1995 (10) TMI 121 - AT - Central Excise

Summary

Issues:
1. Eligibility for exemption under Notification 162/86 for manufacturers of 3 wheeled auto rickshaws.
2. Interpretation of the scheme of tariff for levy of duty on automobiles.
3. Requirement of pre-deposit of duty based on financial position of the applicants.

Eligibility for Exemption under Notification 162/86:
The case involved a plea by the manufacturers of 3 wheeled auto rickshaws regarding their eligibility for exemption under Notification 162/86. The applicants argued that since they did not manufacture chassis and did not claim MODVAT Credit, they were entitled to concessional assessment under the notification. The advocate highlighted the manufacturing process, emphasizing that the chassis did not come into existence during their production process. The contention was that the fitment of the engine at the end did not constitute chassis manufacturing. However, the tribunal found the plea prima facie unacceptable, stating that the scheme of the tariff did not support such an interpretation. The tribunal observed that the applicants' arrangement of manufacturing operations to pay lower duty was not justifiable. The tribunal noted that a vehicle without a chassis was not conceivable, and the applicants were required to make a pre-deposit of Rs. 25,00,000 pending appeal.

Interpretation of Tariff Scheme for Levy of Duty:
The tribunal delved into the scheme of the tariff for the levy of duty on automobiles, particularly focusing on the classification under Tariff headings 87.03, 87.04, and 87.06. It was explained that the duty payable depended on whether the chassis was manufactured and cleared separately or as part of the vehicle manufacturing process. The tribunal emphasized that the duty for vehicles falling under Tariff 87.03 or 87.04 was 25%, and the concessional rate of Rs. 525 per vehicle under Notification 162/86 applied to manufacturers not availing MODVAT Credit. The tribunal rejected the applicants' plea for a lower duty rate based on their manufacturing process, stating that their plea was contrary to the tariff scheme. The tribunal concluded that the applicants were liable to pay duty at the statutory rate and directed them to make the necessary pre-deposit.

Requirement of Pre-deposit based on Financial Position:
Regarding the financial position of the applicants, the advocate offered a pre-deposit of Rs. 5,00,000, citing the applicants as a small-scale manufacturer in a competitive market. However, the tribunal deemed this offer insufficient and directed the applicants to make a pre-deposit of Rs. 25,00,000 by a specified date. The tribunal considered the facts and circumstances of the case in determining the pre-deposit amount, emphasizing compliance with the directive pending the appeal process. The tribunal scheduled a follow-up hearing for compliance reporting, underscoring the importance of the pre-deposit in the legal proceedings.