1996 (1) TMI 192 - AT - Central Excise

Summary

Issues involved: Classification of bodies built on chassis under Chapter Heading 87.07, entitlement to benefit of Notification No. 175/86-C.E.

Summary:
The appeal involved a dispute regarding the classification of bodies built on chassis by independent body builders under Chapter Heading 87.07 and the eligibility for the benefit of Notification No. 175/86-C.E. The Collector (Appeals) had initially held that such bodies do not fall under Chapter Heading 87.07 and denied the benefit of the notification.

The appellants contended that the introduction of Chapter Note 3 did not change the classification and that bodies built on chassis should be classified under Chapter Heading 87.07. They cited relevant case laws to support their argument.

On the other hand, the Revenue argued that the introduction of Chapter Note 3 had changed the classification criteria and supported the Collector (Appeals)' decision to deny the benefit of the notification.

After considering the submissions, the Tribunal analyzed the impact of Chapter Note 3 introduced in 1991, which clarified that building bodies on chassis amounts to manufacture of motor vehicles under Chapter Headings 87.01 to 87.05. However, the Tribunal noted that the bodies in question were not under these specific headings but were fitted with engines, falling under Chapter Heading 87.06.

The Tribunal emphasized that the specific classification of bodies built on duty paid chassis under Chapter Heading 87.07 should be preferred over general entries. It concluded that bodies built on chassis with engines are classifiable under Chapter Heading 87.07, making the appellants eligible for the benefit of Notification No. 175/86-C.E. as an SSI unit.

Accordingly, the impugned order in one appeal was set aside, allowing relief to the appellants, while the other two appeals by the Department were rejected.