1997 (7) TMI 246 - AT - Central Excise

Summary

Issues:
Applicability of Notification No. 75/86 to parts and accessories of motor vehicles, tractors, and trailers for manufacturing internal combustion engines used in various applications.

Detailed Analysis:
The appellants contested the duty demand of Rs. 6,58,356.26 based on the interpretation of Notification No. 75/86 as amended by Notification No. 312/86. The dispute centered around whether parts and accessories used for manufacturing internal combustion (I/C) engines for purposes beyond motor vehicles were eligible for the exemption under the said Notification.

The Collector (Appeals) upheld the Assistant Collector's decision that only I/C engines of motor vehicles, tractors, and trailers were eligible for the benefit of the Notification. The Collector reasoned that the notification covered only I/C engines that are part of motor vehicles, not other types of I/C engines under Chapter 84. The Collector emphasized that the use of the words 'used as original equipment' indicated use only in motor vehicles and tractors, excluding other types of I/C engines.

The appellants argued that the Notification required proving that parts and accessories were intended for use as original equipment parts in the manufacture of internal combustion engines under Chapter 84, irrespective of the application of the engines. They contended that I/C engines are utilized in various applications, including marine and industrial engines, beyond automobile vehicles, thus meeting the Notification's criteria.

The respondent Collector maintained that the exemption under Notification No. 75/86 applied solely to parts and accessories of motor vehicles, tractors, and trailers specified in the Table annexed to the Notification. The Collector emphasized that the Notification covered only I/C engines part of motor vehicles, not other types of engines or vehicles under Chapter 84.

Upon examining the actual wording of Notification No. 75/86 as amended, the Tribunal noted that the exemption encompassed parts and accessories of motor vehicles, tractors, and trailers falling under specific chapters. The Tribunal highlighted that the proviso required satisfying an officer that the goods were intended for use as original equipment parts in the manufacture of internal combustion engines under Chapter 84. The Tribunal clarified that the term 'the said goods' referred specifically to parts and accessories of motor vehicles, tractors, etc., restricting the scope of I/C engines eligible for the exemption to those used in motor vehicles and tractors.

Consequently, the Tribunal found no error in the impugned order and rejected the appeal, affirming that the exemption under Notification No. 75/86 applied only to I/C engines forming part of motor vehicles and tractors, not extended to engines used in other vehicles or equipment like boats or stationary power generators.