1997 (11) TMI 217 - AT - Central Excise

Summary

Issues Involved:
1. Classification of motor vehicles with chassis and motor vehicles with body under the Central Excise Tariff.
2. Whether the process of fitting Fibre glass reinforced plastic (FRP) body kits on duty-paid chassis constitutes 'manufacture' under Section 2(f) of the Central Excises and Salt Act, 1944.
3. Applicability of duty on the body building of motor vehicles.

Detailed Analysis:

1. Classification of Motor Vehicles with Chassis and Motor Vehicles with Body:
The Revenue contended that motor vehicles with chassis manufactured and cleared by M/s. Mahindra and Mahindra fall under Tariff Item 34-I(ii), attracting excise duty at the rate of 30%. When fitted with a body, it becomes a motor vehicle with a body, classifiable under Tariff Item 34-I(ii)(ib) of the tariff. The Revenue argued that by fitting FRP body kits on the chassis, a new article, i.e., a motor vehicle with a definite separate identity, comes into existence, thus involving a process of manufacture attracting the provisions of Section 2(f) of the Central Excises and Salt Act, 1944.

2. Whether the Process of Fitting FRP Body Kits Constitutes 'Manufacture':
The respondents contended that the motor vehicles brought to their factory by customers/dealers are fully duty-paid and purchased from Mahindra and Mahindra Ltd. The respondents argued that they do not carry out any manufacturing activity to make them motor vehicles but only fit the FRP kits as per customers' requirements. The process of fitting the FRP body on the duty-paid chassis does not amount to manufacture. The Collector of Central Excise in the impugned order observed that the chassis received from customers on payment of duty were motor vehicles and remained so even after fitting the FRP body kit, thus not constituting manufacture in terms of Section 2(f) of the Central Excise Act, 1944.

3. Applicability of Duty on the Body Building of Motor Vehicles:
The respondents argued that they are paying duty on the FRP body kits before fitting them onto the vehicles. The Collector of Central Excise noted that parts of the FRP body are cleared from the factory on payment of duty, and there was no need to pay further duty on body building. The Tribunal relied on previous decisions, such as Collector of Central Excise v. Roplas India Ltd., where it was held that converting duty-paid canvas hood jeeps into FRP jeep body does not result in a new product. The Hon'ble Punjab & Haryana High Court in Darshan Singh Pavitar Singh v. Union of India held that building or fabricating a body on a chassis does not constitute manufacturing a motor vehicle. The Supreme Court upheld this view in Collector of Central Excise v. Ram Body Builders.

Conclusion:
The Tribunal concluded that there is no evidence on record to show that the respondents are manufacturing motor vehicles. Given the respondents' payment of duty on the FRP body kits before fitting them onto the chassis, the Tribunal found no infirmity in the impugned order. The appeal filed by the Revenue was dismissed.