2013 (4) TMI 438 - AT - Central Excise

Duty exemption notification No.162/86 dt. 1.3.86 denied - Water tanker lorries cleared without payment of duty by availing exemption Notification - Commissioner confirmed the demand of duty as proposed in the Show Cause Notices - Held that - In view of Board s circular dated 13.1.1989 no hesitation to hold that, in the present case, the fabricated water tank, mounted on chassis would be considered as parts and components captively used for building on chassis of a motor vehicle and covered under Notification No.9/96-CE (NT) dt. 17.5.96 and exempted from duty for the period commencing from 28.2.1993 to 28.2.1994. Accordingly, set aside the order of the Commissioner (Appeals) and uphold the order of the original authority subject to demand of duty for the period 28.2.1993 to 28.2.1994 would be dropped. In favour of assessee.

Summary

Issues:
- Interpretation of Notification No.9/96-CE (NT) under Section 11C of the Central Excise Act, 1944 regarding exemption of duty on parts and components fabricated and captively used for building body on the chassis of motor vehicles.
- Classification of water tankers fabricated and mounted on chassis under Central Excise Tariff Act, 1985.
- Application of Board's Circular No.2/89 and its relevance in determining the classification of fabricated tankers.
- Consideration of the Tribunal's decision in Andhra Sugar Mills Ltd. Vs CCE Guntur- 2007 (207) ELT 534 (Tri.-Bang.) in the present case.

Analysis:

The judgment pertains to two appeals arising from a common order concerning the fabrication and mounting of water tankers on chassis classified under heading No.8702/8704 of the Central Excise Tariff Act, 1985. The issue revolved around the demand of duty and denial of exemption under Notification No.162/86. The Commissioner (Appeals) overturned the adjudication orders, leading to the appeals before the Tribunal.

The appellant argued that the demand of duty was correctly dropped by the adjudicating authority based on Notification No.9/96-CE (NT) exempting duty on parts and components used for building bodies on motor vehicle chassis. Reference was made to Board's Circular No.2/89 and the Tribunal's decision in Andhra Sugar Mills Ltd. case to support the claim.

The respondent, however, contended that the exemption under Notification No.9/96 applies only to parts or components, excluding water tankers falling under Chapter 72. It was argued that water tankers made of MS sheets are dutiable under subheading 7309.00 and not covered by the said notification.

Upon review, the Tribunal examined the relevant portion of Notification No.9/96-CE (NT) and noted that the exemption applied to parts and components used for building bodies on motor vehicle chassis without specifying their classification. Referring to the Board's circular, it was established that fabricated tankers mounted on chassis are considered parts and components captively used for building on motor vehicle chassis.

Consequently, the Tribunal held that the water tankers fabricated and mounted on chassis should be considered as parts and components covered under Notification No.9/96-CE (NT), exempting them from duty for the relevant period. The order of the Commissioner (Appeals) was set aside, and the demand of duty for the specified period was dropped, disposing of both appeals accordingly.