2013 (4) TMI 646 - AT - Central Excise

Admissibility of SSI Exemptions Waiver of pre-deposit of duty/education Cess/interest/penalty - .Department is of the view that the benefit of small scale notification will not be admissible to the appellant as their value of all the excisable goods is more than the amount stipulated in the said notification as the appellant has not included the value of chasis supplied by the customer while computing the aggregate value of the clearances. - Held that - the person who does not avail the benefit of exemption notification of special purpose vehicle or is not eligible for the same and if he does not avail the Cenvat credit of the duty paid on chasis, the value of the motor vehicle so fabricated in his factory premises would be the value excluding the value of the chasis; but if a person who wants to avail the benefit of exemption notification, value needs to be enhanced by inclusion of the value of chasis. Tribunal find that this is not the intent of the legislation at least in this Chapter heading note and Chapter 87. Accordingly, the application for waiver of pre-deposit of amounts involved is allowed and recovery thereof stayed till the disposal of the appeals.

Summary

Issues:
Stay Petitions filed for waiver of pre-deposit of duty, education cess, interest, and penalty. Interpretation of small scale exemption under Notification No. 8/2003. Inclusion of chassis value in the aggregate value of clearances for duty liability calculation.

Analysis:
The issue at hand involves the appellant engaged in manufacturing motor vehicles through fabrication and mounting structures as per customer requirements, considered as manufacturing under Chapter Note 5 of Chapter 87, making it liable to Excise duty as per Notification No. 6/2002-C.E. The appellant also claims exemption under Notification No. 8/2003 for various goods. The dispute arises as the Department contends that the appellant cannot avail the small scale exemption due to the value of all excisable goods exceeding the notification's limit, attributing this to the exclusion of chassis value in clearance value calculation.

The Chartered Accountant representing the appellant argues that excluding chassis value aligns with the legislative intent, citing relevant case laws to support the appellant's position. On the contrary, the Department argues that the duty liability on motor vehicles, considered manufactured goods, must include chassis value in clearance value calculation. The Tribunal carefully reviews both arguments and the legislative framework.

The Tribunal finds the crux of the matter to be whether the appellant should exclude chassis value in the clearance value calculation for fabricated motor vehicles. It notes that the duty liability on motor vehicles should be based on the effective tariff rate and that excluding chassis value is appropriate if no Cenvat credit is claimed on chassis duty. The Tribunal opines that the legislation does not mandate including chassis value when calculating the value of fabricated motor vehicles under Chapter 87.

Ultimately, the Tribunal concludes that the appellant has established a prima facie case for waiving the pre-deposit amounts. It allows the application for waiver and stays the recovery until the appeal's final disposal. The judgment emphasizes the legislative intent and the correct interpretation of the small scale exemption notification in the context of duty liability calculation for manufactured motor vehicles.

This comprehensive analysis of the judgment showcases the intricacies of the legal interpretation involved in the dispute over duty liability calculation and the applicability of small scale exemption under the relevant notifications.