2014 (12) TMI 946 - AT - Central Excise

Waiver of pre deposit - CENVAT Credit - benefit of Notification No. 6/2006-C.E., dated 1-3-2006 - Held that - Appellant has not availed any Cenvat Credit on any of the inputs which have been used in the manufacture of either the bulkers or the duty paid on the chassis and therefore, the appellant would be entitled for the benefit of exemption under the said Notification vide Serial No. 39. We further observe that under Serial No. 87 of the notification, goods manufactured in the factory and used in the same factory for building a body or fabrication or mounting or fitting of structure or equipment on a chassis falling under Heading 8706 is exempt from duty, subject to the condition that no credit on the chassis has been taken. This condition is also satisfied by the appellant. Therefore, there would not be any duty liability on the appellant on the bulkers manufactured and captively consumed in the manufacture of motor vehicle falling under Chapter 8704. Therefore, prima facie we are of the considered view that the appellant is eligible for the exemption. Consequently, the duty demand confirmed against the appellant is not sustainable in law. Thus appellants have made out a strong case for grant of stay. Therefore, we grant unconditional waiver from pre-deposit of dues adjudged against the appellants and stay recovery thereof during the pendency of the appeals. - Stay granted.

Summary

Issues:
Classification of goods under Chapter sub-heading 8707 90 00 of CETA, 1985, duty demand confirmation, imposition of penalties, eligibility for exemption under Notification No. 6/2006-C.E., applicability of Chapter Note 5 to Chapter 87, duty liability on bulkers under Chapter 8707, and the intermediate duty demand on bulkers under Chapter 8707.

Analysis:
The judgment involves a dispute regarding the classification of goods and duty demands. The Commissioner classified Bulkers/Trailers/Tanks fitted on trailers under Chapter sub-heading 8707 90 00 of CETA, 1985, confirming a duty demand along with penalties. The appellant, a manufacturer of Bulkers and Trailers, claimed the benefit of Notification No. 6/2006-C.E. The appellant argued that the chassis supplied by customers were duty paid and used for mounting/fitting the bulkers, making them eligible for exemption under the notification. The appellant contended that the duty liability was discharged on the chassis supplied by customers, and they did not avail Cenvat Credit on inputs used in manufacturing. The appellant highlighted Chapter Note 5 to Chapter 87, stating that goods used for fabrication or fitting on a chassis under Heading 8706 amount to the manufacture of a motor vehicle.

The Revenue argued that duty demand on bulkers under Chapter 8707 was sustainable due to the appellant's manufacturing process involving two units. The steel sheets were sent from Unit No. 1 to Unit No. 2 for fabrication, leading to an intermediate stage duty demand. The Tribunal analyzed Chapter Note 5, deeming the appellant a manufacturer of a motor vehicle under Chapter 8704 for fitting bulkers on chassis under Heading 8706. The Tribunal noted that the appellant did not avail Cenvat Credit on inputs or chassis, making them eligible for exemption under Notification No. 6/2006-C.E. The Tribunal observed that the appellant's compliance with conditions under the notification exempted them from duty liability on bulkers manufactured and consumed in motor vehicle production. Consequently, the duty demand against the appellant was deemed unsustainable, leading to a grant of unconditional waiver from pre-deposit and stay on recovery during the appeal's pendency.

In conclusion, the judgment clarified the classification of goods, eligibility for exemption under Notification No. 6/2006-C.E., and the applicability of Chapter Note 5 to Chapter 87 in determining duty liability. The Tribunal's analysis focused on the appellant's compliance with conditions for exemption, leading to the grant of relief from duty demands and penalties during the appeal process.