2015 (10) TMI 895 - AT - Central Excise

Imposition of National Calamity Contingent Duty - Imposition of interest and penalty - Held that - There is no dispute about the fact that for the pre-budget stock in respect of manufactured goods which have been manufactured before 01.03.2003, NCCD would not be applicable. However, we find that admitted position even from the appellant s side is that the vehicles were not fully finished but substantially finished. It is seen that it is important that the road test are carried on the vehicles before it can be taken on road and released for sale. Similarly, it is an admitted position certain work remains to be done on these vehicles in as much as certain items were yet to be fixed. Under these circumstances, in our view, the motor vehicles cannot be considered as manufactured as on 28.02.2003 and therefore NCCD would be chargeable. In view of the above position, demand is upheld on merits. We also find that equivalent amount of penalty has been imposed under Rule 25 of the Central Excise Rules, 2002. In the facts and circumstances of the case, in our considered view, this is not a fit case for imposition of penalty and we accordingly set aside the penalty imposed under rule 25. Interest under Section 11AB is upheld.- Decided partly in favour of assessee.

Summary

Issues: National Calamity Contingent Duty (NCCD) applicability on motor vehicles substantially manufactured but not marketable before 01.03.2003.

Analysis:
The case involved the imposition of National Calamity Contingent Duty (NCCD) on motor vehicles by the Revenue, which were cleared after 01.03.2003 but were in a substantially manufactured condition. The appellant argued that NCCD should not apply to goods almost manufactured before the levy's effective date, citing the Supreme Court's decision in CCE vs. Vazir Sultan Tobacco Co. Ltd. (1996). The appellant also relied on Circular no. 334/1/2003-TRU dated 28.02.2003 and various case laws to support their contention.

The Revenue contended that the vehicles were not fully manufactured as they required road testing and certain items to be fixed before being marketable. The Revenue argued that since the vehicles became fully manufactured after 01.03.2003, NCCD was applicable. The Tribunal noted that for pre-budget stock of manufactured goods before 01.03.2003, NCCD would not apply. However, it found that the vehicles in question were not fully finished but substantially finished, requiring road testing and additional work before being marketable. Therefore, the Tribunal held that the vehicles could not be considered as manufactured before 01.03.2003, making them liable for NCCD.

The Tribunal upheld the demand for NCCD on the vehicles but set aside the penalty imposed under Rule 25 of the Central Excise Rules, 2002, considering the circumstances of the case. The Tribunal also upheld the interest under Section 11AB. The appeal was disposed of with the above decisions pronounced on 11/09/2015.