2015 (11) TMI 362 - AT - Central Excise

Denial of refund claim - Automobile cess - whether the appellant being job worker i.e. manufacturer of body building is required to pay automobile cess or not as per Automobile Cess Rules, 1984 read with Industries (Development and Regulation) Act, 1951 or not - Held that - Matter of levy of automobile cess was referred to Administrative Ministry i.e. Ministry of Industries and as intimated the intention behind the notification levying the cess is to realized from the vehicle manufacturers and not from the body builders. Further, as per IDR Act, 1951, the notification levying of cess has been issued, which provides that the rate of cess shall not, in any case, exceeds to two percent of the value of the goods i.e. 1/8th per cent of the value of the vehicle. It was also clarified that the cess may continue to be levied and collected in the condition they are cleared from the premises of the manufacturers and no cess should be levied again in case the body on the chassis is built by an independent body builder on the cess paid chassis. Therefore, there was no intention of the Administrative Ministry to levy cess on the activity of the body building. In that case, although the appellant may be the manufacturer in the light of the Chapter Note 5 of the Chapter 87 of the Central Excise Act, 1985, the automobile cess cannot be levied or collected from the appellant. - automobile cess cannot be demanded from the appellant. Therefore, the demand on account of automobile cess along with intened set aside. - Decided in favour of assessee.

Summary

Issues:
- Whether the appellant is required to pay automobile cess on body building activity as per Automobile Cess Rules, 1984 read with Industries (Development and Regulation) Act, 1951.

Analysis:
The appellant, engaged in manufacturing bus bodies on duty paid chassis, stopped paying automobile cess after 2005 following chassis suppliers' payment. The Revenue demanded automobile cess post-Chapter Note 5 to Chapter 87 in Central Excise Tariff Act, 1985, considering body building as manufacturing. Show cause notices were issued, confirmed by the adjudicating authority. Appeals were filed, with the department contesting penalty dropping and the appellant challenging the cess demand. The Commissioner (Appeals) upheld the demand and imposed penalties. The appellant argued citing Tata Motors Ltd. case, claiming non-applicability of cess. The department countered, emphasizing Chapter Note 5 relevance over CBEC Circular 41/88. The Tribunal analyzed the Circular, noting the intent to levy cess on vehicle manufacturers, not body builders. Despite the appellant's manufacturing status, the Circular prevented cess imposition. Referring to the Tata Motors Ltd. case, the Tribunal ruled in favor of the appellant, setting aside the cess demand and penalties, aligning with the Circular's stance. Consequently, the appeals were allowed, providing consequential relief.