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2019 (3) TMI 1219 - AT - Central ExciseBenefit of N/N. 6/2006-CE dt.1.3.2006 (Entry No.90) - Supply of bus chassis to Delhi Metro Railway Corporation (DMRC) - case of Revenue is that such transaction would signify that the buses have neither been procured by DMRC nor will be owned by DMRC. Therefore, M/s. Tata has failed to fulfil the condition No. 18 under exemption N/N. 6/2006-CE dt.1.3.2006 - Held that - As per the condition 18 of notification, the goods are required to be procured by or on behalf of the Delhi Metro Rail Corporation Ltd. for use in the Delhi MRTS project and the goods are part of the inventory maintained by the Delhi Metro Rail Corporation Ltd. and shall be finally owned by the Delhi Metro Rail Corporation Ltd - Admittedly, the goods in question have been procured by DMRC in Metro Feeder bus service, therefore, the use of bus is for MRTS project. The sole reason to deny the benefit of exemption notification is the agreement between DMRC and its operators. As per agreement after five years the operator shall become the owner of the bus. In fact, on the basis of record placed before us, operators have never completed contract and agreements were not rescinded. Consequently, the DMRC remains the owner of the buses in question, therefore, on that ground the benefit of exemption notification cannot be to the appellant. It is admitted that these bus chassis purchased by DMRC from M/s.Tata are used as feeder bus service to carry passengers from various routes of metro and vice versa are integral part of the Delhi MRTS project and DMRC is the owner of the buses, therefore, DMRC has rightly issued certificate in terms of N/N. 6/2006-CE dt.1.3.2006 and M/s.Tata is entitled to avail exemption notification and have rightly cleared chassis in question without payment of duty. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Denial of exemption under Notification No.6/2006-CE dated 1.3.2006. 2. Fulfillment of conditions under the said notification. 3. Classification of bus chassis as machinery or equipment. 4. Ownership and use of the buses by DMRC. 5. Imposition of penalties on the appellants. Detailed Analysis: 1. Denial of Exemption under Notification No.6/2006-CE dated 1.3.2006: The appellants, M/s. Tata Motors Ltd., were denied the benefit of exemption under Notification No.6/2006-CE dated 1.3.2006. The Revenue's stance was that the buses procured by DMRC were to be handed over to private operators on an operate and transfer basis, thus not fulfilling the conditions of the exemption notification. Consequently, a show cause notice was issued demanding duty on 120 bus chassis cleared to DMRC and imposing penalties on all appellants. 2. Fulfillment of Conditions under the Notification: The appellants argued that they had fulfilled the required conditions under Notification No.6/2006-CE by obtaining a certificate from DMRC stating that the goods were part of DMRC's inventory and would be finally owned by DMRC. The department, however, questioned the correctness of the certificate based on the actual use and ownership transfer agreement with private operators after five years. 3. Classification of Bus Chassis as Machinery or Equipment: The appellants contended that the bus chassis qualified as machinery under Sl.No.90 of the notification, supported by the Tribunal's decision in Bharat Sales Corporation vs. CC, Calcutta. The Tribunal agreed, citing definitions from various sources and previous judicial pronouncements, that motor vehicles could indeed be considered machinery. The Tribunal noted that the term "machines" was not limited to those under Chapters 84 and 85 but could include vehicles as well. 4. Ownership and Use of the Buses by DMRC: The Tribunal examined whether the buses were an integral part of the Delhi MRTS project and whether DMRC retained ownership. Despite the agreement to transfer ownership to operators after five years, the Tribunal found that the operators had not completed their contracts, and DMRC remained the owner of the buses. Therefore, the buses were considered part of DMRC's inventory and used for the MRTS project, fulfilling the notification's conditions. 5. Imposition of Penalties on the Appellants: The Tribunal found no fraudulent intent in the issuance of the certificate by DMRC and noted that DMRC is a government-promoted utility organization. Consequently, the penalties imposed on M/s. Tata and the Director of DMRC were deemed unjustified. The Tribunal set aside the penalties, emphasizing that the appellants had acted based on their understanding of the exemption notification. Conclusion: The Tribunal held that M/s. Tata Motors Ltd. was entitled to the exemption under Notification No.6/2006-CE dated 1.3.2006, as the bus chassis were used for the MRTS project and DMRC remained the owner. The Tribunal found no merit in the impugned orders, resulting in the appeals being allowed with consequential relief. The penalties imposed on the appellants were also set aside.
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