Conversion of old buses into lorries - Duty liability - Regarding - Central Excise - 14/87

Conversion of old buses into lorries - Duty liability - Regarding Circular No. 14/87 Dated 30-12-1987 [From F. No. 156/8/87-CX.4] Government of India Ministry of Finance (Department of Revenue) New Delhi Subject : Conversion of old buses into lorries - Duty liability - Regarding. A doubt has been raised as to whether conversion of old buses into lorries by certain modifications would amount to manufacture, and whether the resultant goods would be chargeable to duty. The matter has discussed at the South Zone Tariff-cum-General Conference of Collectors of Central Excise held at Cochin on 16th and 17th November, 1987 (copy of the point enclosed).(Not printed). 2. The Principal Collector, Madras explained at the Conference that certain old buses are converted into lorries by removal of seats, closing of window opening and removing glasses in rear portion and replacing them with doors. Buses are classifiable under Heading No. 87.02 whereas lorries fall under heading No. 87.04. Therefore, the question arose as whether the conversion of old buses into lorries would amount to manufacture. 3. The Conference took note of the clarification issued by the Ministry vide F. No. B. 19/4/86-TRU (pt.), dated 1-7-1986, according to which building of body chassis by independent body building units would amount to manufacture of goods under heading Nos. 87.02 to 87.04 as the case may be. However, in this cases, only certain modifications on the body already built are carried out, hence this process cannot be considered as 'manufacture'. Accordingly, it was decided that conversion of old buses into lorries by certain modification will not amount to manufacture and the resultant goods are not liable to duty. However, if a complete new body is built on the old chasis, it may amount to manufacture, as has already been clarified in the Ministry's letter, dated 1-7-1986. 4. The Board have accepted the above views of the Conference. Accordingly, it is clarified that conversion of old buses into lorries by certain modifications like removal of seats, closing of window opening and removing the glasses in rear portion and replacing them with doors will not amount to manufacture the resultant goods will not be liable to duty. However, if a complete new body is made on the old chassis, it would amount to manufacture, as has already been clarified in Ministry's letter F. No. B. 19/86-TRU (Pt), dated 1-7-1986. 5. All pending assessments may be finalised on the above basis.