TATA ENGINEERING AND LOCOMOTIVE Vs. UNION OF INDIA

JUDGEMENT

(1.) Petitioner No. 1, Tata Engineering and Locomotive Company Limited (TELCO), a Company, is a licencee under the Central: Excises and Salt Act, 1944 (the Act). TELCO manufactures motor vehicles' (chassis) falling under tariff item No. 34 -1(3) of the first schedule to the Act and after paying appropriate excise duty clears/removes the same under gate passes from its factory. It files proper monthly returns showing, inter alia, all quantity of excisable goods falling under that item and the competent officer makes assessment. The duty paid chassis are sent to independent body builders lor body building and the body builders build bodies on the chassis according to the customers' requirements and specifications. TELCO recovers the price of the bodies so built by independent body builders and the motor vehicles are delivered to the customers directly from the places outside factory premises of the Company.

(2.) At no stage earlier any objection was raised by the Excise Department alleging short payment of excise duty. However, by demand -cum notice to show cause dated 15 -1 -1985 as contained in Annexure 13, respondent No. 3 called upon TELCO to show cause why it should not be directed to pay duty on the goods produced as a result of manufacture of body on the chassis which is different from a chassis. TELCO filed its show cause and, inter alia, contended that the body built on the duty -paid chassis is manufactured by independent body builders and not by it and there was no question of TELCO engaging body building activities on the chassis. It asserted that there had been no question of any suppression of fact on the part of the Company as admittedly bodies were built on duty paid chassis by independent body builders.

(3.) Respondent No. 2 by order dated 27 -12 -1986 held that TELCO was liable to pay excise duty on the value of the motor vehicles, i.e. the chassis and the body built thereon and not on the chassis alone. Copy of the order was sent to TELCO by a forwarding letter dated 31 -12 -1986 as contained in Annexure 20. TELCO has challenged the validity of the notice to show cause as contained in Annexure 13 and the order of assessment as contained in Annexure 20.