SCOOTER INDIA LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE dispute arising in this appeal at the instance of the assessee is whether the goods manufactured by it arc to be classified under 8706.31, as claimed by the assessee or under 8706.21, as alleged by the Revenue. The appellant, a Government of India Undertaking is engaged in the manufacture of motor vehicles and parts thereof classified under Chapter 87 of the Central Excise Tariff. Three wheeler driveway chassis manufactured by the appellant are sold to independent buyers who in turn get body fabricated as auto rickshaw or a load carrier or a delivery van. The appellant had been filing classification lists under Rule 173 -B from time to lime. Till an audit objection was raised in 2000, appellant's claim for classifying the chassis under sub -heading 8706.31 read with 8703.10 was being accepted and goods were cleared on that basis. It is the case of the appellant that they have manufactured only 4 or 5 pieces of three -wheelers as a prototype during the relevant period for the purpose of seeking clearance from the Automobile Research Association of India, Pune (ARAI). Consequent upon the audit objection show cause notice was issued to the assessee on 16 -7 -2001 alleging that the three wheeler motor vehicles fitted with chassis manufactured by it are classifiable under sub -heading 8706.21 read with 8702.10 which resulted in a short levy to the extent of Rs. 42,65,19,760/ - during the period from 23 -7 -1996 to 31 -3 -2001. Rejecting the explanation offered by the assessee, the Commissioner confirmed the demand and imposed a penalty of equal amount. Aggrieved by the above order, the assessee has come up in appeal.

(2.) IT is pointed out on behalf of the appellant that in the show cause notice reliance was placed on three documents to support the demand. They were (i) copy of the letter dated 8 -10 -1999 of the appellant submitted to the Automotive Research Association of India, Pune (ARAI) wherein it was stated that the vehicles were designed for seating capacity of 7 persons excluding driver (ii) instructions and warranty booklet of Vikram 750 -D, No. B 010247 and (iii) a pamphlet of the appellant. It was alleged in the show cause notice that the three -wheeler Vikram 750 -D has an additional passenger seat by the side of the driver in addition to 6 passengers fabricated behind the driver. It was pointed out in reply to the show cause notice that the letter dated 9 -10 -99 was an application for possible increase in seating capacity. ARAI Pune did not accept the proposal. It approved only design for 6 seats. Therefore, the chassis manufactured by the appellant was for the basic model approved by ARAI for 6 persons. Those who are building body on the above chassis had also to adhere to the sanctioned seating capacity by ARAI in the proposed prototype. It was also pointed out that the additional seat by the side of the driver was for a co -driver in the case of load carrier. ARAI had not granted approval for basic Model Vikram 750 -D for 7 seats as per the request in the application.

(3.) THE relevant headings and sub -headings are as follows : -