KAILASH AUTO BUILDERS LTD. Vs. CCE

JUDGEMENT

(1.) IN these three appeals, filed by M/s. Kailash Auto Builders Ltd., the issue involved is whether central excise duty is chargeable under Heading 87.07 of the Schedule to the Central Excise Act in respect of the bodies fabricated by them on the chassis. Shri A.R. Madhav Rao, learned Advocate, submitted that the appellants are independent manufacturer of excisable goods, engaged in the activity of building bodies, cabins of motor vehicle chassis; that they received duty paid chassis from their customers for purpose of building bodies of motor vehicles; that as per Note 3 to Chapter 87 of the Central Excise Tariff, activity of building a body on chassis amounts to manufacture of a motor vehicle at the hands of the body builders; that accordingly they cleared the body built motor vehicle under Headings 87.02 or 87.04, as the case may be, after claiming exemption under Notification Nos. 162/86 or 5/98 -CE (serial No. 244); that even then the Commissioner (Appeals) under the impugned Order has held that the appellants are required to pay central excise duty on body of motor vehicles falling under heading No. 87.07; that accordingly, the benefit of Notification No. 162/86 has been denied to them. Learned Advocate further submitted that even if it is held that they are liable to pay duty on the body built on motor vehicle chassis under Heading 87.07 of the Central Excise Tariff, they are not required to pay any additional duty in terms of Notification No. 27/02 -CE (NT) dated 23.7.2002 issued under Section 11C of the Central Excise Act; that by the said Notification, the Central Government has directed that duty of excise payable in excess on the bodies built by independent body builders on motor vehicle chassis shall not be required to be paid even if the duty of excise was short -levied during the period from 1.5.1991 to 28.2.2001; that the period involved in all the three appeals is covered by the period mentioned in the Notification as the period of demand is from March 1995 to December 1999. Reliance has also been placed on the decision in the case of Jay Cee Coach Builders Ltd. v. CCE, Chandigarh -I,, 2003 (159) ELT 297 (Tri.) :, 2003 (107) ECR 314 (T).

(2.) SHRI S.C. Pushkarna, learned DR reiterated the findings contained in the impugned Orders. We have considered the submissions of both the sides. It is not in dispute that the appellants are independent body builders who are fabricating the bodies on motor vehicle chassis received from their customers. Note 3 to Chapter 87 provides that for the purposes of Chapter 87 "building a body or fabrication or mounting or fitting of structures or equipment on the chassis falling under Heading 87.06 shall amount to "manufacture" of a motor vehicle". The Tribunal in the case of Kamal Auto Industries v. Collector, : 1996 (82) ELT 558 :, 1997 (70) ECR 851 (T), has held that even after introduction of Note 3 to Chapter 87, bodies built on chassis would remain classifiable under Heading 87.07. This decision of the Tribunal has been affirmed by the -Supreme Court as observed by the Larger bench of the Tribunal in the case of Ambala Coach Builders v. CCE,, 2000 (119) ELT 713 (Tri -LB). The Central Government has issued a Notification No. 27/02 -CE (NT) dated 23.7.2002 observing that that a practice was generally prevalent regarding levy of duty of excise on the bodies built by independent body builders on the motor vehicle chassis under Headings 87.02 to 87.04 instead of Heading 87.07 and that such bodies were liable to a higher amount of duty of excise than what was levied according to the said practice during the period from 1.5.1991 to 28.2.2001, the Central Government by the said Notification has directed that the duty payable in excess shall not be required to be paid in respect of bodies built by independent body builders on the motor vehicle chassis on which the duty of excise was short -levied during the aforesaid period in accordance with the said practice. As the demand in the present matter relates to the period specified in Section 11C Notification and the appellants have paid duty under Headings 87.02/87.04, as the case may be, they are eligible to the benefit of the Notification. Accordingly, they are not liable to pay any duty. The appeals are thus allowed.