2002 (1) TMI 556 - AT - Central Excise

Chassis not Light Commercial Vehicle, Recalculation of Duty, No Penalty Imposed

SWARAJ MAZDA LTD. Versus COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH-II

SWARAJ MAZDA LTD. Versus COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH-II - 2002 (141) E.L.T. 504 (Tri. - Del.) Issues Involved:1. Availability of benefit under Notification No. 462/86-C.E. to chassis manufactured by the appellant.2. Interpretation of the term 'motor vehicle' in the context of the Central Excise Tariff and Notification.3. Applicability of HSN Explanatory Notes and Motor Vehicles Act definitions.4. Validity of the Department's denial of exemption.5. Correctness of duty demand quantification.6. Imposition of penalty on the appellant.Detailed Analysis:Issue 1: Availability of benefit under Notification No. 462/86-C.E. to chassis manufactured by the appellant.The primary issue is whether the chassis manufactured by the appellant qualifies for the concessional rate of Central Excise duty under Notification No. 462/86-C.E., which is intended for 'fuel-efficient light commercial motor vehicles of payload not exceeding 4,000 Kilograms.' The appellant argued that their chassis, which are later fitted with bodies by independent builders, should be eligible for this benefit. They presented evidence, including a fuel efficiency certificate from the Vehicle Research & Development Establishment (VRDE), to support their claim.Issue 2: Interpretation of the term 'motor vehicle' in the context of the Central Excise Tariff and Notification.The appellant contended that the term 'motor vehicle' in the Notification should include chassis, referencing the HSN Explanatory Notes and the Motor Vehicles Act, 1988, which define a motor vehicle to include a chassis without a body. They argued that the Central Excise Tariff and HSN treat chassis as motor vehicles for tariff purposes.Issue 3: Applicability of HSN Explanatory Notes and Motor Vehicles Act definitions.The appellant relied on HSN Explanatory Notes and the Motor Vehicles Act to argue that chassis should be considered motor vehicles. However, the respondent countered that the Central Excise Tariff clearly distinguishes between chassis (Heading 87.06) and motor vehicles (Headings 87.01 to 87.05), and that the definitions from the Motor Vehicles Act should not be imported into the Central Excise context.Issue 4: Validity of the Department's denial of exemption.The respondent argued that the Notification's benefit is specifically for motor vehicles, not chassis. They emphasized that the chassis alone does not meet the fuel efficiency and payload requirements as stipulated in the Notification. The Tribunal agreed, stating that the chassis, as cleared by the appellant, does not satisfy the definition of a light commercial motor vehicle and thus is not eligible for the exemption.Issue 5: Correctness of duty demand quantification.The appellant argued that the duty demand was incorrectly quantified and should be recalculated based on the Larger Bench decision in Sri Chakra Tyres v. CCE. The Tribunal agreed with this point, directing the Adjudicating Authority to recompute the duty amount accordingly.Issue 6: Imposition of penalty on the appellant.Given the complexity and interpretative nature of the Notification, the Tribunal found that no penalty should be imposed on the appellant. They acknowledged the appellant's bona fide belief in their eligibility for the exemption and set aside the penalty.Conclusion:The Tribunal concluded that the chassis manufactured by the appellant does not qualify for the benefit under Notification No. 462/86-C.E. as it is not considered a light commercial motor vehicle. The duty demand needs to be recomputed, and no penalty is warranted. The appeals were disposed of in these terms, and the cross-objections filed by the Revenue were also disposed of.