Motor vehicle bodies qualify for excise exemption when used in Ordnance Factory manufacture under the relevant notification.

Motor vehicle bodies classifiable under Chapter 87 and supplied to a Central Government Ordnance Factory for use in manufacture of vehicles were covered by Notification No. 64/95-C.E. The exemption extended to parts of motor vehicles falling under the specified chapters when used in the Ordnance Factory for manufacture of Chapter 87 vehicles, subject to the prescribed procedure. A narrow interpretation excluding bodies, despite their use in vehicle manufacture, was unsustainable, so the denial of exemption was set aside in favour of the assessee.

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Issues: Whether motor vehicle bodies manufactured and supplied to a Central Government Ordnance Factory for use in manufacture of motor vehicles were covered by Notification No. 64/95-C.E. as parts of motor vehicles falling under Chapter 87 of the Central Excise Tariff Act, 1985.

Analysis: The exemption notification extended to parts of motor vehicles falling under Chapters 45, 48, 68, 73, 85 and 87, when used in a Central Government Ordnance Factory for manufacture of vehicles falling under Chapter 87, subject to the prescribed procedure. The goods in question were motor vehicle bodies classifiable under Chapter 87, and it was not disputed that they were used by the Ordnance Factory in the manufacture of motor vehicles. On that footing, the denial of exemption on the narrow view that only some distinct parts, and not bodies, were covered was unsustainable.

Conclusion: The bodies of motor vehicles qualified for the exemption under Notification No. 64/95-C.E., and the denial of benefit was set aside in favour of the assessee.

Ratio Decidendi: Where exemption is granted to parts of motor vehicles falling under Chapter 87 for use in a Central Government Ordnance Factory, motor vehicle bodies classifiable under Chapter 87 and actually used in manufacture of motor vehicles are covered by the notification.

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