Special purpose vehicles on duty-paid chassis may qualify for exemption; new appellate grounds beyond the show cause notice are barred.

Fresh grounds not raised in the show cause notice could not be introduced by the Revenue at the appellate stage, so the demand could not be sustained on a new basis. On classification, dumper placers and skip loaders assembled piece by piece on duty-paid chassis were treated as special purpose motor vehicles under Chapter Heading 8705 because the finished vehicle emerged only after mounting bought-out components and was not separately marketable as an independent machine. On that footing, the applicable exemption notifications were held available, and the demand was upheld only if the goods fell outside the notification, which on these facts they did not.

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Issues: (i) Whether the Revenue could urge fresh grounds in appeal that were not part of the show cause notice. (ii) Whether the dumper placer and skip loader assembled on duty-paid chassis were classifiable as special purpose motor vehicles under Chapter Heading 8705 and entitled to exemption under the relevant notifications.

Issue (i): Whether the Revenue could urge fresh grounds in appeal that were not part of the show cause notice.

Analysis: The appellate record shows that the Revenue sought to distinguish the earlier Tribunal decision on grounds not raised in the show cause notice. Such new grounds were not part of the original controversy before the adjudicating authority, and could not be permitted to alter the basis of the demand at the appellate stage.

Conclusion: The fresh grounds were not entertainable.

Issue (ii): Whether the dumper placer and skip loader assembled on duty-paid chassis were classifiable as special purpose motor vehicles under Chapter Heading 8705 and entitled to exemption under the relevant notifications.

Analysis: The equipment was fabricated and assembled piece by piece on duty-paid chassis using bought-out parts and in-house cutting, welding, fitting and fabrication. The resulting product was not a separately marketable machine before mounting, but became functional only after assembly on the chassis. On these facts, the earlier Tribunal ruling on identical goods was held applicable, and the composite vehicle was treated as a special purpose motor vehicle rather than as a separately dutiable machine. Since the chassis was duty-paid and the notifications covered such vehicles, exemption was available.

Conclusion: The goods were correctly classified under Chapter Heading 8705 and the exemption was admissible.

Final Conclusion: The Revenue's challenge failed, and the adjudication dropping the demand was upheld on merits and on the preliminary objection to the new grounds.

Ratio Decidendi: Where a special purpose vehicle emerges only through piece-by-piece assembly of bought-out components on a duty-paid chassis and is not separately marketable as an independent machine, it is not separately dutiable as such and may qualify for the applicable exemption; appellate grounds outside the show cause notice cannot be introduced to sustain the demand.

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