Motor vehicle classification on body-built chassis supports prima facie exemption and waiver of pre-deposit under Chapter 87

Chapter Note 5 to Chapter 87 treats body-building, fabrication, mounting or fitting on a chassis under heading 8706 as manufacture of a motor vehicle. On that basis, a chassis on which a body is constructed for transport of goods is treated as a motor vehicle classifiable under heading 8704, and the earlier Revenue authorities were distinguished as relating to different periods or facts. The strong prima facie case also supported waiver of pre-deposit and stay of recovery where the exemption conditions were otherwise satisfied.

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Issues: Whether, in the light of Chapter Note 5 to Chapter 87 and the exemption under Notification No. 6/06-CE (Sl.No.39), the appellants made out a prima facie case for waiver of pre-deposit and stay of recovery.

Analysis: Chapter Note 5 to Chapter 87, introduced with effect from 2005, treats building of body or fabrication or mounting or fitting of structures or equipment on a chassis falling under heading 8706 as manufacture of a motor vehicle. On that basis, a chassis on which a body has been constructed for transport of goods is to be treated as a motor vehicle classifiable under heading 8704. The earlier authorities relied on by the Revenue related to periods or facts not governed by that chapter note, or to different factual situations. The appellants' own case in another unit had also resulted in unconditional stay, which supported the prima facie view in their favour.

Conclusion: The appellants established a strong prima facie case, and the requirement of pre-deposit of duty, interest and penalty was waived with stay of recovery.

Final Conclusion: The stay applications were allowed and the appeals were directed to proceed without insistence on pre-deposit.

Ratio Decidendi: Where Chapter Note 5 to Chapter 87 applies, body-building on a duty-paid chassis constitutes manufacture of a motor vehicle, supporting classification under heading 8704 and justifying waiver of pre-deposit when the other exemption conditions are otherwise satisfied.

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