Tribunal Upholds Central Excise Duty on Bus Body Building by Transport Corporation

The Tribunal upheld the imposition of Central Excise duty on body building activity by a State Road Transport Corporation, classifying bodies built on chassis under CH 87.07. The appellant's claim for duty exemption under Notifications was rejected due to exceeding exemption limits. Concerns of duplication of duty demand on bus bodies were dismissed, and penalties equal to duty amounts were reduced to Rs. 1,000 from Rs. 10,75,810, deeming the original penalty excessive. Appeals were disposed of accordingly, with the judgment pronounced on 23-4-2007.

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Issues:
- Central Excise duty liability on body building activity
- Applicability of Notifications for duty exemption
- Duplication of duty demand on bus bodies
- Imposition of penalty equal to duty amount

Central Excise Duty Liability on Body Building Activity:
The appellant, a State Road Transport Corporation, undertakes body building on duty paid chassis for their own use. The Revenue authorities demanded Central Excise duty on this activity, which was confirmed by the original authorities. The Commissioner (Appeals) upheld the decision. The Tribunal noted that bodies built on chassis are classifiable under CH 87.07, attracting Central Excise duty at 16% ad valorem. The argument that the appellant is not a manufacturer as they do not sell the buses was rejected, stating that duty is levied on manufacture, even for captive consumption, making them liable for duty.

Applicability of Notifications for Duty Exemption:
The appellant claimed entitlement to various Notifications for duty exemption. However, the Commissioner (Appeals) found that the Notifications cited were not applicable to CH 87.07. It was noted that the appellant had exceeded the exemption limit during a specific period, making them ineligible for exemption. The Tribunal upheld these findings, stating that the appellant failed to counter these points effectively.

Duplication of Duty Demand on Bus Bodies:
The appellant raised a concern regarding duplication of duty demand on 25 buses in two of the three Orders-in-Original issued. The Tribunal confirmed that this issue was examined in the impugned order and decided not to interfere with the Orders-in-Appeal, holding the appellants liable to pay the duty demanded, subject to Modvat credit on inputs.

Imposition of Penalty Equal to Duty Amount:
In one of the Orders-in-Original, a penalty equal to the duty amount was imposed, which the Tribunal deemed harsh. Even though the penalty for a duty demand exceeding Rs. 1 crore was only Rs. 1,000, a penalty equal to duty for a demand of Rs. 10,75,810 was considered excessive. The penalty was reduced to Rs. 1,000. The appeals were disposed of accordingly, with the judgment pronounced on 23-4-2007.

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