2014 (1) TMI 957 - AT - Central Excise

Manufacturing body must deposit Rs. 15 lakhs within 4 weeks to comply with motor vehicle cess levy

The Tribunal directed the appellant, a manufacturing body, to deposit Rs. 15 lakhs within four weeks to comply with the motor vehicle cess levy. Failure ... Leviability of cess on manufacture - Waiver of Pre-deposit - Whether motor vehicle cess shall be payable by the appellant manufacturing body on the chassis supplied by ultimate manufacturer – Held that:- Section 9 of Industries (Development and Regulation) Act 1951, makes clear that cess is a levy on manufacture of goods by schedules industries - Motor vehicle is within that ambit - Central Excise authorities are tax administrators for the levy of cess - manufacturing was done by the appellant belonging to scheduled industry – Thus, the appellant is directed to deposit Rs. 15 as pre-deposit – upon such submission rest of the duty to be stayed till the disposal – Partial stay granted. Issues:1. Whether motor vehicle cess is payable by the appellant manufacturing body on the chassis supplied by the ultimate manufacturer.Analysis:The primary issue in this case revolves around the liability of the appellant manufacturing body to pay motor vehicle cess on the chassis supplied by the ultimate manufacturer. The appellant contends that since the chassis is already subjected to cess, there should be no further levy on the manufacturer for the body built on the chassis. The appellant relies on Board Circular No. 41/88 and the precedent set in the case of S.M. Karmar Automobiles Pvt. Ltd Vs CCE Bangalore to support their argument. They emphasize that any amendment to the Tariff Entry should not automatically alter the provisions of the Industries (Development & Regulation) Act, 1951. On the other hand, the Revenue argues that Chapter Note 4 under Chapter 87 specifies that chassis undergoing manufacture to become a motor vehicle through body building makes the body builder liable to the cess. Despite the historical adherence to the Board Circular, the Revenue asserts that the introduction of Chapter Note 4 changes the scenario, justifying the levy on the manufacturer. The Revenue maintains that the implementation of Cess Rules aligns with the objective of the levy, supported by Rule 2 of the Automobile Cess Rules, 1984.Upon hearing both sides and examining the records, the Tribunal delves into the legal framework to address the issue at hand. The Tribunal refers to Section 9 of the Industries (Development and Regulation) Act, 1951, which establishes that cess is imposed on the manufacture of goods by scheduled industries, including motor vehicles. It clarifies that Central Excise authorities administer the cess levy. The Tribunal acknowledges the appellant's appeal grounds but indicates that a detailed discussion on the cess levy alteration will occur during the regular hearing. Considering the potential prejudice to the Revenue without a pre-deposit, the Tribunal directs the appellant, a scheduled industry engaged in manufacturing, to deposit Rs. 15 lakhs within four weeks and comply with the directive by a specified date.Furthermore, the Tribunal's decision disposes of both stay applications, emphasizing that the directed amount covers both applications collectively. Failure to comply with the deposit directive will lead to the dismissal of appeals associated with those applications. Subsequently, the Tribunal resolves miscellaneous applications in line with the disposal of the stay applications, ensuring procedural closure to the related matters. The order is pronounced in open court, concluding the judgment on the motor vehicle cess issue.