Motor vehicle cess on body building activity upheld prima facie, with pre-deposit required for stay continuation.

In stay proceedings, the tribunal treated the motor vehicle cess under Section 9 of the Industries (Development and Regulation) Act, 1951 as prima facie applicable to body building activity on chassis supplied by the ultimate manufacturer. Chapter Note 4 to Chapter 87 and Rule 2 of the Automobile Cess Rules, 1984 were read as supporting the revenue's case, and the earlier Board Circular was considered unable to override the chapter note. On that basis, waiver of pre-deposit was refused and the appellant was directed to deposit Rs. 15 lakhs as a condition for continuation of the stay proceedings.

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Issues: Whether, in the stay applications arising from the appeal, the appellant was required to make a pre-deposit in view of the prima facie applicability of motor vehicle cess on body building activity undertaken on chassis supplied by the ultimate manufacturer.

Analysis: The statutory levy under Section 9 of the Industries (Development and Regulation) Act, 1951 was treated as a levy on manufacture by scheduled industries, and motor vehicles were considered to fall within that ambit. The reasoning also took note of Chapter Note 4 to Chapter 87 and Rule 2 of the Automobile Cess Rules, 1984, which supported the revenue's case that body building on chassis attracted the cess. The earlier Board Circular was noted, but the view recorded was that the circular could not prevail once the chapter note operated. On that prima facie assessment, the Court found that waiver of pre-deposit was not justified.

Conclusion: The appellant was directed to deposit Rs. 15 lakhs as a condition for continuation of the stay proceedings, and the stay applications were disposed of against the appellant.

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