Exemption for vehicles built on supplied chassis upheld, with chassis value excluded from assessable value and pre-deposit waived.

Exemption for motor vehicles manufactured on supplied chassis was held available where the notification covered vehicles made by a manufacturer other than the chassis manufacturer and required only that no CENVAT credit be taken on the chassis. The distinction between a condition requiring proof that duty on the chassis was paid and a condition omitting that requirement was treated as material, so non-production of duty payment evidence did not defeat the exemption. Once the exemption applied, the chassis value had to be excluded from the assessable value, and the principal-manufacturer sale value could not be adopted for duty computation at that stage. Pre-deposit was waived and stay against recovery granted pending appeal.

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Issues: Whether the appellant was entitled to the benefit of the exemption notifications for vehicles manufactured on supplied chassis, and whether pre-deposit should be waived pending appeal.

Analysis: The exemption entry covered motor vehicles manufactured by a manufacturer other than the manufacturer of the chassis, and the accompanying condition required that no credit of duty paid on the chassis be taken under the CENVAT Credit Rules. The distinction between the condition requiring that duty on the chassis should have been paid and the condition omitting such a requirement was treated as significant. On that basis, the benefit of the notification was held to be available even where duty on the chassis was not shown to have been paid, and once the exemption applied, the value of the chassis was to be excluded from the assessable value. The consequence of that view was that the principal-manufacturer sale value could not be adopted for duty purposes at this stage.

Conclusion: The appellant was held eligible for the notification benefit, and the pre-deposit was waived with stay against recovery granted during pendency of the appeal.

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