Tax exemption for taxi-clearance cars cannot be denied merely because vehicles were later converted to private use.

Duty could not be demanded from the manufacturer where cars were cleared as taxis under Notification No. 162/86-CE and were later deregistered and converted into private vehicles. The manufacturer had satisfied the notification conditions at the time of clearance and had produced the required certificates; later misuse or change of use after clearance did not show breach by the manufacturer. The notification did not impose a continuing obligation on the manufacturer to ensure that the vehicles remained in taxi use after removal, so the duty demand was not sustainable.

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Issues: Whether duty could be demanded from the manufacturer when cars cleared as taxis under Notification No. 162/86-CE were later deregistered and converted into private vehicles.

Analysis: The appellant had complied with the notification conditions at the time of clearance and had produced the requisite certificates. The subsequent misuse or conversion of the vehicles after clearance did not establish breach by the manufacturer. The notification did not cast a continuing obligation on the manufacturer to ensure that the vehicles remained in taxi use after clearance, and duty could not be fastened merely because the vehicles were later put to another use. The issue was covered by the earlier Tribunal view relied upon by the appellant and the impugned demand could not be sustained.

Conclusion: The duty demand was not sustainable against the appellant; the issue was decided in favour of the assessee.

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