Automobile cess cannot be levied twice on bus body building where the chassis has already suffered cess.

An independent body builder constructing bus bodies on duty-paid chassis was treated as not liable for automobile cess again under the Automobile Cess Rules, 1984 and the Industries (Development and Regulation) Act, 1951. The Tribunal relied on Circular No. 41/88, which clarified that the cess was meant to be collected from vehicle manufacturers and not twice on the same vehicle chain. Even if body building amounts to manufacture under Chapter Note 5 of Chapter 87, the statutory scheme did not support a fresh levy on the body builder where cess had already been paid on the chassis.

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Issues: Whether an independent body builder building bus bodies on duty-paid chassis is liable to pay automobile cess again under the Automobile Cess Rules, 1984 read with the Industries (Development and Regulation) Act, 1951.

Analysis: The operative clarification in Circular No. 41/88 stated that the cess was intended to be collected from vehicle manufacturers and not again from independent body builders when the chassis had already suffered cess. The Tribunal treated this clarification as continuing in force and held that, even if the activity of body building amounts to manufacture under Chapter Note 5 of Chapter 87 of the Central Excise Tariff Act, 1985, automobile cess could not be levied twice on the same vehicle chain. The statutory scheme under Rule 2(f) of the Automobile Cess Rules, 1984 and Section 9(1) of the Industries (Development and Regulation) Act, 1951 did not justify a fresh levy on the body builder in these facts.

Conclusion: The appellant was not liable to pay automobile cess on body building done on cess-paid chassis, and the demand was set aside.

Ratio Decidendi: Automobile cess is not leviable again on an independent body builder when cess has already been paid on the chassis and the governing circular clarifies that the levy is intended for the vehicle manufacturer, not the body builder.

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