2023 (9) TMI 864 - AT - Central Excise

Tribunal grants relief to bus part manufacturers, affirming eligibility for exemptions under specific notifications.

Volvo Buses India Pvt Ltd and K. Ramamurthy Versus Commissioner of Central Excise, Bangalore-I

The Tribunal ruled in favor of the appellants, manufacturers of bus parts, regarding their eligibility for exemptions under Notification No. 6/2006-CE and ... Benefit of exemption under Sl. No.39 of the Notification No. 6/2006-CE dated 01.03.2006 and Sl. No. 276 of the Notification No. 12/2012-CE dated 17.03.2012 denied - - 2545 numbers of motor vehicles manufactured for transport of more than 12 persons falling under Chapter heading 8702 of CETA, 1985 but failed to pay duty - extended period of limitation. Denial of exemption on the ground that clause (a) of the condition No.9 or 27 for availing benefit of said exemptions during the relevant period is not complied with inasmuch as the ownership of the chassis remains vested in the chassis manufacturer viz. VIPL. HELD THAT:- There are no merit in the observation in analyzing/examining the issue whether ownership of the chassis after sale and delivery of possession continues to remain with VIPL thereby the clause (a) of the condition 9 of Sl. No. 39 of Notification No. 6/2006-CE and condition 27 of sr. no 276 of Notification No. 12/2012-CE 17.3.2012, as the case may be, is satisfied or otherwise. The term “ownership” has not been defined under Central Excise Act,1944 or the Rules made thereunder. ‘Ownership’ is a legal concept. Applying the concept of ownership to the present case, it is found that the appellant and M/s VIPL are independent legal entities as both are incorporated under the Indian Companies Act,1956. The chassis manufactured by M/s VIPL sold to the appellant on payment of applicable VAT and excise duty. There is no condition appended to such sale which would indicate the transfer of title, possession etc. is incomplete. The appellant after receipt of the chassis undertake the activity of bodybuilding and dispose of the buses to their customers. In these circumstances, merely because the appellant and M/s VIPL belong to a common group of companies, the transaction between them cannot be considered other than sale or purchase of the chassis and the Ownership of chassis not transferred after sale of the same by VIPL to Appellant. The reference to concept of ‘related person’ under Section 4 of the Central Excise Act, 1944, in analysing, the condition of the Notification whether ownership of the chassis is continued to be vested on chassis manufacturer by the learned Commissioner in the impugned order is out of context, in as much as, the question is not for determination of the value of the chassis sold; hence, reliance placed on the meaning of interconnected undertaking under Section 4 of the Central Excise Act, 1944 is also irrelevant. Further, the clause 1.7 of the Chassis Supply Agreement and Master Agreement dated 01.04.2001 providing license to manufacture entire range of products of ‘AB Volvo’ like trucks, buses, construction equipment etc. to M/s VIPL does not establish the case that the ownership of chassis after being sold by M/s VIPL to the appellant continued to vest on the chassis manufacturer i.e. M/s VIPL - on merit the Appellants are eligible to the benefit exemption Notifications 06/2006-CE dt. 01.3.2006 and 12/2012-CE dt. 17.03.2012. Extended period of limitation - HELD THAT:- The allegations of suppression of the fact of bodybuilding on the supplied chassis by M/s VIPL and availing benefit of exemption Notifications have not been established. Consequently, invoking of extended period is also not justified. Since, the issue on merit i.e. admissibility of exemption notification has been decided in favour of the assessee, the entitlement of CENVAT Credit on duty paid inputs becomes academic and hence not deliberated. Thus, the appellants succeed both on merit as well as on limitation - appeal allowed. Issues Involved:1. Eligibility for exemption under Notification No. 6/2006-CE and 12/2012-CE.2. Validity of the demand based on the extended period of limitation.Summary:Issue 1: Eligibility for Exemption under Notification No. 6/2006-CE and 12/2012-CEThe appellants, manufacturers of parts and accessories for buses, claimed exemptions under Notification No. 6/2006-CE and 12/2012-CE. The department argued that the ownership of the chassis remained with the chassis manufacturer, VIPL, thus disqualifying the appellants from the exemptions. The appellants contended that they purchased the chassis from VIPL, paid applicable VAT and excise duty, and did not avail of Cenvat credit on these inputs. They argued that the sale of chassis transferred ownership to them, fulfilling the conditions for exemption.The Tribunal examined the concept of 'ownership' and concluded that the appellants and VIPL are independent legal entities. The sale of chassis from VIPL to the appellants transferred ownership, and the appellants undertook body-building activities on their own behalf. The Tribunal found that the relationship between VIPL and the appellants, being part of the same group, did not affect the transfer of ownership. Therefore, the appellants were eligible for the exemptions under the said notifications.Issue 2: Validity of the Demand Based on Extended Period of LimitationThe Tribunal noted that the appellants had informed the department about their activities and sought registration, which was not required for exempted goods. The department was aware of the appellants' operations since 2008, and investigations were conducted in 2010 without raising objections. The Tribunal held that there was no suppression of facts by the appellants, and thus, the invocation of the extended period of limitation was unjustified.Conclusion:The Tribunal set aside the impugned order, allowing the appeals with consequential relief, affirming the appellants' eligibility for the exemptions and ruling out the extended period of limitation.