1995 (2) TMI 163 - AT - Central Excise

Tribunal orders Swaraj Mazda to deposit duty, grants waiver upon compliance

The Tribunal directed M/s. Swaraj Mazda Limited to deposit a specified amount within a stipulated time, granting a waiver of the remaining duty amount ... Manufacturer of chassis - contract manufacture / body builder as manufacturer - pre-deposit under Section 35F - stay of recovery of Central Excise duty - exemption under Notification No. 162/86-C.E., Serial No. 17 - claim of sickness / BIFR - stay conditioned on depositManufacturer of chassis - contract manufacture / body builder as manufacturer - exemption under Notification No. 162/86-C.E., Serial No. 17 - Whether the appellants are liable as manufacturers of the completed motor vehicle and whether the concessional exemption at Serial No. 17 applies to them - HELD THAT: - The Tribunal found on the material before it that the appellants manufacture the chassis and sell completed motor vehicles with the body built on their chassis; there is no sale of chassis to the body builder and ownership of the completed vehicle vests in the appellants. Their commercial records (production, stocks and licensed capacity measured in on-road automobiles) support this conclusion. In consequence the Tribunal observed that the specific concessional treatment at Serial No. 17 of the Table annexed to Notification No. 162/86-C.E., which applies where bodies are obtained from the market, does not, prima facie, extend to a manufacturer who gets the body built on its own chassis. The Tribunal refrained from making further definitive observations on merits because the matter is sub judice, but recorded that the case law relied upon by the appellants did not convincingly establish entitlement to full waiver of pre-deposit. [Paras 4, 6]The appellants are prima facie to be treated as manufacturers of the completed vehicles and the exemption under Serial No. 17 does not, on the material before the Tribunal, appear to apply to them.Pre-deposit under Section 35F - stay of recovery of Central Excise duty - stay conditioned on deposit - Whether the appellants' stay applications should be allowed and, if so, on what terms regarding pre-deposit and stay of recovery - HELD THAT: - Balancing the contentions, the Tribunal accepted that the issue was contentious and could be finally decided only after full hearing. Taking into account the appellants' financial position, past interim directions in related proceedings and the overall circumstances, the Tribunal exercised its power under Section 35F to grant relief subject to a specified pre-deposit. The Tribunal directed the appellants to deposit a part of the duty demanded within a stipulated period, and provided that upon such deposit the requirement to pre-deposit the balance would be waived and recovery stayed until disposal of the appeals. The Tribunal also made clear that failure to comply would automatically vacate the stay and render the appeals liable to dismissal. [Paras 5, 8]Stay applications allowed in part: appellants directed to deposit the specified sum within the time ordered; on such deposit the balance pre-deposit waived and recovery stayed pending disposal of the appeals, non-compliance to result in automatic vacatur of stay and possible dismissal.Claim of sickness / BIFR - pre-deposit under Section 35F - Whether the appellants' status as a sick unit justifies dispensing with the requirement of pre-deposit - HELD THAT: - The Tribunal examined the appellants' financial disclosures and BIFR reference. It noted that the appellants had collected from customers more for the body-built vehicle than what they paid to the body builder, and that prima facie excise duty paid by the body builder may be available as credit to the appellants. The Tribunal further observed improvements in turnover between consecutive years and minutes of the BIFR meeting indicating steps for indigenisation and cost savings. Relying on precedent that sickness alone does not automatically dispense with duty payments, the Tribunal did not accept the sickness plea as ground for full waiver of pre-deposit. [Paras 6, 7]The plea of being a sick unit does not justify full waiver of the pre-deposit; it is not a ground for dispensing with the deposit ordered.Final Conclusion: The Tribunal directed the appellants to make a specified partial pre-deposit within the time ordered; upon compliance the balance pre-deposit was waived and recovery stayed until disposal of the appeals, while findings on manufacturer status and inapplicability of the Serial No. 17 concession were recorded and the claim of sickness was held insufficient to justify full waiver. Issues:1. Stay applications under Section 35F of the Central Excises and Salt Act, 1944 filed by M/s. Swaraj Mazda Limited challenging the order-in-original passed by the Collector of Central Excise, Chandigarh.2. Whether the appellants are liable to pay Central Excise duty on the completed motor vehicles with body built on the chassis.3. Applicability of the exemption under Serial No. 17 of the Table annexed to Notification No. 162/86-C.E., dated 1-3-1986 to the manufacturer of chassis used in public transport type passenger motor vehicles.4. Consideration of the appellants being a sick unit and their financial position.Analysis:1. M/s. Swaraj Mazda Limited filed 8 appeals challenging the order-in-original passed by the Collector of Central Excise, Chandigarh, and also filed stay applications under Section 35F of the Act seeking waiver of pre-deposit of Central Excise duty amounting to Rs. 2,39,65,986.89. The appellants argued that they were only acting as traders in the body building activity and relied on legal precedents to support their position.2. The appellants contended that they were manufacturers of motor vehicle chassis and sold completed vehicles with body built on their chassis. The Revenue argued that the sale was of the completed vehicle and not the chassis, and the exemption under Notification No. 162/86-C.E. was not applicable to them as manufacturers of chassis used in public transport type passenger motor vehicles.3. The Tribunal observed that the sale was of the completed motor vehicle with the body built on the chassis produced by the appellants. The Tribunal also noted the financial position of the appellants and directed them to deposit Rs. 1,20,00,000 out of the total duty amount within a specified time, granting a waiver of the balance amount subject to compliance.4. The Tribunal considered the appellants' plea of being a sick unit but emphasized that the duty payments were not dispensable based on their financial status. The Tribunal's decision was based on a holistic assessment of the facts and circumstances, balancing the interests of the appellants and the Revenue.5. In conclusion, the Tribunal directed the appellants to deposit a specified amount within a stipulated time, granting a waiver of the remaining duty amount subject to compliance. Failure to adhere to the order would result in the automatic vacation of the stay order and possible dismissal of the appeals.This detailed analysis provides a comprehensive overview of the issues raised in the judgment and the Tribunal's reasoning behind its decision, considering both legal arguments and factual circumstances.