Body building on duty-paid chassis falls under Heading 87.07, with small-scale exemption available under the excise notification.

Body building on duty-paid chassis was treated as not amounting to manufacture of a motor vehicle for Central Excise classification, so it was not assessable under Headings 87.02 or 87.04. The controlling view placed the activity under Heading 87.07, and exemption under Notification No. 175/86-C.E. dated 1-3-1986 was available where the prescribed turnover limit was not exceeded. The Tribunal followed the binding High Court precedent and the earlier Tribunal order adopting that view.

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Issues: Whether body building on duty-paid chassis is classifiable as manufacture of motor vehicles under Headings 87.02, 87.03 or 87.04 of the Central Excise Tariff Act, 1985, or falls under Heading 87.07 with eligibility for exemption under Notification No. 175/86-C.E. dated 1-3-1986.

Analysis: The classification of body building on duty-paid chassis had already been settled by the Punjab & Haryana High Court. The controlling view was that such body building does not amount to manufacture of a motor vehicle and therefore is not assessable under Headings 87.02 or 87.04. It was held to fall under Heading 87.07, and the benefit of Notification No. 175/86-C.E. dated 1-3-1986 was available where the prescribed turnover limit was not exceeded. The Tribunal followed that binding precedent and the earlier Tribunal order relying upon it.

Conclusion: The activity was held classifiable under Heading 87.07, exemption under Notification No. 175/86-C.E. was available, and the assessee was entitled to relief.

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