Automobile cess on chassis body building not leviable where no new manufacture of an automobile is created

Body building on a motor vehicle chassis does not amount to manufacture of a new automobile because the chassis does not become a fresh vehicle merely by addition of a body. The settled classification is under Heading 87.07, and the Board's circular clarified that no further cess is payable where body building is carried out on a cess-paid chassis. On that basis, automobile cess is not leviable on the activity, and the levy was set aside.

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Issues: Whether automobile cess is leviable on the activity of building body on a motor vehicle chassis.

Analysis: The activity of body building on chassis does not amount to manufacture of a new automobile. The vehicle chassis, by itself, does not give rise to a fresh automobile merely because a body is added. The settled classification is under Heading 87.07, and the Board's circular also clarified that no further cess should be levied where body building is done on a cess-paid chassis.

Conclusion: Automobile cess is not leviable on body building of a chassis.

Final Conclusion: The appeal succeeds and the levy of automobile cess on the impugned activity is set aside.

Ratio Decidendi: Body building on a motor vehicle chassis does not amount to manufacture of an automobile and, therefore, does not attract automobile cess.

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