Excise duty on body-built buses cannot be levied twice when independent manufacturers already paid duty on the finished vehicles.

Excise duty on motor vehicles is chargeable on manufacture by the actual manufacturer, not on a later depot sale by the chassis supplier. Where duty-paid chassis were sent to independent body builders who completed the buses and discharged duty on the finished vehicles, the original supplier could not be treated as the manufacturer again merely because it sold the buses through its depots. The depot invoice price, which reflected trading margin and other post-manufacturing additions, could not be adopted as the assessable value for a second levy on the same completed vehicle. On the same basis, the suppression allegation and related penalty had no sustainable foundation.

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Issues: (i) Whether the appellants, who cleared duty-paid chassis and sold the completed buses from their depots after body building by independent body builders, could again be treated as the manufacturers of the completed motor vehicles for excise duty purposes; (ii) Whether the invoice value charged by the appellants on sale of the completed buses from their depots could be taken as the assessable value so as to levy duty a second time; (iii) Whether the demands, suppression finding, and penalty were sustainable.

Issue (i): Whether the appellants, who cleared duty-paid chassis and sold the completed buses from their depots after body building by independent body builders, could again be treated as the manufacturers of the completed motor vehicles for excise duty purposes?

Analysis: Excise duty is attracted on manufacture, not on ownership or subsequent sale. The chassis were separately manufactured goods on which duty had already been paid. The body builders were independent manufacturers with approved classification and price lists, and there was no finding that they were dummy or benami units. Once the completed motor vehicle emerged at the hands of such independent body builders and duty was paid thereon, the appellants could not be treated as manufacturers of the same completed vehicle merely because the vehicle was later sold through their depots.

Conclusion: The appellants were not liable to be treated as the manufacturers of the completed buses at the depot-sale stage, and the further duty demand on that basis was unsustainable.

Issue (ii): Whether the invoice value charged by the appellants on sale of the completed buses from their depots could be taken as the assessable value so as to levy duty a second time?

Analysis: The invoice value represented the appellants' trading margin, service charges, and other post-manufacturing additions. Such post-manufacturing profit is not part of the assessable value for excise. The body builder had already discharged duty on the completed motor vehicle, and the Revenue could not revalue the same goods and levy duty again merely because the appellants resold them at a higher price. The scheme of excise law and the settled principle that trader's profit is not includible in assessable value barred such double levy.

Conclusion: The invoice value of the depot sale could not be adopted to impose a second excise levy on the same completed motor vehicle.

Issue (iii): Whether the demands, suppression finding, and penalty were sustainable?

Analysis: The material on record showed departmental awareness of the clearances and of the body-building arrangement. In the absence of any sustainable basis for treating the body builders as facades or for alleging concealment of the true manufacturing activity, the finding of suppression could not stand. Once the substantive demands failed, the penalty based on the same foundation also had no legs to stand on.

Conclusion: The findings of suppression and the penalty were not sustainable.

Final Conclusion: The demands on the completed buses, the suppression finding, and the penalty were set aside, and the assessee succeeded while the Revenue appeal and cross-appeal failed.

Ratio Decidendi: Excise duty is chargeable only on the goods as manufactured by the actual manufacturer, and where an independent body builder has already manufactured and cleared the completed vehicle on payment of duty, the original chassis manufacturer cannot be subjected to a second levy on the later depot sale price, which includes only post-manufacturing trading additions.

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