Levy of Central Excise / Service tax on Bus Body Building Activity

[Narasimha Murthy]

Whether Central Excise / Service tax is applicable on Bus Body Building Activity - Kindly note that bus bodies are constructed on chassis supplied by

a. OEM's to whom the fully built vehicles will be delivered back and OEMs would be final sellers of the vehicles.

b. private bus fleet owners who purchase the Chassis in their own name and deliver it to the assessee for body construction.

[B. Naga Rami Reddy]

In case of OEM supplies, job work notification 214/1986 applies and excise duty will be discharged by the OEMs on returning the fully built vehicles back to their factory. However, in case of private bus fleet owners , excise duty is exempted in my personal view under Notification No. 12/2012-CE(Sl.No. 334) if the same is mounted on duty paid chassis as per condition No. 40 of the Notification..

Coming to Service Tax applicability, the same is also not payable as the process of building a body on cassis amounts to manufacture as per chapter note 5 of Chapter 87 of CETA.When the activity amounts to manufacture, the service falls under list of negative service under Section 66D(f) of the Finance Act,1994.

[Mahir S]

Sir,

In both the above cases, Central Excise duty shall be applicable under chapter heading 87 of the Central Excise Tariff Act, 1985.

AI Summary

Manufacture classification for bus body building may negate service tax and render excise liability under tariff heading. Whether Central Excise and Service Tax apply to bus body construction on supplied chassis depends on the recipient: for OEM returns the work is treated as job work with excise discharged by the OEM; for private fleet owners an excise exemption may apply where bodies are mounted on duty paid chassis and conditions are satisfied. Building a body on a chassis is characterised as manufacture under tariff notes, placing the activity within the negative list for services and excluding service tax, although an alternative view asserts excise liability under the applicable tariff heading.