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

Excise Duty and Service Tax on Bus Body Building: Key Scenarios and Applicable Notifications Explained A discussion on the applicability of Central Excise and Service Tax on bus body building activities highlights two scenarios. For Original Equipment Manufacturer (OEM) supplies, Notification 214/1986 applies, with excise duty payable by OEMs upon returning fully built vehicles. For private bus fleet owners, excise duty may be exempt under Notification 12/2012-CE if mounted on a duty-paid chassis. Service Tax is not applicable as the activity qualifies as manufacturing under Chapter 87 of CETA, falling under negative services per Section 66D(f) of the Finance Act, 1994. Another opinion suggests excise duty applies under Chapter 87 of the Central Excise Tariff Act, 1985.