TaxTMI 
TaxTMI 
2022 (9) TMI 5
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....ation of the manufacturing process, it was observed that the respondent first manufactures tipper body on stands/stools, separately by cutting and fabrication resulting in manufacture of the body having the essential character of body for carrying goods. The respondent further completes and finishes the body by painting etc. on the stands itself. These bodies are thereafter, assembled on the main chassis of motor vehicles to complete the motor vehicle. The essential characteristics of the body/tipper truck are to hold or contain the stored goods. This fabricated body, in view of revenue, was to be correctly classifiable under CH 8707 under sub-heading 87071000 for the vehicle of heading No.8703 and under heading No.87079000 for other vehicles. 2.3 The bodies so manufactured are captively used in manufacture of exempted products namely Motor Vehicles for transport of goods, exempted vide Notfn.No.6/2006-CE dated. 1.3.2006. Therefore the exemption contained in Notfn.No.67/95 dated 16-3-95 as amended is not available to the captively consumed bodies as the final products manufactured out of these bodies are fully exempted from payment of Central Excise duty. 2.4 Thus Show Cause Noti....
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....g the course of manufacturing of motor vehicle by the noticee are classifiable under chapter 8707 10 00 / 8707 90 00. * The adjudicating authority in the impugned order failed to follow the precedence that the body building on the duty paid chassis amounts to manufacture of 'Body' classifiable under chapter 8707 of the CEATA 1985. The Hon'ble Supreme Court in the case of CCE Vs Ram Body Builder - 1997 (94) E.LT 442 (S.C.) held that "bodies which are built on chassis supplied by the customers would fall under Heading No. 870 ore ETA 1985". The same view was affirmed by the Hon'ble Apex court again in case of Collector Vs Kamal Auto Industries - 2000 (121) E.LT A70 (S.C.), while being revenue's plea on the question of validity of decision of the Tribunal after insertion of Chapter Note mandating building a body on the chassis shall amount to manufacture Motor Vehicle. Therefore it is conclusively settled that body building on chassis and to manufacture of a product called "BODY" classifiable under chapter heading on The adjudicating authority therefore failed to appreciate the fact that body building the chassis amounts to manufacture of distinct excisable goods....
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....utility. The distinction drawn by the learned counsel between the two types of bodies mentioned above is without any merit and it simply does not exist.... ". The ratio of the said judgement is squarely applicable in the present case so far as separate treatment given by the adjudicating authority to the bodies built adjudicating authority to the bodies built on and off the chassis is concerned. Therefore the findings of the adjudicating authority holding that the body does not come into existence when manufactured on the duty paid chassis is not legal and proper. * In view of the above it is apparent that the body building on duty paid chassis in the present case amounts to manufacture of 'excisable goods' as stipulated under Section 2(f) of the Central Excise Act 1944, and therefore liable for levy of duty. The body built by the Noticee is being removed for captive consumption in the manufacturing of "Motor Vehicle" (a final product). There is no dispute that the final products viz. 'Motor Vehicle' of different types cleared by the Noticee attract 'NIL' rate of central excise duty in terms of Notification 6/2006-CE dt 1/3/2006. The Notification 67/95-C....
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....w raised by Revenue in their appeal are not "arising out of the Order in-Original passed by the Commissioner of Central Excise, Pune - III. Hence, such new grounds cannot be raised in the appeal filed under Section 35E(1) read with Section 35E(4). * Issue involved in the present case is squarely covered by the decision of Indian Hydraulic Industries [1988 (37) ELT 213 (T.)] affirmed by the Supreme Court vide its judgement reported at [2000 (121) ELT 17 (S.C.)] Hence, the issue is no longer res integra. * For prior period, Revenue has dropped proceedings initiated against the Respondents on the very same issue. Such proceedings have attained finality. * Detailed report of the jurisdictional Range Superintendent of Central Excise regarding activity of body building on chassis carried out in factory of the Respondents. * Independent Chartered Engineer's certificate regarding activity of body building on chassis carried out in factory of the Respondents. * Note 5 to Chapter 87 clearly provides a deeming provision that fabrication of bodies on chassis would amount to manufacture of motor vehicle'. * For filing the appeal revenue has relied upon the following decision....
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....lleged of Rs. 73,68,311/-. Accordingly, a report on the matter was sought from the jurisdictional Central Excise Division, who vide letter dated 19.11.09 confirmed that during the period June, 08 to March, 2009 the noticee had manufactured 15 number of Tipper Bodies and 98 mm Compactors, the month- wise details of which are as under: Month No. of Vehicles cleared Type of vehicles A.V. (Rs.) Rate of duty C. Ex. Duty (Rs) Ed. Cess + SHE Ed. Cess (Rs.) June 08 21 Garbage Compactor 12600000 14% 764000 52920 0 Tipper Body 0 0 0 0 July 08 10 Garbage Compactor 8750000 14% 1225000 36750 0 Tipper Body 0 0 0 0 August 08 15 Garbage Compactor 11625000 14% 1627500 48825 0 Tipper Body 0 0 0 0 Septembe r 08 19 Garbage Compactor 16490000 14% 2308600 69258 0 Tipper Body 0 0 0 0 October 08 0 Garbage Compactor 0 0 0 0 0 Tipper Body 0 0 0 0 November 08 1 Garbage Compactor 990000 14% 138600 4158 5 Tipper Body 435000 14% 60900 1827 December 08 1 Garbage Compactor 900000 10% 90000 2700 0 Tipper Body 0 0 0 0 January 09 0....
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.... built on stands and painted and cleared to their vendors on payment of duty. In this case, no chassis is required for fitting such body which is fitted subsequently in the Vendors' factory. In other case, where Tipper Body is manufactured, which requires chassis, on which process mentioned above takes place. Since, in the case of Tipper Bodies it will not be possible to manufacture bodies separately and ten mount it on chassis, as the different components such as sub-frames, screw jacks are to be fitted to the chassis, and the mechanism of tilting of the Body is to be fitted on the chassis and controlling part is to be fitted in the cabin of the chassis.' 'Garbage Compactor The process of manufacturing of 'Garbage Compacter' vehicles is as under: (a) The poor for Garbage Compactor Body is prepared on the chassis by fixing Runners on the chassis with the side plates, packing of runner and cross member. The floor sheets are fixed with tack welding process. (b) Different type of components such as compacting unit, bin lifter, ejector plate etc. are mounted on the floor. (c) Power used for working of the compactor is derived from vehicle engine by modifying t....
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....actor mounted/ fabricated on the chassis supplied by customers cannot be said to be classifiable under CSH 87079000 as has been proposed in the show cause notice. 18. Further, I find that out of the 82 Tipper Bodies, as mentioned in the impugned show cause notice, 67 numbers were Garbage Compactors, classifiable as per the notice CH 8705, which reads as below: "Special Purpose Motor Vehicles, other than those principally designed for the transport of persons or goods (for example, breakdown lorries, crane lorries, fire fighting vehicles, concrete mixers lorries, spraying lorries, mobile work shops, mobile radiological units)". From this description I find that all motor vehicles which house an equipment to carry out a defined function have been regarded as "special purpose vehicle". The special purpose vehicle manufactured in the Instant case by the noticee is for garbage / waste collection transportation. Noticee as well as the jurisdictional Central Excise Division has explained the manufacturing process of the said Garbage Compactors and I find that these are mounted/ fixed on the duty-paid chassis in a piece by piece manner and the process is an integrated process where s....
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....-CE.dated 01.03.06 (Sl. No. 39 read with condition No. 9), which reads as below: TABLE S. No. Chapter or heading or sub heading or tariff item of the First Schedule Description of excisable goods Rate Condition No 39. 87 (i) Motor vehicles principally designed for the transport of more than six persons, excluding the driver, including station wagons; and (ii) Motor vehicles for the transport of goods (other than those specially designed for the transport of compressed or liquefied gases), falling under heading 8704; and (iii) three wheeled motor vehicles Nil 9* *9 If manufactured out of chassis falling under heading 8706 on which duty of excise has been paid and no credit of duty paid on such chassis and other inputs used in the manufacture of such vehicle has been taken under rule 3 or rule 11 of the CENVAT Credit Rules, 2002: Provided that this exemption is not applicable to a manufacturer of said vehicles (a) who is manufacturing such vehicle on a chassis supplied by a chassis manufacturer, the ownership of which remains vested in the chassis manufacturer or the sale of the vehicle SO manufactured is made by suc....
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....und that no such report of physical examination of manufacturing process or other documents viz Panchanama etc., is present in the records available in the Commissionerate." In absence of any such verification report of the manufacturing process at the time of issuance of the Show Cause Notice, the entire basis for the issue of show cause notice fails. The appeal can be disposed on this short point itself. Thus the findings recorded by the Commissioner on the basis of the subsequent report called during the adjudication proceedings and Chartered Engineer certificate cannot be disputed. 4.4 Be that as it may be we consider the appeal on the merits. The issue in respect of classification of the "Garbage Compactors" was considered by the tribunal in case of Hydraulic Industries (P) Ltd. Vs. CCE [1988 (37) ELT 213 (T.)] and the tribunal has held as follows: "4. If the specialised equipment were to be assembled first as such and then mounted on the chassis, one could say that an identifiable article, not elsewhere specified, had come into being which had a definite utility, value and demand in the market and hence its assessment under Item 68, prior to its removal for mounting on th....
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....le could not be denied the status of a motor vehicle part. Similarly, though the appellants were not going to use the specialised vehicle itself in their factory, they were to use the specialised equipment, which is the bone of contention before us, for mounting on the chassis. The department cannot reasonably plead that while the fact of step by step mounting of the equipment and the equipment being a fixture on the vehicle could be ignored for the purpose of levy under Item 68, it could not be ignored for the purpose of exemption notifications under the same tariff item." This decision has be upheld by Hon'ble Apex Court as reported at {2000 (121) ELT 17 (SC)] stating as follows: "It was found as a fact that the respondents fit, part by part, specialised equipment on to a motor vehicle chassis so as to produce the sort of specialised motor vehicle that is commonly seen at airports and the like. Finding that the specialised equipment had not been assembled first and then mounted onto the chassis, the Tribunal referred to Explanation II of Item 34 of the erstwhile excise tariff, which was applicable, and held that the authorities below had been in error in seeking to levy excis....
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....r the garbage containers were placed again at various collection points to collect the garbage. The Tariff Heading 87.04 of the Central Excise Tariff covers the motor vehicles for transport of goods. After taking into consideration the facts of the present case, it cannot be said that dumper placer is used for transport of goods. The Revenue has not produced any evidence to show that this dumper placer can be used for other purpose than the collection of containers of garbage or refuge. As the dumper placer is not a motor vehicle for transport of goods, it is not covered under Heading 87.04 of the Central Excise Tariff. The Tariff Heading 87.05 of the Central Excise Tariff covers special purpose motor vehicles other than those pre-designed for transport of persons or goods. As the dumper placer is not a motor vehicle for transport of goods or person, it is, therefore, classifiable under Heading 87.05 of the Central Excise Tariff. In respect of Notification No. 162/86, Sl. No. 11 covers special purpose motor vehicle falling under Heading 87.05 of the Central Excise Tariff and it is provided in the notification that these special purpose motor vehicles are liable to nil rate of duty ....
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....uilder was rendered in the context of Tariff as it stood prior to 25.7.1991 when there was no Chapter Note to Chapter 87 deeming the activity of body building on chassis as amounting to manufacture of motor vehicle. From 25.07.1991 Chapter Note 3 as follows was inserted in the Chapter 87: "For the purpose of Headings 87.01 to 87.05, the activity of body building or fabrication or mounting or fitting of structures or equipment on the chassis shall amount to manufacture of motor vehicle." Examining this chapter note in case of Kamal Auto Industries Tribunal observed as follows: "6. In the case before us, bodies built on the chassis fitted with the engine for motor vehicles are classifiable under Chapter Heading 87.06. The Chapter Heading 87.07 is for bodies (including cabs) for the motor vehicles of Heading Nos. 87.01 to 87.06. The Chapter Note stipulates that if bodies are built or fabricated or mounted or structure fitted (sic.) or equipment on the chassis of motor vehicles classifiable under Heading 87.01 to 87.05 shall amount to manufacture. This Chapter Note, therefore excludes the bodies built on chassis classifiable under Chapter Heading 87.06. In the instant case bodies ....
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.... Note talks about the goods classifiable under Chapter Heading 8701 to 8705 and not the goods classifiable under Chapter Heading 8707. It may be mentioned that description of the goods classifiable under Chapter Heading 87.06 or 87.07 is specific and distinct. The same goods falling under Chapter Heading 87.01 to 87.05 cannot be further classified under Chapter Heading 87.07. It may also be mentioned that for chassis fitted with engine of motor vehicles there is specific heading under Chapter Heading 87.06. We also observe that bodies built on duty paid chassis there is specific heading under Chapter Heading 87.07. Admittedly in the instant case the appellants only make bodies built over the duty paid chassis. Having regard to the fact that for bodies built over duty paid chassis there is a specific heading and in terms of Rules of interpretation, the specific entry is to be preferred over general entry. Entries against Chapter Headings 87.01 to 87.05 are general whereas entry against Chapter Heading 87.07 is specific. We also observe that Heading 87.07 is [modelled] on the basis of Entry No. 87.07 of the Harmonised Commodity Description and Coding System and this heading cov....
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.... note. It has however been observed that in the case of M/s. Kamal Auto Industries [1996 (82) E.L.T. 558], the Tribunal has given an interpretation that the insertion of the Chapter Note 3 does not alter the position in respect of bodies built on chassis fitted with engines, which remain classified under Heading No. 87.07. The department has not accepted the interpretation and has filed an appeal in the Supreme Court against the said order of the Tribunal. 4. In view of the above, it has been decided that while the Supreme Court's decisions in the case of Ram Body Builders shall be followed in respect of cases pertaining to the period before the insertion of Note 4 (later renumbered as 3) to Chapter 87 of the Schedule to Central Excise Tariff Act, 1985 in 1991, for the period after the insertion of the said note, the classification shall be governed by the said chapter note." In the present case we are concerned with the period after the insertion of the said chapter notes in the chapter 87 of the First Schedule to Central Excise Tariff Act, 1987 and as stated in the above circular the classification has to be determined as per the said chapter note and not by following the deci....