AI Drafter 
TaxTMI 
TaxTMI 
2022 (9) TMI 5
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..... dated 1.3.2006. 2.2 Upon physical examination 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....
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....g authority is not correct to that extent and accordingly bodies coming into existence during 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 t....
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....chassis and then fixed thereon. In both cases, the major process of manufacture is the same and the bodies have the same functional 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 t....
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....opriately classified under 8707 and exemption under Notification No.67/95 is not admissible to the respondents and appeal deserves to be allowed. 3.3 Arguing for the respondent learned counsel submitted: • New Grounds now 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 buildi....
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....cise duty in terms of proviso to Notification No. 67/95-CE dated 16.03.95. However, the noticee vide their letter dated 12.08.2009 contested that they had manufactured only 15 Tipper Bodies under CSH 87042290 involving alleged Central Excise duty of Rs. 3.44.168/- while 67 number of said to be Tippers number of said to be Tipper bodies were in fact Garbage Compactor for "Special purpose vehicle" under CSH 87059000 involving alleged 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 G....
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....ter receipt of the chassis along with engine the specific sub- frames are fixed with welding and nut bolting to the chassis. Then the flooring of the Body as required by the customer is mounted on the chassis which is mounted on the single pivot so that the whole body can be made from the horizontal position to vertical position. Cabin side slip is then welded to the floor and front side and rear side are mounted on the floor. Thereafter, screw jack and other accessories such as mud guard for rear wheels, Diesel Tank guard are welded / fitted to the chassis and truck is then painted and dispatched. There are two types of bodies manufactured by the noticee viz. fixed cargo body (other than tipper Body) as per drawing and design of their customers, such as Tata, Mahindra etc. where the body is 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 bod....
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....nd what emerges then is complete vehicle. Body as independent identity does not come into existence as distinct product." 17. in view of the above firstly, w.r.t the issue of classification of the Tipper Body under 87079000 as proposed in the show cause notice, I observe that the allegation of a body coming into existence first and then being fitted on the chassis is neither substantiated and nor corroborated. On the contrary, the Chartered Engineer's certificate and the process of manufacture submitted by the jurisdictional Central Excise Division confirms that the process of manufacture of Tipper Bodies / Garbage Compactor, on the duty paid chassis, is done piece by piece in an integrated manner and in such cases the Tipper body/ Garbage Compactor is inseparable from the said chassis. Therefore, ! hold that the that the Tipper bodies/ Garbage Compactor 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 ....
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....assis, I find that question of applicability or otherwise of notification No. 67/95-CE dated 16.03.95 does not arise. Further, I agree with the contention of the noticee that the activity of body building on motor vehicle is squarely covered by exemption Notfn.No.6/2006-CE dated 1.3.2006 (Sr.No.39), since building of body on duty paid chassis is an integrated activity and results in manufacture of motor vehicle. I observe that the Chapter Note-3 to Chapter 87 introduced w. e. f. 1.3.2001 specifically regards such an activity to be "manufacture", where motor vehicle emerges out and same is physically cleared, therefore the question of assessing the same as body having been manufactured and cleared independently is incorrect. In view of above, I hold that these Tipper Bodies have been rightly classified by the noticee under CSH 870422290 and have been correctly cleared without payment of duty by claiming Notfn. No. 6/2006-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 veh....
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....n this para. Commissioner has considered this para and recorded her findings in para 17. It is observed that Commissioner has for arriving at her findings referred to the report received from the division office and also the Chartered Engineer Certificate. Commissioner has found that the report received from the division office was not in accordance with the allegation made in para 2, based on physical examination of manufacturing process. It is also observed show cause notice also do not rely on any report prepared for such physical examination and make it a relied upon document for issuance of the show cause notice. So to clarify on the basis of the show cause notice we had sought clarification from the from the concerned authorities as to existence of any such physical verification report. In response to our query, Assistant Commissioner (L & T) Central Tax Pune -I Commissionerate has replied vide F No PIII/ TC-967/2012 dated 14th July 2022 stating as follows: "In this connection, it is found 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 abse....
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.... such equipment was a fixture on the chassis, there would be merit in the other argument of the appellants that the equipment was entitled to full exemption under either of the notifications Nos. 167/79-C.E., dated 19-4-1979 and 118/75-C.E., dated 30- 4-1975. The first notification exempted parts of motor vehicles falling under Item 68 which were intended for use in further manufacture of excisable goods. The second notification was wider in its scope as it exempted all goods falling under Item 68, other than complete machinery meant for producing or processing any goods, which were intended for use in the same or another factory of the manufacturer. The specialized equipment was. no doubt, not a motor vehicle part in the conventional sense nor were the appellants going to use the specialised vehicle in their factory, as argued by the learned representative of the department. But since the legal fiction created by the Tariff Entry 34 treated the composite specialised vehicle as a motor vehicle, any part of such a vehicle 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, the....
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....a fixture of the specialized vehicle, there was no question of removal of the specialized equipment as such for the purposes of Rules 9 and 49 of the Central Excise Rules, 1944. 6. In the case of Maniar & Company v. CCE reported in 2000 (119) E.L.T. 418 (Tri.), the Tribunal has observed as under :- "The appellants were manufacturing the product named as dumper placer. The said product has hydraulic equipment fitted on the duty-paid chassis for carriage of containers for evacuating the garbage or refuge. The containers for collecting the garbage are placed on different places in the cities and the dumper placer are used for transportation of garbage containers. The garbage, as such, is not transported by the dumper placer. The appellants also produced the product literature which shows that the garbage was collected in the containers which are placed at various collection points and the dumper placer gripped firmly and safely the loaded container, transport it to the dumping site and then the container is tipped to discharge its load and thereafter the garbage containers were placed again at various collection points to collect the garbage. The Tariff Heading 87.04....
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....under Chapter Heading 87.05. 8. We are in agreement with the view taken by the Commissioner while considering the issue in detail and also hold that the vehicle in question is classifiable under Chapter Heading 87.05 of the Central Excise Tariff Act, 1985. In the case of Maniar & Company (supra), it was held that the assessee was eligible for the benefit of exemption Notification No. 162/86-C.E., dated 1-3-1986. Hence, the respondent is also eligible or the benefit of the said exemption. Accordingly, giving the benefit of that exemption, the respondent is liable to pay any duty. With these terms, we hold that there is no infirmity in the order passed by the Commissioner and the same is upheld. The appeal filed by the Revenue is rejected." 4.6 In their appeal revenue has relied upon the following decisions: i) Darshan Singh Pavitar Singh [1988 (34) ELT 631 (P & H)] ii) Ram Body Builder - 1997 (94) ELT 442 (S.C.)] iii) Kamal Auto Industries - 2000 (121) ELT A70 (S.C.). The decision of Punjab and Haryana High Court in case of Darshan Singh Pavitar Singh Ram Body Builder was rendered in the context of Tariff as it stood prior to 25.7.1991 when ....
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....nts that the show cause notice only alleged that these goods were classifiable under sub-heading 87.01 to 87.05 that specific sub-heading was not mentioned in the show cause notice, for the purpose of classification specific heading is needed. We also observe that the Collector (Appeals) has observed that in terms of Chapter Note 4 under Chapter 87 there is no doubt that building bodies on chassis leads to manufacture of motor vehicles and that such products would be classifiable under Headings 8701 to 8705 depending on the nature and use of the motor vehicles produced and not under Heading 8707. We also observe that the Collector (Appeals) has held that as far as the issue of exact sub-heading raised by the assessee is concerned, once the decision has been taken to exclude the goods produced from 8707, the rest is a matter of working out details, the individual details of each and every item produced by the assessee can be worked out. 8. On examination of the observations of the Collector (Appeals) and the contentions of the appellants we find that no doubt Chapter Note 4 of Chapter 87 was introduced in 1991. This Chapter Note talks about the goods classifiable under Chap....
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....fied as follows: "I am directed to say that on dismissal of Department's appeals by Supreme Court on 2-9-1997 in the case of CCE v. M/s. Ram Body Builders [1997 (94) E.L.T. 442 (S.C.)], various references have been received for a clarification regarding the Department's stand on classification of body built on duty paid chassis by the independent body builders. 2. The main question under consideration in these appeals was whether the bodies so manufactured are classifiable under Heading No. 87.07 or Heading Nos. 87.02 to 87.05. The Supreme Court in the above referred case has held that the bodies which are built on chassis supplied by the customer would fall under Heading No. 87.07. 3. The matter has been examined and it has been observed that the Hon'ble Supreme Court's decision in the cases is confirmed to the period prior to 25-7-1991 i.e. before insertion of Note 4 (later renumbered as Note 3) to Chapter 87 of CETA, 1985. The apex court, thus, has not given any ruling in respect of the classification, after the insertion of the said Chapter note and thus the classification on and after 25-7-1991 would be governed by the said Chapter note. It has howev....
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....87.04 and not applicable to 87.07. Similarly, he has examined the Notification 6/2002-C.E. and given a finding that the same is not applicable to CH 87.07. The appellants claimed that they would be entitled for the SSI Exemption. This point also has been examined by the lower authorities. There is a finding in Para 11 that during 1999-2000, the appellants had cleared 251 bus bodies valued at Rs. 6.25 crores. As they had exceeded the exemption limit of Rs. 3 crores, they would not be entitled for exemption. This point has not been properly countered by the appellant." We do not find any dispute with the preposition that has been advanced in the present case. However applicability of the said decision has to be determined vis a vis the fact of present case. In the case of garbage compactor, Commissioner has held the same to be classifiable as special purpose vehicle and hence held them to be exempted in terms of notification no 6/2006-CE, and in case of tippers she has based her findings on the basis of the verification report given by the jurisdictional officers and the chartered engineer certificate. Hence we find that the said decision is clearly distinguishable. 4.8 In para....