Custom, Excise & Service Tax Tribunal
M/S.Jcbl Ltd. (Unit-Ii) & (Unit-I) vs Cce & St, Chandigarh-Ii/Cce, Delhi on 7 September, 2015
THE CUSPTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI
Date of Hearing/ Decision:07.09.2015
Excise Appeal No.1249 and 1254 of 2012-EX(DB)
[Arising out of Order-in-Appeal No.71-74/CE/Appl/Chd-II/2012 dated 14.02.2012 passed by the Commissioner of Central Excise, Service Tax & Customs, Chandigarh-II]
M/s.Jcbl Ltd. (Unit-II) & (Unit-I) Appellants
Vs.
CCE & ST, Chandigarh-II/CCE, Delhi Respondent
Appearance:
Rep. by Shri B. L. Narsimhan, Advocate for the appellant.
Rep. by Shri Govind Dixit, AR for the respondent.
For approval and signature:
Honble Shri Ashok Jindal, Member (Judicial) Honble Shri B. Ravichandran, Member (Technical) 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3 Whether Their Lordships wish to see the fair copy of the Order? 4 Whether Order is to be circulated to the Departmental authorities? Coram: Honble Shri Ashok Jindal, Member (Judicial) Honble Shri B. Ravichandran, Member (Technical) Final Order Nos.52854-52855/2015 dated:07.09.2015 Per Ashok Jindal:
The appellant has filed these appeals against the impugned orders demanding education cess and imposing penalty thereon.
2. The facts of the case are that the appellant is engaged in the manufacture of buses/fabrication of bus bodies on duty paid chassis supplied by M/s. Eicher Motors and others. The appellant was paying automobile cess on the body building manufacture till 2005 but stopped paying automobile cess thereafter on the insistence of chassis suppliers, who had already paid automobile cess on the value of the chassis in terms of CBEC Circular No.48/88 dated 31.08.88. The appellant filed refund claims before the Department for automobiles cess paid during earlier period. Subsequent to that in view of Chapter Note 5 to Chapter 87 in the Central Excise Tariff Act, 1985, the body building activity was considered to be amounting to manufacture. Therefore, as per Revenue, automobile cess was required to be paid by the appellant. In these circumstances, show cause notices were issued to the appellant for demanding automobile cess along with interest and penalties were also proposed. The demands alleged in the show cause notice were confirmed along with interest by the adjudicating authority and penalties were dropped. Against the said order, both the sides filed appeals before the Commissioner (Appeals), the department against dropping the penalty by the adjudicating authority and the appellant against the order of demanding automobile cess from the appellant. The ld. Commissioner (Appeals) confirmed the demand along with interest and also imposed penalty on the appellant. Aggrieved from the said orders, the appellant is before us.
3. Shri B.L. Narsimhan, ld. Counsel for the appellant submits that the issue is squarely covered by the decision in the case of Tata Motors Ltd. Vs. CCE, Pune-III reported in 2014 (310) ELT 153 (Tribunal-Mumbai), therefore, the issue no longer res integra and consequently, the appeals be allowed.
4. On the other hand, ld. Authorised Representative opposed the contention of the ld. Counsel and submits that in the case of Tata Motors Ltd. (supra), this Tribunal has relied on the CBEC Circular No.41/88 dated 31.08.1988 but the same is not applicable to the facts of this case as in this case, the automobile cess was sought to be demanded from the appellant after introduction of Chapter Note 5 of Chapter Note 87 of the Central Excise Tariff Act, 1985. As per Chapter Note 5 of Chapter Note 87 of CETA, the activity of the body building amounts to manufacture. Therefore, the Circular dated 31.08.1988 has lost its relevance and the Chapter Note 5 of Chapter 87 was introduced later. He further submits that Rule 2 (f) of the Automobile Cess Rules, 1984 clearly lays down that, words and expression used in this Rule and not defined in these Rules but defined in Central Excise Act, 1944 or the Rules made thereunder shall have the meaning respectively assigned to them in that Act or the Rules, therefore, the word manufacture in Section 9(1) of the Industries (Development and Regulation) Act, 1951, one has to look into the definition of Central Excise Act, 1944. Therefore, the appellants are the manufacturer of the automobiles as per Chapter Note-5 of the Chapter Note 87 of CETA and as per the Automobiles Cess Rules,1984, the manufacturers of automobiles are required to pay cess. In that sense, the appellant are required to pay automobile cess on their activity and the CBECs Circular has no relevance to that. In these circumstances, the impugned orders are to be upheld.
5. Heard the parties. Considered the submissions.
6. In this case, a short issue before us is whether the appellant being job worker i.e. manufacturer of body building is required to pay automobile cess or not as per Automobile Cess Rules, 1984 read with Industries (Development and Regulation) Act, 1951 or not. We find that CBEC issued a Circular no.41/88 dated 31.08.1988, which is reproduced as under:-
Circular No.41/88 dated 31st August, 1988 Cess on automobile not to be levied again in case the body on the chassis is built by an independent body builder Subject:- Levy of Cess on automobiles consequent upon the introduction of new Central Excise Tariff, 1985 Clarification regarding.
Doubts have been raised as to whether with the introduction of new Central Excise Tariff, 1985 w.e.f. 28.02.1986, cess is required to be levied once again on the body built motor vehicles even when cess has already been paid on the chassis manufactured by the independent body builder.
The matter has been referred to Administrative Ministry who have intimated that the intention behind the notification levying the cess is to realize such levy from the vehicle manufacturers and not from the body builders. Further, the provision of IDR Act, 1951, under which the notification levying the cess has been issued, provides that the rate of cess shall not in any case exceed two annas per cent of the value of the goods. If the cess is levied in line with the Excise Tariff Act, 1985, this would exceed the maximum rate of 1/8th per cent prescribed in the IDR Act. Therefore, the cess may continue to be levied and collected on the vehicles in the condition they are cleared from the premises of the manufacturers and no cess should be levied again in case the body on the chassis is built by an independent body builder on the cess paid chassis.
The cess should be levied and collected accordingly.
Trade interests should also be suitably informed.
7. On introducing the said Circular, we find that the matter of levy of automobile cess was referred to Administrative Ministry i.e. Ministry of Industries and as intimated the intention behind the notification levying the cess is to realized from the vehicle manufacturers and not from the body builders. Further, as per IDR Act, 1951, the notification levying of cess has been issued, which provides that the rate of cess shall not, in any case, exceeds to two percent of the value of the goods i.e. 1/8th per cent of the value of the vehicle. It was also clarified that the cess may continue to be levied and collected in the condition they are cleared from the premises of the manufacturers and no cess should be levied again in case the body on the chassis is built by an independent body builder on the cess paid chassis. Therefore, there was no intention of the Administrative Ministry to levy cess on the activity of the body building. In that case, although the appellant may be the manufacturer in the light of the Chapter Note 5 of the Chapter 87 of the Central Excise Act, 1985, the automobile cess cannot be levied or collected from the appellant. Therefore, the arguments advanced by the ld. AR are not acceptable as the said clarification issued by the Ministry of Industries has not been withdrawn till date. In that situation, the decision of the Tribunal in the case of Tata Motors Ltd. (supra) is squarely applicable to the facts of this case, wherein this Tribunal has held as under:-
9. We further find that another issue in this matter is that whether the appellants are required to pay cess on automobile or not. The CBEC Circular vide Circular No. 41/88, dated 31-8-1988, has clarified that the cess may continue to be levied and collected on the vehicles on the condition they are cleared from the premises of the manufacturers and no cess should be levied again in case the body on the chassis is built by an independent body builder on the cess paid chassis. In the case of S.M. Kannappa Automobiles P. Ltd. v. Commr. of C. Ex., Bangalore reported in 2008 (224) E.L.T. 467 (Tri.-Bang.), the issue came up before this Tribunal and this Tribunal held that as the body builder are not required to pay cess. Cess paid on chassis in this case also on chassis M/s. Tata Motors have paid the cess. Therefore, we hold that the appellants are not required to pay cess as the body on cess paid chassis is built by the appellants. Therefore, demand of cess on automobile is set aside.
8. In these circumstances, we hold that the automobile cess cannot be demanded from the appellant. Therefore, the demand on account of automobile cess along with interest is set aside. With these observations, the appeals are allowed with consequential relief, if any.
[Operative part of the order pronounced in the open Court] ( Ashok Jindal ) Member (Judicial) ( B. Ravichandran) Member (Technical) Ckp.
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