1. The Commissioner of Central Excise has demanded duty of Rs. 1.14 crores from the appellants for the period October 2003 to June 2005 in respect of the cabin-fitted chassis cleared to M/s. Ashok Leyland Ltd. He has also imposed penalty of Rs. 15 lakhs on the assessee.
2. After examining the records, and considering the submissions made by both sides, we find that the adjudicating authority has classified the subject goods under Heading 87.06 of the CETA Schedule and has accordingly demanded duty thereon. For the purpose of quantification of duty, the authority has accepted the price declared by the assessee.
Hence the dispute in this case, by and large, pertains to classification of the item. The decision of the lower authority on this issue is based on Chapter Note 4 to Chapter 87 of the said Schedule for the period upto 28th February 2005 and Note 3 to the said Chapter for the subsequent period. The text of the Chapter Note has remained the same for the entire period of dispute (October 2003 to June 2005) and the same reads as under: Heading No. 8 7.06 shall include chassis, whether or not fitted with a cab.
The goods cleared by the assessee, admittedly, was chassis fitted with cab. Apparently, it is on this basis that the impugned order was passed. Ld. Counsel for the assessee has claimed classification of the above item under Heading 87.04 on the strength of Note 3 to Chapter 87 for the period upto 28th February 2005 and Note 5 to the said Chapter for the subsequent period. The text of this Chapter Note has also remained the same for the entire period and the same reads as under: For the purposes this Chapter, building a body or fabrication or mounting or fitting of structures or equipment on the chassis falling under Heading 87.06 shall amount to "manufacture" of motor vehicle.
Ld. Counsel has argued that the activity undertaken by the assessee viz. fitting driver's cabin on chassis, amounted to ''manufacture" of a motor vehicle for transport of goods and, therefore, goods which resulted from that activity could only fall under Heading 87.04 (Motor vehicle for transport of goods). After considering the submissions, it appears to us that it was not in the assessee's hands that a complete motor vehicle took shape. Hence, prima facie, for the present purpose, we cannot accept the plea that what was cleared by the assessee (cab-fitted chassis) was a motor vehicle. Further, we do not find mention of a "Cab" in the definition given under Chapter Note 3/5 relied on by ld. Counsel, though there is mention of "Body", "Structure" and "Equipment". Hence, prima facie, the decision taken by the adjudicating authority with reference to Chapter Note 4/3 explaining Heading 87.06, but without reference to the artificial definition of "manufacture" given in Chapter 87, cannot be faulted. The appellants do not seem to have a prima facie case. The decision of the Tribunal in Commissioner v. T.P.S. Mfg. and Construction Co. (P) Ltd. 2003 (162) ELT 1122 (Tri. Del) cited by ld. Counsel does not appear to support the assessee's case inasmuch as the goods considered in that case was a motor vehicle which resulted from body-building on chassis, unlike in the present case. The appellants have not pleaded financial hardships. Nevertheless, we adopt a lenient approach as usual.
3. Accordingly, the appellants are directed to predeposit a sum of Rs. 10,00,000/- (Rupees ten lakhs) for the purpose of Section 35F of the Central Excise Act, 1944 within four weeks and report compliance on 19.6.2006. In the event of due compliance, there will be waiver and stay of recovery in respect of the penalty amount and the balance amount of duty.