ORDER
K.K. Agarwal, Member (T)
1. The appellants in this case are receiving motor vehicle from the manufacturer and after removing canopy are fitting FRP body on the same and were claiming exemption under Notification 162/83 which exempts vehicle manufactured on chassis on the duty of excise has been paid and no credit of duty paid on such chassis and other inputs used in the manufacture of such vehicles has been taken under Rule 56A or 37A of the Rules. They were issued a show cause notice demanding duty on the ground that the exemption was not available to them as what was being received by them was a motor vehicle and not a duty paid chassis and therefore the conditions of the notification are not satisfied.
2. Learned Advocate for the appellants submits that though they are receiving a motor vehicle but nevertheless they are removing the canopy and what remains thereafter is only a chassis on which FRP body is being fitted and therefore they are entitled to the exemption under the said notification. He also referred to Chapter Note 3 of Chapter 87 which reads as under:
For the purposes of Heading Nos. 87.01 to 87.05, building a body or fabrication or mounting or fitting of structures or equipment on the chassis shall amount to manufacture of a motor vehicle.
3. In view of this they submit what was manufactured by them was a motor vehicle and not a body and therefore no duty is chargeable on them.
4. We have considered the submissions. We find that the wordings of the notification are very clear as it exempts motor vehicle manufactured out of duty paid chassis on which no credit is taken of the duty paid on the chassis. In the present case what being received is a motor vehicle and not a chassis and therefore prima facie the exemption provided under Notification 162/86 is not available to them. Bodies are independently classified under Chapter Heading 8707 and therefore Chapter Note 3 of no help to them. We, therefore, do not find any prima facie case on merits in the appellant’s favour. We are however told that the unit is closed and financial hardship has been pleaded. Taking the same into account, we direct the appellants to deposit a sum of Rs. 5 lakhs towards duty within 8 weeks and on such payment there shall be waiver from pre-deposit of the balance amount of duty and penalty and recovery thereof stayed till disposal of appeal. Compliance to be reported on 18-2-2007.
(Dictated in Court)