The Bangalore bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) held Volvo Buses India eligible for excise duty exemption as the ownership of chassis will not continue after supply as per the chassis supply agreement.
Volvo Buses India Pvt Ltd, the appellants are manufacturers of parts and accessories of buses falling under Chapter sub-heading 87082900 of Central Excise Tariff Act, 1985 (CETA). During verification of refund claim dt. 08/12/2011, it was noticed by the Department that the appellant also undertakes the activity of bodybuilding on the duty-paid chassis. However, no duty was paid on the said manufactured body-built motor vehicles for the period 08/2008 to 07/2012.
Consequently, an investigation on nonpayment of excise duty on the bodybuilding activities was initiated and on completion of the same, show-cause notice was issued to the appellant on 08/06/2013 alleging that during the said period though they have manufactured 2545 numbers of motor vehicles for transport of more than 12 persons falling under Chapter heading 8702 of CETA, 1985 but failed to pay a duty of Rs.67,46,70,752/-; consequently on adjudication, the demand was reduced to Rs.58,03,73,082/- with interest and penalty of the equivalent amount imposed on the appellant company and Rs.50,000/- on Shri Ramamurthy, Director of the appellant.
The Appellant has submitted that the benefit of exemption under Sl. No.39 of the Notification No. 6/2006CE dated 01.03.2006 and Sl. No. 276 of the Notification No. 12/2012CE dated 17.03.2012 is available subject to fulfilment of conditions as prescribed in Sl. No.9/27.
It was submitted that undisputedly VIPL is the manufacturer of chassis and has sold the said chassis to the Appellants on payment of applicable Central Excise duties and Sales Tax / VAT. The Appellant has also not availed input credit of the duty paid on the chassis and the duty paid on other inputs used in the manufacture of the chassis under the Cenvat Credit Rules, 2004.
It was further submitted that the definition of ‘Sale’ as defined under Section 2(29) of the Karnataka Value Added Tax Act, 2003 clearly shows that when there is the transfer of property in goods by one person to another in the course of business for consideration, it is considered as ‘sale’ and ‘sales tax’ is payable on the said transaction.
Further, the definition of sale and purchase under Section 2(h) of the Central Excise Act,1944 also envisages that mere transfer of possession of goods from one person to another amounts to sale and purchase.
The chassis purchase agreement also clearly indicates that the ownership of the chassis will vest with the Appellants immediately on the sale thereof by VIPL. Further, it is clear from the VAT payment that the sales tax authorities have accepted the said transaction to be a sale under the KVAT, 2003 and there has been no dispute in this regard.
The allegation of the Revenue is that clause (a) of condition No.9 or 27 for availing the benefit of said exemptions during the relevant period is not complied with since the ownership of the chassis remains vested in the chassis manufacturer viz. VIPL even though it is claimed by the Appellant that the chassis has been sold by VIPL to the appellant and applicable VAT paid on such clearance; delivery of possession of the chassis consequent to the sale has been transferred to the appellant thereby complied with the definition of sale and purchase prescribed under Section 2(h) of Central Excise Act, 1944.
The two-member bench comprising D.M Misra (Judicial) and R Bhagya Devi (Technical) observed that the chassis manufactured by M/s VIPL was sold to the appellant on payment of applicable VAT and excise duty. There is no condition appended to such a sale which would indicate the transfer of title, possession etc. is incomplete. Merely because the appellant and M/s VIPL belong to a common group of companies, the transaction between them cannot be considered other than the sale or purchase of the chassis and the Ownership of the chassis not transferred after the sale of the same by VIPL to Appellant.
“The Chassis Supply Agreement and Master Agreement dated 01.04.2001 providing license to manufacture the entire range of products of ‘AB Volvo’ like trucks, buses, construction equipment etc. to M/s VIPL in our opinion does not establish the case that the ownership of chassis after being sold by M/s VIPL to the appellant continued to vest on the chassis manufacturer i.e. M/s VIPL. Similarly, various clauses in the Technology License Contract dated 01.01.2008 between Volvo Bus Corporation, Sweden and the appellant also do not lead to any inference that the legal ownership of the chassis continued to remain on the chassis manufacturer VIPL belonging to the same group company. Therefore, on merit, the Appellants are eligible for the benefit exemption Notifications 06/2006-CE dt. 01.3.2006 and 12/2012-CE dt. 17.03.2012.”, the CESTAT held.
The Tribunal set aside the impugned Order and allowed the Appeals.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
