Relief to Tata Motors: CESTAT Quashes Excise Duty Demand of Approx.21 crores on Manufacture of Commercial Motor Vehicles on ground of Absence of Actual Manufacturer [Read Order]

The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) granted relief to Tata Motors India by quashing the excise duty demand of approximately 21 crores on the manufacture of a commercial motor vehicle on the ground of the absence of an actual manufacturer. 

Tata Motors Limited, the appellant assessee engaged in manufacturing chassis of commercial motor vehicles in their Jamshedpur factory, and such chassis, apart from being sold to independent customers from the factory gate was also supplied to independent bodybuilders for building body thereon, in the premises of the job-worker and the bodybuilders thereafter supplied by the bodybuilder to the Regional Sales Offices(RSOs) of the assessee for sale to customers. 

The assessee appealed against the order passed by the Commissioner of Central Excise for confirming the demand of Central Excise duty amounting to Rs. 21,27,34,334/- along with interest and equivalent penalty. 

Shovit Betal, the counsel for the assessee contended that the ownership of raw material or finished goods and non-sale thereof at the time of clearance from the factory, are not relevant to determine the excise duty liability and the taxable event was ‘manufacture’ and the liability to pay excise duty was on the person, who had carried out that process, viz. manufacturer. 

Also submitted that here the assessee was not the actual manufacturer of the motor vehicle and the assessee only supplied the chassis ie, the raw materials for the manufacture of a commercial motor vehicle. 

M. Ranjan, the counsel for the department relied on the decisions made by the lower authorities and contended that the excise duty was not discharged rightly because chassis were merely removed for undertaking processing thereon and were not sold to the bodybuilders. 

The Bench observed that in the case of AFL Pvt. Ltd. v. CCE, the court held that wherein the job-workers were manufacturing the goods (barges and tugs) at the premises hired by the raw-material supplier from its equipment and the raw-material supplier did supervisory quality checks only. Accordingly, the job worker was the manufacturer and not the raw material supplier, and the demand of duty on the raw material supplier was not sustainable. 

The two-member bench comprising Ashok Jindal (Judicial) and Anpazhakan (Technical) quashed the excise duty demand against the assessee while allowing the appeal filed by the assessee. 

To Read the full text of the Order CLICK HERE

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