By TIOL News Service

MUMBAI, SEPT 24, 2015: THE appellant is a manufacturer of motor vehicles. With effect from 01.03.2003, National Calamity Contingent Duty (NCCD) was imposed on motor vehicles. Appellant had certain motor vehicles which were in “substantially” manufactured condition though not in marketable condition. These vehicles were cleared after 01.03.2003.

Since the appellant did not pay NCCD on such motor vehicles, Revenue initiated proceedings for demand and recovery of the same.

As the demand was confirmed by the lower authorities, the appellant is before the CESTAT.

The appellant submitted that NCCD is a new levy and as held by the Supreme Court in the case of Vazir Sultan Tobacco Co. Ltd. 2002-TIOL-215-SC-CX-LB the new levy would be applicable only on the goods manufactured after 01.03.2003. Since some of the vehicles in question were ‘almost manufactured' and even though cleared after 01.03.2003, no NCCD is applicable on the said goods. Appellant also relied on the Board letter 334/1/2003-TRU dated 28.02.2003, para 17 of which clarified that NCCD is not applicable to the pre-budget stock.

The AR while reiterating the findings of the original authority submitted that there is nothing like almost-manufactured motor vehicles ;that the motor vehicles admittedly were not manufactured as there is also a requirement of road testing as also certain items were to be fixed;that without these, motor vehicles are not marketable and cannot be taken on road and it is only when the goods are fully finished including road testing etc. the vehicles can be called manufactured motor vehicles. Since in the present case, the goods were manufactured after 01.03.2003, NCCD is applicable, the AR concluded.

The Bench observed -

"5. There is no dispute about the fact that for the pre-budget stock in respect of manufactured goods which have been manufactured before 01.03.2003, NCCD would not be applicable. However, we find that admitted position even from the appellant's side is that the vehicles were not fully finished but substantially finished. It is seen that it is important that the road test are carried on the vehicles before it can be taken on road and released for sale. Similarly, it is an admitted position certain work remains to be done on these vehicles in as much as certain items were yet to be fixed. Under these circumstances, in our view, the motor vehicles cannot be considered as manufactured as on 28.02.2003 and, therefore, NCCD would be chargeable. In view of the above position, demand is upheld on merits. We also find that equivalent amount of penalty has been imposed under Rule 25 of the Central Excise Rules, 2002. In the facts and circumstances of the case, in our considered view, this is not a fit case for imposition of penalty and we accordingly set aside the penalty imposed under rule 25. Interest under Section 11AB is upheld."

The Appeal was disposed of.

In passing : A decade old case comes to a close…hopefully!

(See 2015-TIOL-2021-CESTAT-MUM)