By TIOL News Service

MUMBAI, APR 21, 2016: THE appellant cleared motor vehicles on payment of duty to dealers across the country and some of these are sold by dealers for use as 'taxis'. A concessional rate of CE duty is available for motorcars that are used as public carrier i.e. as taxis in terms of exemption notification 6/2006-CE.

About the Scheme: The scheme has been derived as a refund mechanism whereby the manufacturers are required to pay full excise duty at the time of clearance and for them to take credit to the extent of exemption upon reimbursement of the amount to the buyer who submits proof of registration as tax with the Regional Transport Authority (RTA) under the Motor Vehicles Department of the state government. Thereafter, the manufacturer files application for refund with the jurisdictional Assistant Commissioner of Central Excise, who, after ascertaining the submission of the relevant documents, is required to issue an intimation within seven days or receipt upon which the manufacturer reverse the credit taken as a pre-requisite to being sanctioned with the refund.

In the instant case, the Assistant Commissioner observed that the conditions of the exemption notification had been complied with except that the taxis were registered for a limited period of five years, and finding this to be repugnant to the conditions, rejected the claim.

The Commissioner (A) concurred with this finding and upheld the rejection of the refund claims.

Therefore, the appellant is before the CESTAT.

The appellant relied upon the decision in Maruti Udyog Ltd. & Premier Automobiles - 2015-TIOL-138-CESTAT-MUM.

The AR relied upon the decision of the Supreme Court in QaziNoorul H.H.H. Petrol Pump v. Dy. Director, E.S.I Corporation wherein it was held that the only rule of interpretation which applies to the facts of the present case is the Literal Rule of Interpretation, which means that one should go simply by the wording of the Statute and nothing else and there is no scope for applying any other Rule of Interpretation.

The Bench after considering the submissions noted that the original authority and the first appellate authority have taken the stand that the benefit of notification can be extended subject only to permanent registration as a taxi whereas the registration in all the claims was for a period of five years.

The CESTAT observed -

++ In our view, this interpretation is not in consonance with reality. Even for privately owned vehicles, registration is, by law, effective only for a limited period of fifteen years and is subject to extension of the registration period upon compliance with certain conditions which include road-worthiness. If such be the regulation for private vehicles, public carriers cannot but be faced with more stringent norms.

++ Assuredly, the Regional Transport Authority (RTA) would subject such vehicles to tests of worthiness and maintenance at more frequent intervals. It is obviously for this reason that an open-ended registration is not envisaged under the Motor Vehicles Act. Nor is it reasonable to insist upon such permanent registration. The lower authorities should have borne this in mind considering that all other conditions stipulated for eligibility of the concessional rate have been complied with.

++ Concessional rate of duty is subject to 'registration for use solely as taxi' without any reference to the period of registration; it was, therefore, improper on the part of the lower authorities to insist upon a tenure that is not expressly stated there.

The appeals were allowed with consequential relief.

(See 2016-TIOL-944-CESTAT-MUM)