Per V.K.Agrawal:

The issue involved in this appeal, filed by revenue, is whether duty of excise is payable by M/s. Mahindra& Mahindra Ltd., in respect of goods received from job workers as motor vehicles under Chapter 87 of the Schedule to the Central Excise Tariff Act.

2. Shri M.P. Singh, learned D.R., mentioned that a Misc. Application No. E/ Misc./37/2001-B has been filed by the Commissioner praying for taking on record Section 1 I D of the Central Excise Act as amended by the Finance Act, 2000. Shri V. Lakshmikumaran, learned Advocate for the Respondents has no objection. Accordingly the Misc. Application, filed by the Commissioner is allowed.

3. Briefly stated the facts are that M/s. Mahindra & Mahindra manufacture motor vehicles. They were clearing cowl and chasis on payment of duty to Body Builders who constructed the metal body on the said cowl and chasis and returned the vehicle under their gate passes to the Respondents. M/s. Mahindra & Mahindra subsequently sold these vehicle after testing etc. under their own delivery notes cum invoices. In addition the Respondents were sending materials to M/s. Roplas (I) Ltd., Pune for body building under the provisions of Rule 57F(2) of the Central Excise Rules. According to the Department duty of excise was not paid on full value of vehicle at which the said vehicles were sold in the course of wholesale trade though the Respondents had recovered the duty from their customers. The Central Excise Officers seized 43 such vehicles which were provisionally released subsequently on execution of bond and payment of differential duty. A show cause notice dated 4.7.1991 was for demanding differential duty, for confiscating the seized vehicle and for imposing penalty on M/s Mahindra & Mahindra. A few officers of the Respondents and Body Builders were also asked to show cause as to why penalty be not imposed on them under Rule 209A of the Central Excise Rules. The Collector, Central Excise, under the impugned Order No. 28/92 dated 13.7.92, dropped the proceedings against all the noticees, holding that body built vehicles were classifiable under Sub-heading 8707.00 of C.E.T.A.; body-builders were not related persons; there was no allegation in the show cause notice that body-builders were under the control direct or indirect of the Respondents; that in view of the decision in Ujagar Prints Vs. U.O.I., 1989 (39) ELT 493 (SC), no recovery of any differential duty was warranted in spite of the fact that M/s. Mahindra & Mahindra had charged higher prices from their customers.

4. Shri M.P. Singh, learned D.R., submitted that the Revenue is only demanding the payment of the differential duty on the motor vehicle which was fully manufactured in the hands of the Respondents only; that the differential duty is being demanded since the duty has already been paid on chasis as well as body fabricated by the body builders. He emphasised that transfer of chasis and cowl by Mahindra& Mahindra body builders was not in the form of sale and throughout the Respondents were the owners of chasis and cowl; that the Agreement, entered between the Respondents and body-builders, clearly shows that the body-builders did not have any right of ownership of any nature whatsoever in respect of the vehicles and chasis entrusted to them by the Respondents; that body-builders were not at liberty either to deal, change, sell or otherwise deal with the vehicle which should be returned to manufacturer by the body-builders immediately after completion of work for which the vehicles and chasis were sent to them. The learned D.R. referred to the following clauses of agreement in support of his contention:

3. The vehicles and chasis sent by the Manufacturer to the Body Builder shall be held by the Body Builder in trust for the Manufacturer and for the sole purpose of constructing steel bodies on the said vehicles and chasis and for no other purpose. The body builder shall not have any rights of ownership of any nature whatsoever