2017 (10) TMI 554 - CESTAT CHANDIGARH

Manufacture - bullet-proofing activity undertaken by the appellant - job-work - It was alleged that as the bullet proofing was done by a division of Mahindra & Mahindra, the cost of bullet proofing should be included in the value of base vehicle cleared by Mahindra& Mahindra in terms of Rule 10A of the Central Excise Valuation Rules, 2000 as the said activity amounts to manufacture. It was alleged that the activity amounts to manufacture and cost of bullet proofing was to be added to the cost of base vehicle paid by Mahindra & Mahindra - case of appellant is that the process does not amount to manufacture and duty cannot be charged on the value addition carried outside the factory of clearance on account of certain processes not amounting to manufacture.

Whether the bullet proofing amounts to manufacture or not, and whether the extended period of limitation is invokable or not? - Held that: - Bullet Proofing of Mahindra Bolero and Mahindra Rakshak does not amount to manufacture and no duty is payable by the appellant.

With regard to Mahindra Scorpio and Mahindra Bus, we find that the process undertaken by the appellant involves the removal of body shell of the vehicle and reinforcing the same with bullet proofing sheets from the inside, strengthening the platform by welding iron studs on the weak joints of the platform and replacement of coils and shock absorbers so as to enable the platform to bear the increased weight of the base vehicle after bullet proofing. The body shell is then reinstalled on the platform and the floor is covered with a ballistic carpet. The glass is also changed to thicker bullet proof glass. We have seen that Mahindra Scorpio remains as Mahindra Scorpio and Mahindra Bus remains as Mahindra Bus before and after the bullet proofing and the use of the vehicles also remains same to carrying the passengers and the character of vehicle also do not change on accessories being added to these vehicles - in this case the Scorpio remain Scorpio and the Bus remains the Bus after bullet proofing and therefore, it cannot be said that the activity of bullet proofing amounts to manufacture. Accordingly, the activity undertaken by the appellant does not amount to manufacture. Merely few additions do not constitute a production or manufacture - activity undertaken by the appellant does not amount to manufacture.

The adjudication order is beyond the scope of show cause notice with regard to the classification proposed in the show cause notice. Accordingly, the adjudication orders are set-aside.

Penalties also set aside.

Extended period of limitation - As we have decided the issue on merit, in favor of the appellant, therefore, we are not going into the issue of limitation.

Appeal allowed - decided in favor of appellant.