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12. |
Anomaly in excise rate structure for small vehicle body building |
It is suggested that chassis for vehicles with smaller tonnage (up to 1.5 MTs), (falling under 8706) should not attract the extra imposition of Rs. 10,000/-. |
Excise duty on the Chassis fitted with Engine was enhanced from 16% adval. To 16% + Rs.10,000/- per unit during the Budget 2003-04 on the basis that the same would promote integrated bus body building, without effecting the duty structure of the fully built vehicles.
The above would be effectuated as under: A) Either the Bus/Truck manufacturer would manufacture the entire truck or bus inside his factory; orB) Chassis fitted with Engine would be given to a body builder by the Chassis manufacturer along with the design features and of the fully built vehicles. Over 90% of the vehicles constituted in this category is above the payload of 1.5 MTs capacity. The cost of body building ranges between Rs. 75,000/- and Rs. 5 lacs and above depending on the type of body building. In such cases, since the body builder would avail the entire Cenvat credit of the duty paid on the Chassis (i.e. 16% + Rs.10,000/-); the effective rate of duty on the Body built vehicle would remain at 16%.In respect of the vehicles with a smaller payload of less than 1.5 MTs, which is normally used as load carriers for short haulage, the cost of body building would be in the range of Rs. 20,000/-. In such cases, if the manufacturer of the vehicle were to give it to a body builder, the amount of Rs. 10,000/- cannot be absorbed under the Cenvat scheme, as the value addition itself is only around Rs. 20,000/-. Consequently, the effective duty would far exceed 16%. It would therefore be iniquitous to impose Rs. 10,000/- on the Chassis of the smaller tonnage (up to 1.5 MTs). |
