I am directed to say that on dismissal of Departments appeals by Supreme Court on 2.9.97 in the case of CCE v. M/s Ram Body Builders [1997 (94) ELT 442 (SC)], various references have been received for a clarification regarding the Department's stand on classification of body built on duty paid chassis by the independent body builders.

2.     The main question under consideration in these appeals was whether the bodies so manufactured are classifiable under heading No. 87.07or heading Nos. 87.02 to 87.05. The Supreme Court in the above referred case has held that the bodies which are build on chassis supplied by the customer would fall under heading No. 87.07.

3.     The matter has been examined and it has been observed that the Hon'ble Supreme Court's decision in these if confined to the period prior to 25.7.1991 i.e. before insertion of Note 4 (later renumbered as note 3) to Chapter 87 of CETA, 1985. The apex court, thus, has not given any ruling in respect of the classification, after the insertion of the said Chapter note and thus the classification on and after 25.7.91 would be governed by the said Chapter note. It has, however, been observed that in the case of M/s Kamal Auto Industries [1996 (82) ELT 558], the Tribunal has given an interpretation that the insertion of the chapter note 3 does not alter the position in respect of bodies built on chassis fitted with engines, which remain classified under heading No. 87.07. The department has not accepted the interpretation and has filed an appeal in the Supreme Court against the said order of the Tribunal.

4.     In view of the above, it has been decided that while the Supreme Court's decisions in the case of Ram Body Builders shall not be followed in respect of cases pertaining to the period before the insertion of Note 4 (later renumbered as 3) to Chapter 87 of the schedule to Central Excise Tariff Act, 1985 in 1991, for the period after the insertion of the said note, the classification shall be governed by the said chapter note.