2015 (4) TMI 563 - AT - Central Excise

Classification of goods - Classification of motor vehicle model Nos. Commander 750 DP (10 Seater), Commander 650 DI (10 Seater) and Commander 750 DP (ST) - Classification under tariff heading 87.03 or under tariff heading 87.02 - whether the classification sought to be made under Tariff Heading 87.03 in Order-in-original No. 50 to 87/Commr (AH)/05 dated 30-3-2005 passed by the commissioner of Central Excise (Adjudication), Mumbai, can be sustained or not - Held that - there were specifications stipulated in the Statute as to the dimensions of the seating space as also the gross vehicle weight and gross axle weight. These specifications have been provided in the statute not only for the sake of passenger comfort but also for the safety of the passengers travelling in the vehicle. Therefore, when the classification of vehicle is made based on the seating capacity of passengers, the statutorily stipulated specifications and norms have to be complied with. Viewed from this perspective, there is merit in the argument that these specifications should be tested/examined by the competent authorities before a vehicle can be categorised as a 10 seater or 11 seater, etc. From the documents available on record, it is seen that the various certificates given by the road transport authorities or by ARAI, are merely based on the declarations made by the appellant and not on the basis of any objective data specified in any industry standards or statutory provisions governing motor vehicles and therefore, these certificates do not inspire any confidence as regards their acceptance and not much reliance can be placed on them. From the various statements recorded from the officials of the appellant firm, it prima facie appears that attempts have been made by the appellant to project their vehicle as belonging to a particular type so that their excise duty liability can be minimized. - once classification list has been approved, the excise authorities can take a different view. It is not merely the weight of the passenger but also that of the cargo permitted to be carried that is relevant in determination of the gross vehicular weight. Hence, the argument that only the weight of the persons needs to be taken into account for determining payload and not that of the personal belonging/cargo, is not prima facie convincing. As per the technical literature published in various web-sites, another important feature in vehicle design is the wheel base (the difference between the front and rear wheels) as it impacts weight distribution and aerodynamics of the vehicle. The components that decide the wheelbase are also the major masses in the car (driver, engine, gearbox, etc.) and by placing these strategically along the wheelbase, a more forward or rearward weight bias can be achieved. Thus the dimensions of the wheel base directly impacts the axle weight. - Matter reamanded back - Decided in favour of assessee.

Issues Involved:

1. Classification of motor vehicle models under the Central Excise Tariff Act.
2. Compliance with seat dimensions and weight norms as per the Maharashtra Motor Vehicles Rules, 1989.
3. Validity of extended period for duty demand and imposition of penalties.
4. Consideration of Motor Vehicles Act and Rules for excise classification.
5. Necessity of expert opinion for determining seating capacity and compliance with industry standards.

Detailed Analysis:

1. Classification of Motor Vehicle Models:

The primary issue in these appeals is the classification of motor vehicle models Commander 750 DP (10 Seater), Commander 650 DI (10 Seater), and Commander 750 DP (ST) manufactured by the assessee. The department contends that these vehicles should be classified under tariff heading 87.03 of the Central Excise Tariff, while the appellant claims classification under tariff heading 87.02. The Hon'ble Apex Court observed a conflict between two Tribunal Benches on this matter, necessitating a larger Bench to resolve the classification issue.

2. Compliance with Seat Dimensions and Weight Norms:

The department argued that the vehicles did not meet the seat dimensions specified in Rule 171 of the Maharashtra Motor Vehicles Rules, 1989, nor the weight norms specified under Rules 82 and 84. The appellant countered that the vehicles were certified by the Automotive Research Association of India (ARAI) as 10-seaters and registered as such by various State Transport Commissioners. However, the adjudicating authority found discrepancies in seat dimensions and payload capacity, leading to classification under 8703.

3. Validity of Extended Period for Duty Demand and Imposition of Penalties:

The appellant argued that the invocation of the extended period for duty demand and penalties was unwarranted, as the classification under heading 8702 had been approved and accepted by the department. They claimed there was no suppression of facts, as the vehicles were described as 10-seaters in product literature and invoices. The department, however, alleged suppression based on internal communications and statements from the appellant's officials.

4. Consideration of Motor Vehicles Act and Rules for Excise Classification:

The Tribunal noted that both the Central Excise Tariff Act and the Motor Vehicles Act deal with the classification of motor vehicles, one for taxation and the other for road transport management. These statutes are considered pari materia, meaning they should be construed together. The Tribunal emphasized that specifications and norms under the Motor Vehicles Act could be used for excise classification, rejecting the contrary view that these provisions are inapplicable for central excise classification.

5. Necessity of Expert Opinion:

The Tribunal found that the matter required detailed examination with the assistance of a technical expert, such as ARAI or another recognized testing agency, to confirm whether the vehicles met the specifications for transport vehicles under the Motor Vehicle laws. The Tribunal remanded the matter back to the adjudicating authority for re-examination with expert assistance, directing transparency and cooperation from the appellant in providing necessary technical details and making the vehicle available for inspection.

Conclusion:

The appeals were allowed by way of remand, keeping all issues open. The adjudicating authority was directed to re-examine the matter afresh with expert opinion and complete the adjudication process expeditiously. The appellant was also to be provided with copies of additional information obtained from the Transport Commissioner to ensure transparency.

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