2021 (3) TMI 1359 - AAR - Customs

Classification of goods - underground mining trucks - to be classified under sub-heading 8430 50 10 as mining machinery excluding coal mining or under sub-heading 8704 10 10? - applicant has contended that the provisions of the Motor Vehicle Act do not include vehicle of a special type designed/intended for use only in a factory or in any other enclosed premises, and that goods used majorly in underground enclosed premises cannot be classified as a motor vehicle, and hence, 8704 heading is not applicable. HELD THAT - The question of referring to the provisions of Motor Vehicle Act or any other statute would arise only when the terms of the tariff headings leave some ambiguity. As per Rule 6 of the general rules for the interpretation of import tariff, for legal purposes, the classification of goods in the sub-headings of a heading shall be determined according to the terms of those sub-headings and any related sub-heading notes and, mutatis mutandis, to the above rules. Thus, the terms of the tariff headings and sub-headings is the primary determinant of classification. The terms of the tariff headings and the accompanying explanatory notes leave no doubt that vehicles that transport goods, but are off-road vehicles are covered under CTH 8704 10. In the event, there is no necessity to refer to the provisions of Motor Vehicle Act or to the product positioning in the advertisements of the supplier. It cannot be the case that extraneous criteria can take precedence over the terms of tariff headings and HSN explanatory notes - In fact, the HSN explanatory notes even elaborate that the goods under sub-heading 8704.10 can generally be distinguished from other vehicles for the transport of goods by the characteristics such as limited speed and area of operation, special earth-moving tyres, payload and that certain dumpers are specially designed for working in mines or tunnels. The goods under consideration in this application are meant for movement/transport goods, carrying relatively high payloads, albeit over short distances within the premises of small and medium sized mines. They are not meant for working the earth. The terms of Heading 8704 10 and the accompanying chapter notes/HSN explanatory notes squarely cover the said goods - there are no merit in the applicant s contention of the goods not being motor vehicles as the functional and design feature of the goods answer the requirements of CTH 8704 10. Thus, it is held that underground mining trucks, one example of which is the SANDVIK TH 320, is classifiable as motor vehicles for transport of goods designed for usage in restricted conditions like a mine, under 8704 10 10.

Summary

Issues Involved:
1. Classification of underground mining trucks.
2. Interpretation of relevant tariff headings and sub-headings.
3. Applicability of HSN explanatory notes.
4. Comparison with international classification practices.
5. Relevance of the Motor Vehicle Act and market perception.

Issue-Wise Detailed Analysis:

1. Classification of Underground Mining Trucks:
The applicant, M/s. Sandvik Mining and Rock Technology India Pvt. Ltd., sought an advance ruling on the classification of underground mining trucks, specifically the Sandvik TH 320 model. The applicant proposed classification under sub-heading 8430 50 10 as mining machinery excluding coal mining, while an alternative classification under sub-heading 8704 10 10, which includes motor vehicles designed for off-highway use, was also considered.

2. Interpretation of Relevant Tariff Headings and Sub-Headings:
The Customs Tariff Act, 1975, groups commodities under 98 chapters, aligned with the World Customs Organization’s Harmonized System (HS). The applicant argued for classification under Heading 8430, which covers machinery for earth, minerals, or ores. However, the Commissioner opined that the product falls under Heading 8704, which covers motor vehicles for the transport of goods, including dumpers designed for off-highway use. The ruling emphasized that the primary function of the trucks is the transport of goods (mucking and tramming), aligning more with Heading 8704.

3. Applicability of HSN Explanatory Notes:
The Harmonized System (HS) explanatory notes are crucial for classification. The notes under Heading 8704 explicitly cover vehicles used for the transport of goods, including those used in mines. The ruling noted that the Sandvik TH 320 truck is designed for moving materials within mines, fitting the description under Heading 8704. The notes also distinguish these vehicles by their limited speed, special tyres, and off-road capabilities, further supporting classification under 8704 10.

4. Comparison with International Classification Practices:
The ruling highlighted that similar products by companies like Hitachi and Caterpillar are classified under Heading 8704 in other countries, including the United States. This international practice reinforced the decision to classify the Sandvik TH 320 under Heading 8704.

5. Relevance of the Motor Vehicle Act and Market Perception:
The applicant argued that the trucks should not be classified as motor vehicles under the Motor Vehicle Act, as they are designed for use in enclosed premises and not on public roads. However, the ruling clarified that the terms of the tariff headings and HSN explanatory notes take precedence over other statutes. The classification under Heading 8704 10 was found to be explicit and unambiguous, making references to the Motor Vehicle Act unnecessary. Additionally, the product’s marketing as a truck for moving ore/muck did not influence the classification, as the primary determinant is the tariff heading terms.

Conclusion:
The ruling concluded that the Sandvik TH 320 underground mining truck is classifiable under sub-heading 8704 10 10 as a motor vehicle for the transport of goods designed for off-highway use, specifically within mines. The decision was based on the product’s features, usage, and alignment with the HSN explanatory notes and international classification practices.