2019 (11) TMI 529 - AAR - GST

Classification of an item - Utility Van - whether classifiable under chapter Pleading 8703 or Chapter Heading 8704? HELD THAT - The Customs Tariff, as also the GST Tariff, broadly classifies the vehicles under two categories viz. Vehicles for transport of passengers and vehicles for transport of goods. As per statutory requirements laid down under the provisions of Motor Vehicle Act 1988 and Motor vehicle Rules 1989, each type of vehicle is required to be certified either by the Vehicle Research and Development Establishment of Ministry of Defense or by the Automobile Research Association of India, or certain other authorities. The goods in questions i.e. Utility vehicles, are predominantly designed for transportation of goods and these vehicles also conform to the categorisations and conditions laid down under Automotive Industry Standards AIS 053 as Category N vehicles for carrying /goods - thus, the utility vehicles in question shall merit classification under Chapter Head 8704 of GST Tariff and shall be liable to GST at the rate applicable at the time of supply.

Summary

Issues: Classification of Utility Van under Chapter Heading 8703 or 8704

Analysis:
1. Background and Facts of the Case: The applicant, a manufacturer of automobiles, filed an application seeking clarification on the classification of Utility Vans designed for both carrying goods and passengers. The vans were designed to carry up to 6 passengers and cargo ranging from 687 Kg to 1942 Kg.

2. Legal Provisions and Standards: The classification of vehicles as per the Customs Tariff Act and GST Tariff broadly categorizes them into vehicles for transporting passengers and goods. The Automotive Industry Standards AIS-053 classify passenger-carrying vehicles under Category M and goods-carrying vehicles under Category N.

3. Applicant's Arguments: The applicant argued that the Utility Vans should be classified under GST Tariff 8704 as they are primarily designed for transporting goods, meeting the conditions specified for goods-carrying vehicles under AIS-053.

4. Precedents and Case Laws: The applicant cited the decision of the Mumbai Tribunal and the Supreme Court in cases related to the classification of goods-carrying vehicles with space for passengers. These cases emphasized that vehicles primarily designed for transporting goods should be classified under the relevant category for goods transport.

5. Authority's Findings: After considering the submissions and standards, the Authority admitted the application for consideration under Section 97(2)(a) of the GST Act. The Authority concluded that the Utility Vans, meeting the conditions for goods-carrying vehicles under AIS-053, should be classified under Chapter Heading 8704 of the GST Tariff.

6. Ruling: The Authority ruled that the Utility Vehicles, predominantly designed for transporting goods and meeting the norms of Category N vehicles under AIS 053, should be classified under Chapter 8704 of the GST Tariff. The ruling is subject to the provisions of the GST Act until declared void.

In summary, the judgment clarifies the classification of Utility Vans as goods-carrying vehicles under Chapter Heading 8704 of the GST Tariff based on the design and predominant use for transporting goods, in accordance with the Automotive Industry Standards and legal precedents.