2002 (12) TMI 150 - AT - Central Excise

Issues Involved:
1. Classification of goods under the Central Excise Tariff.
2. Validity of the show cause notice and reliance on specific documents.
3. Interpretation of relevant headings and sub-headings of the Central Excise Tariff.
4. Compliance with the Motor Vehicles Act and related rules.
5. Assessment of seating capacity and payload capacity.

Issue-Wise Detailed Analysis:

1. Classification of Goods:
The primary dispute is whether the goods manufactured by the appellant should be classified under sub-heading 8706.31, as claimed by the appellant, or under sub-heading 8706.21, as alleged by the Revenue. The appellant, engaged in manufacturing motor vehicles and parts, claims that their three-wheeler chassis should be classified under 8706.31 read with 8703.10, suitable for vehicles designed for transporting not more than six persons excluding the driver. The Revenue contends that the chassis is meant for vehicles designed for transporting more than six persons excluding the driver, thus falling under 8706.21.

2. Validity of Show Cause Notice and Reliance on Documents:
The show cause notice issued on 16-7-2001 relied on three documents: a letter dated 8-10-1999 to ARAI, an instructions and warranty booklet of Vikram 750-D, and a pamphlet of the appellant. The notice alleged that the three-wheeler Vikram 750-D had an additional passenger seat beside the driver, making it suitable for more than six passengers. The appellant argued that the letter was an application for increased seating capacity, which ARAI did not approve, and the approved design was for six seats. The additional seat was meant for a co-driver in load carriers, not for passenger capacity.

3. Interpretation of Relevant Headings and Sub-Headings:
The relevant headings and sub-headings under Chapter 87 of the Central Excise Tariff were examined. Heading 87.02 pertains to motor vehicles designed for transporting more than six persons excluding the driver, while Heading 87.03 covers vehicles designed for not more than six persons excluding the driver. The appellant argued that their chassis should be classified under 8706.31 read with 8703.10, for vehicles designed to transport not more than six persons excluding the driver.

4. Compliance with the Motor Vehicles Act and Related Rules:
The appellant referred to the Explanatory Note to the Budget under the Finance Bill 1996-97 and Rule 126 of the Central Motor Vehicles Rules, 1989, which mandates prototype testing by specified agencies. The appellant produced certificates from ARAI, Pune, showing approval for a seating capacity of six passengers plus one driver. They also provided registration certificates from various states confirming the seating capacity as six excluding the driver.

5. Assessment of Seating Capacity and Payload Capacity:
The Commissioner relied on the warranty booklet and the letter to ARAI to conclude that the chassis was designed for more than six passengers. However, the Tribunal found that ARAI had not approved the design for more than six passengers. The appellant's explanation that the dual seat in the driver's cabin was for load carriers was accepted. The Tribunal also found the appellant's argument regarding payload capacity (750 Kgs) reasonable, as it included the weight of six passengers, their luggage, and the driver, without contradicting the claimed passenger capacity.

Conclusion:
The Tribunal concluded that the appellant had provided sufficient evidence to classify the chassis under 8706.31 read with 8703.10. The order of the Commissioner was set aside, and the appeal was allowed. The Tribunal emphasized the importance of statutory certificates and registration documents over non-statutory documents like the warranty booklet in determining the classification.

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