2018 (3) TMI 256 - AT - Central Excise

Classification of goods - motor vehicles as well as chassis fitted with engine which is also cleared at times by the appellant - motor vehicles have been described as tipper which have been claimed to be meant for off-road use and hence classifiable under 8704 2390. However, Revenue of the view that such vehicles are meant for off- road use and hence are to be described as dumpers for off-road use which are classifiable under 870410. Held that - The Central Excise Tariff is based on the HSN Harmonised System Nomenclature. The HSN explanatory notes can serve as a useful guide in deciding the classification of the goods under the First Schedule to the Central Excise Tariff Act, 1985. The features highlighted by the appellant include limited speed as well as special earthmoving tyres. When we look at the specifications of the trucks manufactured by both the appellants, we note that such trucks are capable of maximum speed in the range of 70 to 85 km per hr. The type of wheels/ tyres which are used in the appellant s vehicles are also of the type used on highways and not off-road tyres - such vehicles manufactured by the appellant are meant to carry loads and capable of off-loading but the same are not machines exclusively meant for off-road use. The motor vehicles manufactured by the appellants do not fall in the category of dumpers designed for off-highway use under 8704 10. They are classifiable, as claimed by the appellant under 8704 2390 as tipper trucks likewise the classification of chassis also will fall under 87060042 and not under 87060043 as claimed by the Department. Demand of differential duty - case of Revenue is that MFTPL has exported chassis fitted with engines but they paid Excise duty only @ 10% under claim of rebate whereas the applicable Excise duty during the relevant time was 10% plus specific Excise duty @ ₹ 10,000/- per chassis - Held that - There is no dispute that the goods have been exported during the period June, 2008 to February, 2011. Admittedly, there is a short payment of duty by the appellant. However, the fact remains that if the differential duty is paid by the appellant the same will also be available to them as rebate since the goods have been exported - there is no justification for demand of duty which is set aside alongwith the interest and penalties. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Classification of motor vehicles and chassis under the Central Excise Tariff.
2. Demand for differential National Calamity Contingent Duty (NCCD).
3. Short payment of excise duty on exported chassis by M/s Man Trucks India Pvt. Limited (MFTPL).

Issue-wise Detailed Analysis:

1. Classification of Motor Vehicles and Chassis:
The primary issue revolves around the classification of motor vehicles and their chassis manufactured by M/s V.E. Commercial Vehicles Limited (VECVL) and M/s Man Trucks India Pvt. Limited (MFTPL). The appellants classified their vehicles under Central Excise Tariff Heading (CETH) 87042390 as "tipper trucks" and their chassis under CETH 870660042. However, the department contended that these vehicles and chassis should be classified as "dumpers" designed for off-highway use under CETH 870410 and 87060043, respectively.

The department's case was based on product literature and technical specifications, concluding that the vehicles were misclassified as tippers instead of dumpers. The department referenced HSN explanatory notes to support their classification.

The appellants argued that their vehicles were designed for road/highway use and not for off-highway use, citing specifications such as high speeds (72-85 km/hr) and road-capable tyres. They also presented comparative data showing that typical dumpers have limited speed and special earth-moving tyres, unlike their vehicles.

Upon review, the tribunal concluded that the vehicles manufactured by the appellants were not exclusively meant for off-road use and should be classified under CETH 87042390 as tipper trucks. Consequently, the corresponding classification for chassis should fall under CETH 87060042, not 87060043.

2. Demand for Differential National Calamity Contingent Duty (NCCD):
The dispute over the classification led to a demand for differential NCCD on the chassis cleared by the appellants. The tribunal noted that the NCCD was exempted for fully manufactured vehicles but payable on dumper chassis. Since the vehicles were classified as tippers, the demand for differential NCCD was unjustified. The tribunal set aside the demand for differential NCCD made by the adjudicating authority.

3. Short Payment of Excise Duty on Exported Chassis by MFTPL:
During the period from June 2008 to February 2011, MFTPL exported chassis fitted with engines and paid excise duty at 10% instead of the applicable 10% plus ?10,000 per chassis. The adjudicating authority demanded the differential duty along with interest and penalties, despite the fact that the duty paid on exported goods was refunded as a rebate.

The tribunal acknowledged the short payment but agreed with the appellant's contention that paying the differential duty would result in a revenue-neutral situation since the goods were exported, and the differential duty would be refundable as a rebate. Consequently, the demand for differential duty, interest, and penalties was set aside.

Conclusion:
The tribunal set aside all impugned orders and allowed all appeals, concluding that the vehicles and chassis were correctly classified by the appellants, and the demands for differential NCCD and excise duty were unjustified.