Draft - Clarification on “Road tractors for semi-trailers” - Central Excise - Draft

DRAFT Circular for Comments F. No. ………………………… Government of India Ministry of Finance Department of Revenue Subject: Clarification on "Road tractors for semi-trailers" 1. Representations have been received in the Board that certain field formations are proposing to charge excise duty on agricultural tractors on the ground that besides agricultural work, these tractors are used for haulage of farm products, fertilizers, etc. thereby qualifying as "road tractors for semi-trailers". "Road tractors for semi-trailers" attract Central Excise duty at the rate of 16%, if the engine capacity is more than 1800 cc. 2. Tractors falling under Chapter heading 8701 were exempted from excise duty in Budget 2004-05 with the intention to give exemption to agricultural tractors, in order to encourage farm sector. A tractor meant primarily for agriculture purposes can also be incidentally used to take goods to nearby markets. But that is an incidental use, and such tractors are not primarily designed to haul trailers. Therefore, incidental use of hauling trailers will not put such tractors in dutiable category. Therefore primary use of tractor should be the deciding factor. 3. Trade and Field formations may be informed accordingly. 4. Receipt of this Circular may please be acknowledged. (Dilip Goyal) Under Secretary to the Govt. of India