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TMI Blog2019 (11) TMI 421X X X X Extracts X X X X X X X X Extracts X X X X ..... rrier vehicle - intra-State supplies and inter-State supplies of goods - Notification No. 1/2017-Compensation Cess (Rate) dated 28.06.2017, as amended from time to time - scope of Sr. No. 52B of Cess Rate Notification - For the purpose of Cess @ 22% under Sr. No. 52B of Cess Rate Notification, whether the ground clearance of the vehicle is to be considered in laden condition or in unladen condition? - Vehicle whose ground clearance in unladen condition is more than 170mm but below 170mm in laden condition, whether will get covered under Sr. No. 52B of Cess Rate Notification? - challenge to AAR Decision. Whether the term ground clearance mentioned in the explanation to the Sr. 52B of the Schedule to the Cess Rate Notification No. 1/2017Compensation Cess (Rate), dated 28.06.2017 as amended is to be measured in laden state or unladen state? - HELD THAT:- The term ground clearance is not defined anywhere in GST Law including GST (Compensation to States) Act, 2017, which deals with the levy of compensation cess on the motor vehicles at various prescribed rates on the goods specified under the Schedule appended to the Cess Rate Notification No. 1/2017-Compensation Cess (Rate), dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ying the motor vehicles is not standardized, as the same will vary with persons occupying the motor vehicle, and thereby causing fluctuation in the ground clearance of the motor vehicles. We would like to refer to the submissions made by the Appellant, wherein they relied upon the CESTAT Rulings in the case of COMMISSIONER OF CENTRAL EXCISE, PUNE-I VERSUS TELCO LTD. [ 2002 (2) TMI 717 - CEGAT, MUMBAI] which has been upheld by Hon ble Supreme Court in COMMISSIONER VERSUS TELCO LTD. [ 2002 (9) TMI 876 - SC ORDER] , wherein to compute payload of the vehicle the standard weight per passenger was considered as 68 kg in line with the yard stich proposed by motor vehicle law - In view of the above cited ruling of the CESTAT Mumbai, which was subsequently upheld by the Supreme Court, it is observed in the instant case that the Advance Ruling Authority has not followed the principle of the ratio decidendi, and thereby erred in holding that the weight of the persons occupying the motor vehicles cannot be standardized, and hence would not be constant for the purpose of determining the payload of the vehicle, which in turn will cause fluctuation in the ground clearance of the vehicle in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Diesel Market segment Utility Vehicle (UV) Length 4598 mm Grcund clearance (Unladen) 205 mm Ground clearance (Laden) 160 mm (subsequently amended to 176 mm) C. The Central Government has vide Notification No. 1/2017-Compensation Cess (Rate) dated 28.06.2017, as amended from time to time, (hereinafter referred to as Cess Rate Notification ) notified the rate of Compensation Cess that would be levied on the intra-State supplies and inter-State supplies of such goods. D. The rate of compensation cess, applicable on supply of goods, is determined based on the description of goods specified in the corresponding entry in Column (3) and falling under the tariff items, sub-heading, heading or chapter, as specified in corresponding entry in Column (2) of the Schedule appended to Cess Rate Notification. The Cess Rate Notification further provides that the Compensation Cess would be levied at the rates mentioned in Column (4) of the schedule appended to Cess Rate Notification. E. Sr. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eof. I. As the Tata Harrier is vehicle having seating capacity of upto 5 persons (including driver) most relevant Heading is 8703 which covers motor cars and other motor vehicles principally designed for the transport of less than 10 persons (including driver), including station wagons and racing cars. J. The relevant extract of the Chapter Sub-heading 8703 32 is reproduced hereunder Tariff Item Description of goods (1) (2) 8703 Motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 8702), including station wagons and racing cars 8703 32 -- Of a cylinder capacity exceeding 1,500 cc but not exceeding 2,500 cc : 8703 32 10 --- Vehicles principally designed for the transport of more than seven persons, including the driver --- Other : 8703 32 91 ---- Motor cars 8703 32 92 ---- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MH/AAR/27/TH/123 dated 12.02.2019 made following submissions, before Advance Ruling Authority: a. the Advance Ruling Authority has jurisdiction to decide matters involving applicability of Cess rate under Compensation Cess Act; b. subsequent to filing Application for Advance Ruling, ARAI issued Certificate for Compliance under Central Motor Vehicle Rules, by Tata Harrier vehicle, specifying Minimum Ground Clearance as 176 mm (laden) in accordance with IS-9435; in the absence of said ARAI Certificate at the time of filing Application for Advance Ruling, the Appellant had mentioned Ground Clearance in laden condition as 160 mm in table to Question No. (1.1); under the circumstances, the Appellant requested to treat the said Application amended to this effect more specifically question nos. (1.1), (1.4) and (1.5) framed in the Application; c. notwithstanding the above factual amendment in subject Application, considering the fact that in near future the Appellant may launch vehicles with ground clearance below 170 mm in laden condition, the Appellant requested the Advance Ruling Authorities for deciding the questions raised in Application. O . In the said letter, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05 mm and in laden condition is 160 mm would fall under Sr. No. 52B of Cess Rate Notification. e. Question No. 1.5: Whether GST Compensation Cess @ 22% under Sr. No. 52B of Cess Rate Notification, will be applicable to Tata Harrier vehicle? Answer to question No. 1.5: GST Compensation Cess @ 22% under Sr. No. 52B of Cess Rate Notification would be applicable to Tata Harrier. f. Question No. 1.6: Vehicle whose ground clearance in unladen condition is more than 170mm but below 170mm in laden condition, whether will get covered under Sr. No. 52B of Cess Rate Notification? Answer to question No. 1.6: To get covered under Sr. No. 52B of Cess Rate Notification No., the ground clearance should be 170 mm or above in unladen condition. Q. Being aggrieved by the answers in Impugned Order to question Nos. 1.3 and 1.6 of the Application for Advance Ruling, the Appellant is filing the present Appeal before your honour to the extent they are answered against the Appellant. R. However, the Appellant has filed this appeal beyond the period of 30 days from the date of the communication of the Advance Ruling Order as envisaged under Section 100( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll therefore cannot be constant. 3. In this regard, the Appellant submits that in the explanation part of said Sr. No. 52B, while the parameter as to ground clearance has been mentioned as 170 mm and above, it is not mentioned whether to compute the ground clearance in laden condition or unladen condition. In the absence of the same, the Appellant submits that it has to be computed in laden condition as the vehicle would be used in a laden condition and not in an unladen condition. 4. The Appellant further submit that as per the regulations of Motor Vehicle Act, 1988, a manufacturer of motor vehicle is required to obtain certificate from The Automotive Research Association of India ( ARAI ) to the effect that the vehicle manufactured by the manufacturer is complying with the Central Motor Vehicles Rules. The said certificate is issued based on the standards laid down in this regard. ARAI is a research institution of the automotive industry with the Ministry of Heavy Industries Public Enterprises, Government of India. The ARAI has been certifying the specification/ dimensions of vehicles including ground clearance in accordance with IS-9435. 5. IS-9435 is Indian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion would get covered under Sr. 52B, is also not tenable. 9.1 While answering to Question No. 1.6 i.e. vehicle whose ground clearance in unladen condition is more than 17() mm but below 170 mm in laden condition, whether it would get covered under Sr. No. 52B of Cess Rate Notification, the Advance Ruling Authority has answered that for the purpose of said Sr. No. the ground clearance should be 170 mm or above in unladen condition. 9.2 The Appellant referring to submissions made above, submits that this finding is factually not correct. The ARAI has been computing ground clearance in laden condition under IS-9435. Hence, this finding also needs to be set aside. 9.3 The Appellant also submits that there are specified norms for computation of ground clearance. As per these norms, the dimension is to be scaled with the vehicle loaded to its maximum capacity or the approved gross vehicle weight ( GVW ). In other words, the ground clearance is measured in laden condition and the weight considered in determining the same is the maximum capacity or the approved gross vehicle weight. 9.4 Given this, the finding that the weight of passengers will not be constant and wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explanatory to each other. ...Emphasis supplied 10.2 In the present set of facts, the subject matter is methodology for determining the ground clearance which is governed by Motor Vehicle Act, 1988 and rules and regulations made in this regard. Whereas the Cess Rate Notification provides for the rate of compensation cess applicable on the goods including motor vehicle. The rate of compensation cess is different for vehicles having different capacity and features. Further, the Rate Notification does not lay down the criteria for determination of capacity and the features basis which the vehicles should be classified. 10.3 Motor Vehicle Act, 1988 and the rules made thereunder are applicable to the motor vehicles. Given this, motor vehicle is an object which is common for Rate Notification and the Motor Vehicle Act, 1988. 10.4 By applying the ratio laid down in case of Mahindra Mahindra Ltd. [2015 (324) E.L.T. 707 (Tri. - LB)] = 2015 (4) TMI 563 - CESTAT MUMBAI , the Appellant submits that for determination of ground clearance, reference should be made to Motor Vehicles Act, 1988 and the rules made thereunder. 10.5 It is relevant to note that as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and no opposition or resistance offered by the jurisdictional officer in this regard, we were satisfied that the Appellant was prevented by a sufficient cause from presenting the appeal within period of thirty days from the receipt of the impugned Advance Ruling issued by AAR, and the said delay of 20 days was not deliberate on their part. Hence, we allowed the appellant to present their appeal within a further period of 30 days in accordance of the proviso to sub section 2 of section 100 of the CGST Act 2017. Subsequent to the admission of the appeal, the representative of the Appellant reiterated their written submissions, which they have filed before us. The representative of the Respondent argued on the same line, as they have done earlier before the Advance Ruling Authority, countering the submissions made by the Appellant. Discussion and Findings 13. Heard both the parties, and have also gone through the facts of the case and all the written and oral submissions made by the Appellant as well as the Jurisdictional officer/Respondent. The Appellant, having been aggrieved with the ruling in respect of Question 1.3 and Question 1.6, have filed the present appeal aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertificate of fitness of transport vehicles. For ease of reference, section 56 of Central Motor Vehicles Act, 1988 is being reproduced herein under: (1) Subject to the provisions of section 59 and 60, a transport vehicle shall not be deemed to be validly registered for the purposes of section 39, unless it carries a certificate of fitness in such form containing such particulars and information as may be prescribed by the Central Government, issued by the prescribed authority, or by an authorized testing station mentioned in sub-section (2), to the effect that the vehicle complies for the time being with all the requirements of this Act and the rules made thereunder. . 18. Thus, the aforesaid provision mandates the manufacturer of motor vehicle to obtain certificate from the competent authority, which in the present case is The Automotive Research Association of India ( ARAI ) to the effect that the vehicle manufactured by the manufacturer is complying with the Central Motor Vehicles Rules. The said certificate issued by ARAI is based upon the standards laid down in this regard. ARAI is a research institution of the automotive industry with the Mini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d clearance in the unladen state of the vehicle, which would not vary and remain specific and constant in respect of each of the motor vehicles, should be considered while deciding its description and classification under Sr. 52 B of the Cess Rate Notification i.e. 1/2017-Compensation Cess (Rate), dated 28.06.2017. 23. As regards the observation made by the Advance Ruling Authority, it is opined that the rulings made by the Advance Ruling Authority is arbitrary and ungrounded, and the same is based on the flimsy notion in so much as they inferred that the weights of the passengers occupying the motor vehicles is not standardized, as the same will vary with persons occupying the motor vehicle, and thereby causing fluctuation in the ground clearance of the motor vehicles. In this regard, we would like to refer to the submissions made by the Appellant, wherein they relied upon the CESTAT Rulings in the case of TELCO Ltd. [2002 (143) E.L.T. 548 (Tri.-Mumbai)] = 2002 (2) TMI 717 - CEGAT, MUMBAI which has been upheld by Hon ble Supreme Court and reported in [2003 (152) E.L.T. A259 (S.C.)] = 2002 (9) TMI 876 - SC ORDER ], wherein to compute payload of the vehicle the stand ..... X X X X Extracts X X X X X X X X Extracts X X X X
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