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TMI Blog2023 (7) TMI 446X X X X Extracts X X X X X X X X Extracts X X X X ..... hat if the department wishes to change the classification proposed by an assessee then it is for the department to discharge the burden and prove that the Vehicles fall under CTH 8703, which includes within its scope motor cars and other motor vehicles principally designed for transport of persons. The department has merely relied upon the website of Polaris USA to conclude that the classification adopted by Polaris India is not correct. It was imperative for the department to have established that the Vehicles are primarily designed for transport of persons. Only when the department discharges the burden of proof, that the burden of proof would shift to the assessee. For a vehicle to be classified under CTH 8703, it is required to be principally designed for transportation of persons. The Vehicles in dispute, namely, the Ranger (non-electric) and the Ranger (electric) and Brutus Vehicles are not designed principally for transportation of persons. It would, therefore be necessary to determine what would constitute principally designed for transportation of persons In COMMISSIONER OF CENTRAL EXCISE, PUNE-I VERSUS TELCO LTD. [ 2002 (2) TMI 717 - CEGAT, MUMBAI] the Tribunal observed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Polaris USA designs, engineers, manufactures and markets innovative high quality Off Road Vehicles, including All Terrain Vehicles [ATVs], snowmobiles, motorcycles and electric powered vehicles for various applications. 3. Polaris India commenced import of vehicles from its parent company and through various Bills of Entry filed during the period from 23.07.2013 to 18.11.2016, imported the following models of vehicles, which shall be referred to as 'Vehicles': 1. Rangers (Non-Electric) [cleared under CTH 8704] (i) In Ranger Crew 900 Model (ii) In Ranger Crew 570 Model (iii) In Ranger 570 Model 2. Ranger (Electric) [cleared under CTH 8709] 3. Brutus [cleared under CTH 8709] 4. These Vehicles, which were classified by Polaris India under Customs Tariff Heading [CTH] 8704 and 8709, as vehicles for the purpose of carrying goods, material shifting and pushing and hauling activities based on their features and characteristics, have been classified under CTH 8703 in the impugned order by treating them as vehicles principally designed for transportation of persons. 5. It needs to be noted that earlier the Directorate of Revenue Intelligence [DRI] had initiated investigations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of CTI 8703 10 10 and CTI 8703 10 90 shows that for a motor vehicle to be classified under CTH 8703, it must be principally designed for transport of persons first. The fact that the vehicle is principally designed for transport of persons is required to be proved by the Department upon scrutiny and examination of the vehicles in dispute, if the Department intends to classify the Vehicles under CTH 8703 by rejecting the classification adopted by the appellant; (ii) The Vehicles in dispute have not been designed principally for transportation of persons; (iii) Incidental use by passengers does not make the Vehicles as one which are principally designed for transportation of passengers; and (iv) There is no suppression or mis-statement or declaration with intent to evade payment of service tax and so the extended period of limitation could not have been invoked, nor could penalty have been imposed. 10. Ms. Jaya Kumari, learned authorized representative appearing for the Department supported the impugned order and made the following submissions: (i) ATVs which are having off road use are for recreational purpose and principally designed for transportation of persons and not f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified in their respective headings even if presented with the tractor, and whether or not mounted on it. 3. Motor chassis fitted with cabs fall in heading 8702 to 8704, and not in heading 8706. 4. Heading 8712 includes all children's bicycles. Other children's cycles fall in heading 9503. Tariff Item Description of goods Unit Rate of duty Standard Preferential Areas (1) (2) (3) (4) (5) 8701 Tractors (Other Than Tractors of Heading 8709) 8702 Motor Vehicles for the Transport of ten or more persons, including the Driver 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 10 - Vehicles specially designed for travelling on snow; golf cars and similar vehicles: 8703 10 10 --- Electrically operated u 125% - 8703 10 90 --- Other u 125% - 8704 Motor Vehicles for the Transport of Goods 8704 10 - Dumpers designed for off- highway use - Other, with spark-ignition internal combustion piston engine: 8704 31 -- g.v.w. not exceeding 5 tonnes: --- Lorries and trucks: 8704 32 11 ---- Refrigerated u 40% - 8704 32 19 ---- Oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... storages, and plow systems. The Vehicle provides spaces and fittings, which allows easy installation of these utility accessories, and therefore provides the flexibility to the customers to customize the Vehicle as per their requirements and needs depending upon the job or work to be performed. (iv) Ranger Vehicles are ATVs primarily used for off road applications inter alia by the State Forest Departments, Border Security Force, State Police for patrolling in forests or along border or by other users for material/ waste movement, transportation of goods in large farm houses, etc. Ranger Vehicles are not meant for transport on roads. (b) Technical Features and Specifications (i) Ranger Vehicles have two sections which are separated by way of a barrier or a panel: - Front Area/Section - This is meant for the seating of driver and passengers - Rear Area/Section - This is meant for loading and carrying of cargo or material. (ii) *********** (iii) Ranger Vehicles have a box capacity ranging from 226 kg to 453 kg which is used to load, store and transport cargo. (iv) Ranger Vehicles have a payload capacity ranging from 453 kg to 794 kg which offers the Vehicle to carry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acilitate easy ingress and egress; (v) Ranger Vehicles have more weight carrying capacity for goods as compared to the weight carrying capacity for passengers; and (vi) Additionally, Ranger Vehicle is primarily marketed by the appellant to support cargo transport and similar work functions, highlighting payload capacity, including some models with more fuel-efficient diesel engines and enhanced heavy duty suspensions, brake systems, and calibration clutch. 16. Learned counsel, therefore, submitted that it is evident that the construction, build and usage of the Vehicle are meant for material shifting and transportation of cargo. Thus, according to the learned counsel, the Ranger Vehicles deserve classification under CTH 8704, which covers vehicles primarily meant for transportation of goods. 17. With regard to Brutus and Ranger Vehicles (electric), learned counsel for the appellant placed the following position as enumerated in the Memo of Appeal. BRUTUS AND RANGER VEHICLES (ELECTRIC) (a) Product Description and Usage (i) Brutus Vehicles and Ranger Electrical Vehicles are work utility vehicles predominantly used in factories, warehouses and other places by the customers. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... distances. (iv) Passenger comfort removed - Brutus Vehicles do not come standard with roofs to protect passengers from extreme weather conditions such as rain or sunlight. Further, dash, floor, seats, all are made from waterproof plastics and vinyl allowing vehicle to be an open cab vehicle for work applications. Also, vehicle can be washed with a garden hose. (v) Focus on cargo carrying - These Vehicles have separate cargo area, platform and a drop-down tailgate offering easier cargo transportation. These Vehicles also have an electric bed lift allowing for easier unloading of heavy cargo. (c) Technical Features and Specifications of standard Brutus Vehicles and Ranger Electric Vehicles (i) These Vehicles have two sections which are separated by way of a barrier or a panel: Front Area/Section - This is meant for the seating of driver and passengers Rear Area/Section - This is meant for loading of cargo or goods (d) These Vehicles have a small area for seating of passengers and can carry up to two to three passengers only. (e) Brutus Vehicles and Ranger EVs have a cargo box capacity of 447 Kg and 226.80 Kg, respectively, which is used to load, store and transport the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Presence of permanent seats with safety equipment (safety seat belts or anchor points and fittings for installing safety seat belts) for each person The vehicles have bench type seats for providing easy ingress and egress for work/ cargo carrying capabilities. Passenger comfort is compromised. Presence of rear windows along two side panels There are no rear doors or windows along the two side panels. Rear section of the vehicles contain cargo box meant for loading, storing and carrying goods and material. They also have a drop-down tailgate and tilt dump box for convenient cargo transportation. Presence of sliding, swing-out or lift-up door or doors with window, on side panels or in rear Vehicles do not have doors, windows or similar safety features on the front or rear section. However, the customer is given an option to install doors, side panels, etc. Increased windows and sight capacity especially in rear of the vehicle There are no windows in the front or rear section. Rear section contains cargo boxes and do not have windows/doors attached to it. Absence of a permanent panel or barrier between area for driver and front passengers and rear area that may be used fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for loading, storing and carrying goods and material. Additionally, the vehicles have a drop down tailgate and tilt dump box for convenient cargo transportation. Presence of sliding, swing-out or lift-up door or doors with window, on side panels or in rear for loading and unloading of cargo No door or windows are present in the Ranger Vehicles un order to allow easy ingress and egress for smooth transportation of goods. Absence of rear windows and inclusion of side panels to contain cargo The rear section of vehicles contains cargo boxes for loading, storing and carrying of cargo and does not have windows or doors to it. Presence of a permanent panel or barrier between the area for the driver and front passenger and the rear area Ranger Vehicles have two sections - Front section/area is meant for seating of driver and passengers, whereas the rear is for loading and carrying cargo. The two sections are separated by a panel/barrier. Absence of comfort features and interior finish and fittings in cargo bed area which are associated with passenger areas of vehicles (E.g. floor carpeting, ventilation, interior lighting, ashtrays) In the cargo area, there are no comfort feature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to perform pushing or hauling functions…. In other words, the evidence shows that the ATVs in issue have many different uses, some of which have nothing to do with carrying goods, some of which do." 26. Even this paragraph would indicate that Principal Commissioner has noted that the Vehicles may perform a wide variety of functions, some of which would be pushing or hauling functions. 27. For a vehicle to be classified under CTH 8703, it is required to be 'principally designed' for transportation of persons. The Vehicles in dispute, namely, the Ranger (non-electric) and the Ranger (electric) and Brutus Vehicles are not designed principally for transportation of persons. It would, therefore be necessary to determine what would constitute 'principally designed for transportation of persons'. 28. In Commissioner of Central Excise vs. Telco Ltd [2002 (143) ELT 548 (Tri.-Mumbai)], the Tribunal observed: "(f) In absence of any other criteria available to determine 'principally designed and on a plain reading of logic of the classification ruling of HSN Committee now adopted by us indicates to us, if vehicle weight is used up in the design, in favour of the passengers inasmu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that determines whether the vehicle is principally designed for transportation of persons. 31. The documents filed by the appellant establish that the design and build of the imported Vehicles are not principally meant for transportation of passengers, as from the distribution of the payload capacity between the area designed for passengers and cargo, it can be seen that out of the total capacity, more is designed to be used for carrying of cargo only and not passengers. This shows that the principal design is not for transportation of passengers but for transportation of goods. 32. This apart, the Ranger and Brutus Vehicles imported by the appellant over the years have been sold to the TN Coastal Security, NIM/UK-SDRF- Disaster Relief Forces, Border Security Surveillance and Utility Support, primarily for the purpose of transportation of goods and utility purposes. Therefore, applying the usage/functionality test, which can be applied in the instant case as CTH 8703 uses the words 'principally designed for transportation of passengers' which implies reading of an 'end use' stipulation in the Tariff as held in Telco, it is clear that the said Vehicles are not vehicles designed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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