Classification of LPG Tankers for Motor Vehicle Chassis - Central Excise - 2/89

Classification of LPG Tankers for Motor Vehicle Chassis Circular No. 2/89 Dated 13-1-1989 [From F. No. 156/34/88-CX.4 ] Government of India Ministry of Finance (Department of Revenue) New Delhi Subject : Classification of LPG Tankers for Motor Vehicle Chassis. A doubt has arisen whether in the manufacture of road tankers used for carring milk, petroleum, LPG etc, containers or tanks come into existence as separate distinct excisable goods of Chapter 73, 83, 86 or whether it is to be regarded as fabrication of bodies of motor vehicles. 2. The matter was discussed in the West Zone Tariff Conference of Collectors at Bombay on 28-7-1988 but in view of the divergent opinions expressed the Conference could not come to a definite conclusion on the correct classification of these goods. This matter has since been examined by the Board. 3. Attention is drawn to HSN Explanatory Notes at p.1410 which indicate that Chapters 86, 87 and 88 provide for the classification of parts and accessories subject to the fulfilment of the following three conditions : (a) They must not be excluded by terms of Note 2 to Section XVII. (b) They must be suitable for use solely or principally with articles of Chapter 86 to 88. (c) They must not be more specifically included elsewhere in the nomenclature. 4. The tanks/containers of road tanker or rail tank wagons do not have the identity of a separate and distinct product of tanks/containers covered by Chapters 73 or 83, or 86, but are more appropriately considered as parts of motor vehicles for carriage of goods, or trailers or tanker wagons since they have no other use and are specially designed for them. They cannot also be taken as containers of Heading 8609 in view of explanatory notes for that heading (P. 1421) and general scope of the section (p. 1409). Tanks for railway tank wagons SH 8606 are classifiable as parts of railway rolling stock Heading 8607 which covers bodies and parts of bodies (p. 1419). Similarly tanks/containers for road tankers (mounted on chassis) of Heading 8704 would be covered as body under 8707 (parts of bodies under 8708) as per notes at pages 1431, 1432 and for trailers and semi tankers under 8716 (p.1441). Similar position would prevail under CETA-85 where by virtue of Note 4 to Chapter 87, the coverage of 8706 is wider and includes chassis with cab. 5. In view of the above, it is therefore clarified that container/tank fabricated for mounting on chassis (Heading No. 8706) in the manufacture of road tankers (Heading No.8704) would be regarded as fabrication of bodies for motor vehicles under Heading 8707, or fabrication of bodies for trailer/semi trailer Heading of 8716. However, these would be eligible for benefit of exemption under Notification 217/86, if the final product i.e. motor vehicles of Heading 8704 pay duty at appropriate rates.