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2019 (11) TMI 421

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..... ehicle - 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 Ce .....

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..... e 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. 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 groun .....

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..... otification 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. 52A of Cess Rate Notification provides that motor vehicle of engine capacity exceeding 1500 cc other than motor vehicles specified against entry at S No. 52B would attract the Compensation Cess at rate of 20%. Whereas, Sr. No. 52B of Cess Rate Notification provides that motor vehicles of engine capacity exceeding 1500 cc, popularly known as Sports Utility Vehicles (SUVs) including utility vehicles .....

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..... ore than seven persons, including the driver - Other : 8703 32 91 - Motor cars 8703 32 92 - Specialized transport vehicles such as ambulances, prison vans and the like 8703 32 99 - Other K. Since, the Tata Harrier has engine capacity of 1956 cc and seating capacity of 5 persons (including driver), the Appellant was of the view that it would be classifiable under HSN 8703 32 91. L. In order to get clarity on the classification of Tata Harrier and also on other aspects, the Appellant filed an application before Maharashtra Advance Ruling Authority (hereinafter referred to as ARA ) and sought ruling on the following questions: a. Whether Tata Harrier vehicle, which has specifications as mentioned above, is classifiable under Tariff Item 8703 32 91 or 8703 32 99 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975)? b. If the vehicle satisfies only the conditions mentioned in main clause but is not satisfying any one or all of the conditions mentioned in Explanation , whether it would be covered under Entry at Sr. No. 52B of Notification No. 1/2017-Compensation Cess (Rate) dated 28.06.2017 as amended? c. Whether the ground clearance of the vehicle is to be considered in la .....

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..... nt also framed Additional Question as below: Q. No. (1.4A) 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 Notification No. 1/2017-Compensation Cess (Rate) dated 28.06.2017 as amended. P. The ARA passed Order No. GST-ARA-93/2018-19/B-32, dated 22.03.2019 = 2019 (5) TMI 494 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA as follows: a. Question 1.1: Whether Tata Harrier vehicle, which has specifications (supra), is classifiable under Tariff Item 8703 32 91 or 8703 32 99 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975)? Answer to question No. 1.1: Tata Harrier is classifiable under Tariff Item 8703 32 91 of the First Schedule. b. Question No. 1.2: For a motor vehicle to get covered under Sr. No. 52B of Cess Rate Notification as SUV/UV, whether it has to satisfy only the conditions mentioned in main clause i.e. engine capacity above 1500 cc and popularly known as SUV/ UV or in addition, it has to also satisfy the conditions mentioned in Explanation i.e. length exceeding 4000 mm and ground clearance of 170 mm and above? In short, if the vehicle satisfies only the condi .....

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..... the jurisdictional officer and the applicant. S. In view of the above delay, which amounts to 20 days beyond the date of the communication of the Advance Ruling, the Appellant has separately filed a separate application for the condonation of delay in filing of the present appeal incorporating, in detail, the reasons for the said delay, and has pleaded for the condonation of the delay, and for the admission of the instant appeal for hearing on merits. GROUNDS OF APPEAL 1. At the outset, the Appellant submits that the Impugned Order is incorrect both on facts and on legality. The Appellant do not agree with the findings in the Impugned Order in respect of answers to question Nos. (1.3 and 1.6 i.e. ground clearance to be arrived in unladen condition). The Impugned Order proceeds on incorrect footing in answering to said questions (1.3 and 1.6) and hence, it is liable to be set aside to that extent. The ruling pronounced by the Advance Ruling Authority that ground clearance is to be computed in unladen condition is legally not tenable. 2. The Appellant had raised question No. 1.3 before Maharashtra Advance Ruling Authority as to whether under Sr. No. 52B of Cess Rate Notification, th .....

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..... e part of the vehicle. The centre part is that part contained between two planes parallel to and equidistant from the longitudinal median plane (of the vehicle)(see 4) and separated by a distance which is 80 percent of the least distance between points on the inner edges of the wheels on any one axle. Note - This measurement has to be done on fully laden vehicle to the maximum authorized GVW. .....Emphasis supplied 6. Further, the vehicle should meet the Standards laid down under Motor Vehicle Rules. The objective for defining the minimum ground clearance is considering the fact that the vehicle is safe and reliable for the passengers. Since, the standards are laid down keeping in view the safety of vehicle, the ground clearance should be measured while the passengers are on board the vehicle i.e. in laden condition and not in unladen condition. 7. As regards the finding of the Maharashtra Advance Ruling Authority that the ground clearance in laden condition cannot be considered on the ground that the same will vary depending on the weight of passengers and luggage occupying the vehicle and will therefore cannot be constant, the Appellant submit that it is not correct in as much as .....

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..... thod to determine the round clearance the reference should be drawn from The Central Motor Vehicle Rules 1989 10.1 It is a settled position of law that if a term is not defined in the Act or the rules, then the meaning of the said term should be drawn from the Statue which governs the same subject. The view of the Appellant finds support in the case of Mahindra & Mahindra Ltd. [2015 (324) E.L.T. 707 (Tri. - LB)] = 2015 (4) TMI 563 - CESTAT MUMBAI wherein the Larger Bench of Mumbai Tribunal held that reference can be made to the legislation which is pari materia to the subject under consideration. The relevant extract of the decision is reproduced below: 5.3 Both Chapter 87 of the Central Excise Tariff Act, 1985 and the Motor Vehicles Act, 1988, deal with the same subject matter of classification of motor vehicles, one for the purpose of taxation and the other for the purpose of road transport management. In other words they can be considered as pari materia, that is, statutes dealing with the same subject matter or forming part of the same system. Statutes are in pari materia which relate to the same person or thing, or to the same class of persons or things. To quote from the .....

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..... s that the impugned Order should be set aside, to the extent it states that for the purpose of Cess Rate Notification, the ground clearance should be considered in unladen condition. Personal Hearing 11. A personal Hearing in the matter was conducted on 22.08.2019, wherein Shri Rajesh Shukla, Head, Indirect Tax and Shri Sanjay Ekhande, Dy. General Manager, Indirect Taxation, appearing on behalf of the Appellant, first pleaded for the condonation for the delay of 20 days in filing the present appeal by submitting as under: (a) That the Appellant is of one of the largest manufacturers of automobiles in India and also contributes substantially towards tax collection by the Government; (b) In every financial year, the Appellant files 25-30 appeal (approx.), most of which are filed in a timely manner and hardly there are any cases of delay in filing of appeals or reply to notices, thus emphasizing that they are law abiding entity; (c) That they could not appeal the present appeal in time on account of the following reasons: (i) That they were busy in closing the books of account and preparation of financial statements during the months of May 19 and June 19. (ii) That they were busy in .....

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..... o question No. 1.3: The ground clearance given in the Cess Rate Notification must be arrived in unladen condition. 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. 14. On perusal of the aforementioned ruling and the submissions made by the Appellant against the same, the moot issue, before us, is as under: (i) 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. 15. To decide the aforementioned issue, we would like to discuss the meaning of the term ground clearance in relation to the motor vehicle. However, it is observed 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 ve .....

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..... stance between the ground and the lowest point of the centre part of the vehicle. The centre part is that part contained between two planes parallel to and equidistant from the longitudinal median plane (of the vehicle) (see 4) and separated by a distance which is 80 percent of the least distance between points on the inner edges of the wheels on any one axle. Note - This measurement has to be done on fully laden vehicle to the maximum authorized GVW. 20. Thus, on perusal of the Note part of the abovementioned clause, it is clearly revealed that the minimum ground clearance of any motor vehicles has to be measured only in fully laden state of that particular motor vehicle. There is no mention of unladen state anywhere in the said standard IS-9435 in so far as the measurement of ground clearance of a motor vehicle is concerned. Thus, it can decisively be inferred that as per the standards set out under IS 9435 : 2004 issued by Bureau of Indian Standard, which is followed by the ARAI, the authorized body for certifying the fitness of the motor vehicles, the ground clearance of the motor vehicles in their unladen state has no significance or implication. 21. Accordingly, it is observe .....

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..... ich in turn will cause fluctuation in the ground clearance of the vehicle in the laden state. They relied on this theory and eventually decided that the ground clearance of the vehicle will be measured in the unladen state to determine the applicability of the compensation cess as prescribed under the Cess Rate Notification i.e. Notification No. 1/2017- Compensation Cess(Rate) dated 28.06.2017. 24. Hence, in view of our findings herein above, we pass the following order: ORDER We, hereby, set aside the ruling pronounced by the Advance Ruling Authority in respect of the following questions raised by the Appellant and answer them as under: Q.1.3 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? Ans: For the purpose of Cess @ 22% under Sr. No. 52B of Cess Rate Notification, the ground clearance of the vehicle is to be considered in laden condition only. Q. 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? Ans: Vehicle whose g .....

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