TMI Blog2023 (7) TMI 446X X X X Extracts X X X X X X X X Extracts X X X X ..... at 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 obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Polaris Industries Inc., USA [Polaris USA]. 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 D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to prove that the correct classification is Customs Tariff Item [CTI] 8703 10 10/ 8703 10 90. A perusal 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , fertilizers or other goods. Machines and working tools designed for fitting to tractors of heading 8701 as interchangeable equipment remain classified 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8704 90 19 ---- Other u 40% - 8704 90 90 --- Other u 40% - 8709 Works Trucks, Self-propelled, not fitted with lifting or handling equipment, of the type used in factories, warehouses, dock areas or airports for short distance transport of goods; tractors of the type used on railway station platforms; parts of the foregoing vehicles - Vehicles: 8709 11 00 -- Electrical u 10% - 8709 19 00 -- Other u 10% - 8709 90 00 - Parts Kg. 10% - 13. It is pointed out by the learned counsel f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 heavy loads to places where other vehicles cannot go. (v) Additionally, Ranger Vehicles have a hitch toe capacity ranging from 680 Kg to 1134 kg which provides ease in transportation of heavy weighted goods. (vi) Ranger Vehicles have high engine capacities ranging from 44 HP to 82 HP which allow the vehicle to carry loads to off road regions. *********** (c) Special Features of standard Ranger Vehicles (i) No seating comfort- Ranger Vehicles have bench type seating allowing for easy ingress and egress for work/cargo carrying capabilities. Hence, passenger comfort is compromised for cargo/goods carrying capabilities. (ii) ************ (iii) Hauling/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, 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. Ranger Electric vehicles are the electric vehicles which are run on AC induction motors whereas Brutus Vehicles are light-weight diesel powered vehicles with hydrostatic transmission. These Vehicles also have all season climate control functions and come with optional front attachments to create new levels of productivity outdoors. (ii) The build and design of the Brutus/Ranger Electric vehicles focus on cargo and hitch toe capabilities along with offering features which are relevant for transportation of goods and performing various work applications like plow, lift, scoop, blow etc. as shown in the images below. These Veh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atures 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 cargo. (f) Brutus Vehicles and Ranger EVs have a payload capacity of 793.80 Kg and 453.60 Kgs, respectively, which allows the Vehicles to carry heavy loads. (g) Brutus Vehicles and Ranger EVs have a hitch toe capacity of 907.2 Kg and 680.40 Kg respectively which provides ease in transportation of heavy weighted goods. (h) Brutus Vehicles have a top speed of 30 mph or less and Ranger EVs have a top speed of 25 mph or less. (i) These Vehicles have a bench type seating to allow easy ingress and egress and do not have any passenger comfort amenities, that are provides in vehicles designed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 for transport of both passengers and cargo The Vehicles have two sections front for driver and passengers and rear for loading of cargo. The sections are separated by a defined physical separation in the form of a panel or a barrier. Lack of substantial cargo room Vehicles have separate cargo area, platform and a drop-down tailga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dditionally, 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, inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iverse buying public. Some of the utility ATVs may, no doubt, be purchased primarily as personal or corporate workhorses 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of passengers or for transportation of goods, is still the settled yardstick to be applied in such a controversy. 30. Thus, it is the gross weight usage 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 transportatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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