Special purpose motor vehicle classification upheld for tractor-mounted equipment; duty demand and penalty were set aside.

Mounting a loader arm and material handling equipment on a tractor was treated as manufacture of a special purpose motor vehicle under Heading 8705 because Note 3 to Chapter 87 covers fabrication or fitting of tractors on equipment for Headings 8701 to 8705. The Tribunal followed an earlier decision on a similar loader cum dozer and rejected the Revenue's classification under Heading 8429. The classification under Heading 8705 was upheld, and the duty demand and penalty were set aside.

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Issues: Whether the goods manufactured by mounting a loader arm and material handling equipment on a tractor were classifiable under Heading 8705 as a special purpose motor vehicle, and whether the resulting duty demand and penalty could stand.

Analysis: The product was found to be the same as that considered in an earlier Tribunal decision concerning a similar loader cum dozer. Note 3 to Chapter 87 provides that, for Headings 8701 to 8705, building of body or fabrication or fitting of tractors on equipment amounts to manufacture of a motor vehicle. As the process involved mounting material handling equipment on a tractor, the resulting product fell within Heading 8705. The contrary view taken by the Revenue under Heading 8429 was therefore not sustainable.

Conclusion: The classification under Heading 8705 was upheld in favour of the assessee, and the duty demand and penalty were set aside.

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