2019 (11) TMI 421 - AAAR - GST

Appellate ruling on Tata Harrier's ground clearance for Cess rates under Tariff Item 8703

In Re: M/s. Tata Motors Limited

The Appellate Authority set aside the Advance Ruling Authority's classification of Tata Harrier under Tariff Item 8703 32 91 and ruled that for the ... Time limitation - Appellant has filed this appeal beyond the period of 30 days from the date of the communication of the Advance Ruling Order - HELD THAT:- The Appellant has filed this appeal beyond the period of 30 days from the date of the communication of the Advance Ruling Order as envisaged under Section 100(2) of the CGST Act, 2017, which provides that every appeal shall be filed within a period of 30 days from the date on which the ruling sought to be appealed against is communicated to the concerned officer, the jurisdictional officer and the applicant. 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. Classification of goods - Rate of Compensation Cess - Tata Harrier vehicle - 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 Cess (Rate), dated 28.06.2017. Section 56 of Central Motor Vehicles Act, 1988 mandates the manufacturer of motor vehicle to obtain certificate from the competent authority, which in the present case is ‘The Automotive Research Association of India (‘ARAI’)’ to the effect that the vehicle manufactured by the manufacturer is complying with the Central Motor Vehicles Rules. The said certificate issued by ARAI is based upon the standards laid down in this regard. ARAI is a research institution of the automotive industry with the Ministry of Heavy Industries & Public Enterprises, Government of India. The ARAI has been certifying the specification/ dimensions of vehicles including ground clearance in accordance with IS-9435 - Further, it is seen that IS-9435 is Indian Standard for terms and definitions relating to dimensions of road vehicles issued by Bureau of Indian Standards. 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 - it is observed that any vehicles whose ground clearance in laden state are below 170 mm. will not get covered under Sr. 52B of the Cess Rate Notification i.e. Notification No. 1/2017-Compensation Cess (Rate), dated 28.06.2017. Merits of the Advance Ruling order - Validity of order wherein the authority of the Advance Ruling has held that the ground clearance of the motor vehicle should be measured in unladen condition, which they attributed to the reasons that the weights of the passengers occupying any vehicle is not standardized, and will vary from passenger to passenger, and hence is not constant - HELD THAT:- The rulings made by the Advance Ruling Authority is arbitrary and ungrounded, and the same is based on the flimsy notion in so much as they inferred that the 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 ground clearance of the vehicle in the laden state. 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? - HELD THAT:- 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. 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? - HELD THAT:- Vehicle whose ground clearance in unladen condition is more than 170mm but below 170mm in laden condition, will not get covered under Sr. No. 52B of Cess Rate Notification. Issues Involved:1. Classification of Tata Harrier under the appropriate tariff item.2. Applicability of the conditions in the main clause and explanation of Sr. No. 52B of the Cess Rate Notification.3. Consideration of ground clearance in laden or unladen condition for the purpose of Cess Rate Notification.4. Applicability of GST Compensation Cess @ 22% to Tata Harrier.5. Condonation of delay in filing the appeal.Detailed Analysis:1. Classification of Tata Harrier:The Appellant, Tata Motors Limited, sought a ruling on whether Tata Harrier is classifiable under Tariff Item 8703 32 91 or 8703 32 99 of the First Schedule to the Customs Tariff Act, 1975. The Advance Ruling Authority (ARA) classified Tata Harrier under Tariff Item 8703 32 91.2. Applicability of Conditions in Sr. No. 52B of Cess Rate Notification:The Appellant questioned whether a vehicle must satisfy both the main clause and the conditions in the explanation (length exceeding 4000 mm and ground clearance of 170 mm and above) to be covered under Sr. No. 52B. The ARA ruled that the vehicle must satisfy both the main clause and the conditions mentioned in the explanation.3. Consideration of Ground Clearance:The core issue was whether the ground clearance for the purpose of Sr. No. 52B of the Cess Rate Notification should be considered in laden or unladen condition. The ARA ruled that ground clearance must be measured in the unladen condition. The Appellant argued that ground clearance should be measured in the laden condition, as per the standards set by the Automotive Research Association of India (ARAI) and Indian Standard IS-9435, which states that ground clearance should be measured in a fully laden vehicle to the maximum authorized Gross Vehicle Weight (GVW).4. Applicability of GST Compensation Cess @ 22%:Based on the ARA's ruling that Tata Harrier falls under Sr. No. 52B, the ARA concluded that GST Compensation Cess @ 22% is applicable to Tata Harrier.5. Condonation of Delay:The Appellant filed the appeal beyond the 30-day period stipulated under Section 100(2) of the CGST Act, 2017. The Appellant requested condonation of the 20-day delay, citing reasons such as being busy with financial year-end activities and technical glitches on the GST portal. The jurisdictional officer did not oppose this request. The Appellate Authority condoned the delay, allowing the appeal to be heard on merits.Appellate Authority's Findings:Ground Clearance Consideration:The Appellate Authority found that the term 'ground clearance' is not defined in the GST Law, including the GST (Compensation to States) Act, 2017. Therefore, they referred to the Central Motor Vehicles Act, 1988, and the rules made thereunder, which are in pari materia with the GST (Compensation to States) Act, 2017. As per IS-9435, ground clearance is to be measured in a fully laden state. The Appellate Authority concluded that the ARA's ruling to measure ground clearance in the unladen condition was arbitrary and ungrounded.Final Order:The Appellate Authority set aside the ARA's ruling and concluded:- 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 the laden condition only.- A vehicle whose ground clearance in the unladen condition is more than 170 mm but below 170 mm in the laden condition will not get covered under Sr. No. 52B of Cess Rate Notification.This comprehensive analysis ensures that the significant phrases and legal terminology from the original text are preserved, providing a thorough understanding of the judgment.