Tata Ace Garbage Tipper vehicles classified under tariff heading 8704 as goods carriers attracting 28% GST rate

AAR Maharashtra ruled that Tata Ace Garbage Tipper vehicles designed for municipal waste collection under Swachh Bharat Mission fall under tariff heading 8704 (motor vehicles for transport of goods) rather than 8705 (special purpose vehicles). Despite specialized features like 60:40/70:30 waste segregation partition, tarpaulin covers, and hydraulic tipping equipment for NGT compliance, the vehicles are classified as goods carriers per registration certificate. The ruling applies 28% GST rate under Schedule IV, rejecting the applicant's claim for special purpose vehicle classification which would have attracted different tax treatment.

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Issues Involved:
1. Classification of Tata Ace Garbage Tipper vehicles under the Customs Tariff Act.
2. Applicability of IGST rate on the said vehicles.

Issue-wise Detailed Analysis:

1. Classification of Tata Ace Garbage Tipper Vehicles:

The applicant, engaged in the manufacturing of vehicles, sought an advance ruling on whether Tata Ace Garbage Tipper vehicles, designed for garbage collection and disposal under the Swachh Bharat Mission, are classifiable under Tariff Item 8705.90.00 as Special Purpose Motor Vehicles. The applicant argued that these vehicles are specially designed for garbage applications, featuring partitions for waste segregation and covered bodies as per National Green Tribunal guidelines. They contended that these vehicles should be classified under Chapter sub-heading 8705, which covers special purpose vehicles not primarily designed for the transport of persons or goods.

The jurisdictional officer, however, submitted that the vehicles are classified as goods carriers as per the ARAI certificate and should fall under Tariff item 8704 31 90, which pertains to motor vehicles for the transport of goods. The officer argued that the vehicles do not align with the examples of special purpose vehicles listed under heading 8705, such as breakdown lorries, crane lorries, and fire fighting vehicles.

Ruling on Classification:

The Authority for Advance Ruling (AAR) observed that the applicant admitted the vehicles could be used for transporting goods. The ARAI certificate classified the vehicles as goods carriers. Therefore, the AAR concluded that the vehicles should be classified under heading 8704, not 8705, as they are designed for the transport of goods.

2. Applicability of IGST Rate:

The applicant sought clarity on whether the Garbage Tipper vehicles would attract IGST at 18% under Sr. No. 401A of Schedule III of IGST Rates, specified under Notification No. 1/2017-Integrated Tax (Rate). They argued that special purpose motor vehicles attract an 18% IGST rate.

The jurisdictional officer countered that since the vehicles are classified under heading 8704 as goods carriers, they should attract a 28% IGST rate under Sr. No. 166 of Schedule IV of IGST Rates, which applies to motor vehicles for the transport of goods other than refrigerated motor vehicles.

Ruling on IGST Rate:

The AAR ruled that the Garbage Tipper vehicles, classified under heading 8704, would attract an IGST rate of 28% as specified under Sr. No. 166 of Schedule IV of IGST Rates.

Conclusion:

- The Tata Ace Garbage Tipper vehicles are not classifiable under Tariff Item 8705.90.00 as Special Purpose Motor Vehicles.
- The vehicles do not attract IGST at 18% under Sr. No. 401A of Schedule III.
- The applicable IGST rate for the vehicles is 28% under Sr. No. 166 of Schedule IV of IGST Rates.

Order:

The AAR concluded that the Tata Ace Garbage Tipper vehicles are classified under heading 8704 and attract an IGST rate of 28%.

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