Motor vehicle classification turns on certified seating capacity and cleared configuration, with taxi-use exemptions following compliance.

Motor vehicles under Chapter 87 were classified by their certified and cleared configuration, including actual passenger seating capacity, rather than by an abstract reference to the basic model alone. On that basis, vehicles tested and certified for passenger carriage were held classifiable under heading 8703, not heading 8702. Because the vehicles also met the notification conditions for taxi use, including the prescribed registration certificate and timely refund claim requirements, the exemption notifications applied and the refund claims were upheld. The revenue challenge therefore failed on both classification and exemption entitlement.

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Issues: (i) Whether the vehicles were correctly classifiable under heading 8703 instead of heading 8702 on the basis of their principal design and seating capacity. (ii) Whether the respondents were entitled to the benefit of the exemption notifications and consequential refund claims for vehicles registered for use solely as taxis.

Issue (i): Whether the vehicles were correctly classifiable under heading 8703 instead of heading 8702 on the basis of their principal design and seating capacity.

Analysis: The tariff headings under Chapter 87 classify motor vehicles by passenger carrying capacity. The vehicles in dispute were tested and certified by recognized agencies, and the certificates recorded the basic model as well as variants with separate design and drawing particulars and specified seating capacity. The Motor Vehicles Act and the relevant rules require prototype testing and do not permit post-certification alteration of seating capacity. In this setting, the relevant classification is the form in which the vehicles were cleared and their actual passenger capacity at that stage, not a broad assumption based only on the basic model.

Conclusion: The vehicles were correctly classifiable under heading 8703.

Issue (ii): Whether the respondents were entitled to the benefit of the exemption notifications and consequential refund claims for vehicles registered for use solely as taxis.

Analysis: The exemption notifications applied to vehicles falling under sub-heading 8703.90, subject to payment of duty at the prescribed rate, timely refund claim, and production of the prescribed certificate of taxi registration. Since the vehicles were held to fall under heading 8703, and the record showed compliance with the notification conditions, the respondents satisfied the requirements for the claimed exemption and refund.

Conclusion: The respondents were entitled to the benefit of the notifications and the refund claims.

Final Conclusion: The common order in appeal was sustained in substance, and the revenue appeals failed because the classification and refund entitlement were both upheld in favour of the respondents.

Ratio Decidendi: For motor vehicles under Chapter 87, classification and exemption eligibility turn on the vehicle as certified and cleared, including its actual passenger carrying capacity and compliance with the notification conditions, rather than on an abstract reference to the basic model alone.

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