Crane classification under Excise Tariff: modified truck cranes fall under Heading 84.26, not special purpose motor vehicles.

Truck cranes mounted on a specially modified motor vehicle chassis were held classifiable under Heading 84.26, because the modified under-carriage had lost the character of an essentially complete lorry and the goods remained integrated lifting machines rather than special purpose motor vehicles under Heading 87.05. The demand was also found time-barred, as the goods had been cleared on approved classification lists and the show cause notice was issued beyond six months despite disclosure of the relevant description. With the classification demand failing on merits and limitation, the penalty was unsustainable and was set aside.

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Issues: (i) Whether truck cranes manufactured by the assessee were classifiable under Heading 84.26 or Heading 87.05 of the Central Excise Tariff Act, 1985; (ii) whether the demand was barred by limitation; (iii) whether penalty could be sustained.

Issue (i): Whether truck cranes manufactured by the assessee were classifiable under Heading 84.26 or Heading 87.05 of the Central Excise Tariff Act, 1985.

Analysis: The product was manufactured by mounting cranes on a specially modified under-carriage built from a motor vehicle chassis. The Tribunal applied the HSN explanatory notes and held that Heading 87.05 covers essentially complete motor vehicle chassis or lorries on which a crane is simply mounted, whereas self-propelled machines in which the working elements are located in the cab of the machine mounted on a wheeled chassis remain classifiable under Heading 84.26. Since the modified chassis lost the character of a lorry and the machine was an integrated lifting machine, the goods did not answer Heading 87.05.

Conclusion: The truck cranes were classifiable under Heading 84.26 and not under Heading 87.05, in favour of the assessee.

Issue (ii): Whether the demand was barred by limitation.

Analysis: The goods had been cleared on the basis of classification lists filed and approved by the proper officer. The show cause notice was issued beyond six months from the relevant date, and the assessee had disclosed the relevant description in the classification lists. In these circumstances, the longer period was not justified and the demand was time-barred.

Conclusion: The demand was barred by limitation, in favour of the assessee.

Issue (iii): Whether penalty could be sustained.

Analysis: Once the classification demand failed on merits and limitation, there was no basis to sustain the penalty.

Conclusion: The penalty was unsustainable and was set aside, in favour of the assessee.

Final Conclusion: The classification adopted by the department was rejected, the demand was held unsustainable, and the assessee obtained complete relief.

Ratio Decidendi: A crane mounted on a specially modified under-carriage that is no longer an essentially complete motor vehicle chassis or lorry is classifiable as a crane under Heading 84.26 rather than as a special purpose motor vehicle under Heading 87.05.

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