TaxTMI 
TaxTMI 
2023 (7) TMI 446
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.... USA designs, engineers, manufactures and markets innovative high quality Off Road Vehicles, including All Terrain Vehicles [ATVs], snowmobiles, motorcycles and electric powered vehicles for various applications. 3. Polaris India commenced import of vehicles from its parent company and through various Bills of Entry filed during the period from 23.07.2013 to 18.11.2016, imported the following models of vehicles, which shall be referred to as 'Vehicles': 1. Rangers (Non-Electric) [cleared under CTH 8704] (i) In Ranger Crew 900 Model (ii) In Ranger Crew 570 Model (iii) In Ranger 570 Model 2. Ranger (Electric) [cleared under CTH 8709] 3. Brutus [cleared under CTH 8709] 4. These Vehicles, which were classified by Polaris India under Customs Tariff Heading [CTH] 8704 and 8709, as vehicles for the purpose of carrying goods, material shifting and pushing and hauling activities based on their features and characteristics, have been classified under CTH 8703 in the impugned order by treating them as vehicles principally designed for transportation of persons. 5. It needs to be noted that earlier the Directorate of Revenue Intell....
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....burden to prove that the correct classification is Customs Tariff Item [CTI] 8703 10 10/ 8703 10 90. A perusal of CTI 8703 10 10 and CTI 8703 10 90 shows that for a motor vehicle to be classified under CTH 8703, it must be principally designed for transport of persons first. The fact that the vehicle is principally designed for transport of persons is required to be proved by the Department upon scrutiny and examination of the vehicles in dispute, if the Department intends to classify the Vehicles under CTH 8703 by rejecting the classification adopted by the appellant; (ii) The Vehicles in dispute have not been designed principally for transportation of persons; (iii) Incidental use by passengers does not make the Vehicles as one which are principally designed for transportation of passengers; and (iv) There is no suppression or mis-statement or declaration with intent to evade payment of service tax and so the extended period of limitation could not have been invoked, nor could penalty have been imposed. 10. Ms. Jaya Kumari, learned authorized representative appearing for the Department supported the impugned order and made the following submissions: ....
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....ansport, in connection with the main use of the tractor, of tools, seeds, fertilizers or other goods. Machines and working tools designed for fitting to tractors of heading 8701 as interchangeable equipment remain classified in their respective headings even if presented with the tractor, and whether or not mounted on it. 3. Motor chassis fitted with cabs fall in heading 8702 to 8704, and not in heading 8706. 4. Heading 8712 includes all children's bicycles. Other children's cycles fall in heading 9503. Tariff Item Description of goods Unit Rate of duty Standard Preferential Areas (1) (2) (3) (4) (5) 8701 Tractors (Other Than Tractors of Heading 8709) 8702 Motor Vehicles for the Transport of ten or more persons, including the Driver 8703 Motor Cars and Other Motor Vehicles Principally Designed for the Transport of Persons (Other than those of Heading 8702), Including Station Wagons and Racing Cars 8703 10 - Vehicles spe....
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....has placed the factual portion contained in the Memo of Appeal in respect of Ranger Vehicles (non-electric) and the same is produced below: RANGER VEHICLES (NON-ELECTRIC) a) Product Description and Usage (i) Ranger Vehicle is a market leader providing best off-road capability and hardest working vehicle allowing cargo carrying capabilities to locations where other vehicles cannot go. All Ranger Vehicles come with four wheel drive to offer ability to work in wet and muddy regions. (ii) The build and design of the Ranger Vehicle focus on cargo and hitch toe capabilities along with offering features which are relevant for transporting goods to off road places. Ranger Vehicles have a separate cargo area, platform and a drop-down tailgate offering easier cargo transportation. Ranger Vehicles also have a tilt dump box for easier unloading of the cargo. (iii) The Ranger Vehicle is manufactured with an intent to transport cargo and therefore offers various options to install utility accessories such as winches, cargo and bed storages, and plow systems. The Vehicle provides spaces and fittings, which allows easy installation of these utility accessorie....
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.... passengers from extreme weather conditions such as rain or sunlight. Further, dash, floor, seats, all are made from waterproof plastics and vinyl allowing vehicle to be an open cab vehicle for work applications, garden which can be washed with a hose. 15. The contention of the learned counsel for the appellant, based on the features, specifications, technical capabilities and usage as described above, is that: (i) The Ranger Vehicles (non-electric) are primarily designed and intended for transportation of cargo on off road surfaces; (ii) Various Ranger Vehicle models are four- wheel, light-weight vehicles with a top speed of 60 mph or less having different payload abilities ranging from 454 kg to 907 kg and incorporate a segregated large rear box or cargo area that tilts to facilitate unloading of goods; (iii) Although various models can carry anywhere from 2-6 passengers, primarily seats and vehicle configurations are designed for work and cargo hauling, depending upon users' requirements; (iv) Further, seating area in Ranger Vehicle is smaller and generally not protected with doors or similar safety features, as in passenger vehicles, i....
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....es the flexibility to the customers to customize the Vehicle as per their requirements. (iv) Brutus is predominantly used in floods and other disaster hit areas wherein the Vehicle assists in clearing the roads, plowing off snow after a major disaster, etc. (b) Special features of standard Brutus Vehicles and Ranger (Electric) Vehicles (i) No seating comfort - These Vehicles have bench style seating allowing easy ingress and egress with transport of goods as focus. Passenger comfort is compromised (as shown in the image below) in these Vehicles for cargo/ goods carrying capabilities. The set-up of these Vehicles is ergonomically different than a people carrier. (ii) Rear Suspension - These Vehicles have suspension designed to increase load carrying capability while keeping ground clearance allowing vehicle to carry goods to locations which other vehicles cannot carry. Similar to Ranger Vehicles, the suspension in Brutus is specifically designed to be able to carry massive loads while maintaining ground clearance. (iii) Hauling/Trailer Capabilities - These Vehicles have Trailer Hitch attachment which allows the Vehicles to have additional....
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.... cargo. Brutus has more weight carrying capacity for goods as compared to the weight carrying capacity for passengers. 18. Learned counsel for the appellant contented that it is evident from technical literature, product features, images and videos that Brutus and Ranger Electric Vehicles are meant for transportation of goods and not passengers. Thus, according to the learned counsel, special features of Brutus and Ranger Electric Vehicles completely fit within the scope of Work Trucks and Vehicles covered under CTH 8709 and, accordingly, appropriately classifiable under CTH 8709. 19. Learned authorised representative appearing for the department submitted that the Vehicles imported by Polaris India deserve to be classified under CTI 87031010 CTI 87031090 and in this connection placed reliance on the website of Polaris USA. Learned authorised representative submitted that the Vehicles are principally designed for transportation of persons and not for transportation of goods. In this connection learned authorised representative also placed reliance upon serial no. 6 of Explanatory Notes to HSN 87.03 and HSN 87.09. 20. It would be useful to compare the salient features for c....
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....omfort features and interior fitting which are prevalent in vehicles meant for passengers. There is no door, windows or roofs. However, an option to install them is given to the customers. Uni-body construction without defined separation between passenger and cargo locations They do not have uni-body construction. There is a defined separation between driver and passenger section and cargo section. 21. Similarly, it would be appropriate to compare the salient features for classification under CTH 8704 with the features of the Vehicles and the same are as follows: Salient features for classification under CTH 8704 Features of the Vehicles Presence of bench-type seats without safety equipment for each person or passenger amenities in the area behind the area for the driver and front passengers. These vehicles have bench type seats for providing easy ingress and egress for work/ cargo carrying capabilities. They come with only basic safety features which are to be present in all vehicles like seat belts for drivers and passengers. Presence of separate cabin for driver and passenger and a separate open platform with side panels and a drop-down tailgate (pick-up ....
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....hin its scope motor cars and other motor vehicles principally designed for transport of persons. The department has merely relied upon the website of Polaris USA to conclude that the classification adopted by Polaris India is not correct. It was imperative for the department to have established that the Vehicles are primarily designed for transport of persons. Only when the department discharges the burden of proof, that the burden of proof would shift to the assessee. In this connection reliance can be placed on the decision of the Supreme Court in H.P.L Chemicals vs. CCE., Chandigarh [2006 (197) E.L.T. 324 (SC)], wherein the following observations have been made: "29. This apart, classification of goods is a matter relating to chargeability and the burden of proof is squarely upon the Revenue. If the Department intends to classify the goods under a particular heading or sub-heading different from that claimed by the assessee, the Department has to adduce proper evidence and discharge the burden of proof. In the present case the said burden has not been discharged at all by the Revenue." 25. The reason assigned in the impugned order passed by the Principal Commissioner....
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....e by crew/family members/farm labour, should not over-ride the essential characteristic of the vehicles herein which is for transport of goods/spare parts & tools/goods-farm produce for which it is designed put to use. The transport of person is incidental. That farm labour/crew/family members could travel in relative comfort of a Tractor/Trolley one encounters in the Rural Indian Scene, will not contribute to be a factor to determine those transports as 'principally designed for persons'. *********** Therefore any intended/isolated advertised use by the manufacturer, does not induce us to conclude that the entity under dispute, are 'principally designed for transport of person'. A single isolated advertisement cannot be a cause to classify the entity under 8703. The substantial normal use, as it appears, from the documents in the Miscellaneous Application of Revenue is for transport of goods." (emphasis supplied) 29. In Mahindra and Mahindra Ltd. vs. CCE & ST, Hyderabad-I [2019 (367) E.L.T. 465 (Tri.- Hyd.)], the Tribunal observed: "6.5 In the event, we have no hesitation in holding that the test laid down in the earlier Tribunal decision viz; that a ....