TaxTMI 
TaxTMI 
2023 (12) TMI 562
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.... Force Motors is engaged in the manufacture of light commercial vehicles, while GVK Research Institute is engaged in providing emergency medical services to the Government of Karnataka. GVK Research Institute invited tender for supply of Original Equipment Manufacturer [OEM] integrated vans for conversion into 367 Ambulances. Force Motors submitted the tender and ultimately GVK Research Institute placed the purchase order on Force Motors for supply of the aforesaid OEM integrated vans. 3. The issue that arises for consideration in these appeals is as to whether the vans supplied by Force Motors would merit classification as delivery vans falling under Excise Tariff Item [ETI] 8704 21 90 or as ambulance under ETI 8703 33 92 of the Central Excise Tariff Act 1985 [the Tariff Act]. 4. The Commissioner, by the impugned order, has classified the vehicles under ETI 8703 33 92 of the First Schedule to the Tariff Act as ambulances and has, therefore, directed Force Motors to pay the differential duty with penalty and interest. The Commissioner has also imposed penalty upon GVK Emergency Management & Research Institute, Dehradun (appellant of Excise Appeal No. 51661 of 2021), GVK Emerg....
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....tions of the First Schedule to the Tariff Act above, the vehicle cleared by the Noticee No. 1 above deserves to be appropriately classifiable under Chapter subheading 87033392 of the Central Excise Tariff Act, being the incomplete or unfinished vehicle having the essential characters of the complete or finished ambulance and it was also known to Noticee No. 1 at the time of clearance of the said vehicles that the same are going to be used as ambulances. xxxxxxxxxxxx 11. The Noticee No. 2, 3, 4 and 5 placed orders for supply of OEM vans for conversion into ambulance. The Noticee No. 1 willfully misstated the vehicles as delivery van and abetted with the Noticee No. 2, 3, 4 and 5 to issue purchase order for supply of delivery van with intention to evade payment of Central Excise Duty. Thus extended period of five years is correctly invokable in this case for affecting recovery of duty short paid in terms of proviso to Section 11A(1) [now Section 11A(4)] of the Central Excise Act, 1944 on account of suppression of facts, willful misstatement or fraud. The Notcee No. 1 also appears to have rendered themselves liable for penal action under Section 11AC of the Central E....
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....ers. 18. We manufactured the above referred 212 Nos. of vehicles, as per the agreed specifications and cleared the same vide various invoices, issued as per the provisions of Rule 11 of the Central Excise Rules, 2002. Annexed hereto and market as Annexures 21 to 24 are one of the invoices raised for supply of Traveller Delivery Van vehicles, as per the above referred four orders. These invoices are being submitted as a specimen. As the model of the vehicle, Traveller (type) supplied by us to the Customer were manufactured as a Delivery Van, satisfying the technical specifications, required by the Customer, was of the type - Traveller, model - Delivery Van, the above referred invoices contained the description of the goods as "Traveller Delivery Van (BSII) (EMRI) 3350 MM Wheel Base fitted with TD 2650 FTI (Bharat Stage II Compliant) diesel engine, 270 Degree rear door hinges, front disc brake, additional fitments, (4) 215/75 R15 Tyres and Ett." 19. All these 212 Nos. of vehicles were sold by us, at our factory gate, to the Customer, and accordingly the duty liability computed as per the provisions of Section 4, of the Act, was discharged by us, considering....
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....king a wrong declaration in the invoices with intention to evade payment of duty, the extended period of limitation contemplated under section 11A(4) of the Excise Act would be invokable. The relevant portions of the order passed by the Commissioner are reproduced below: Order "94. Noticee No.1 submitted that the vehicles supplied to EMRI (212 numbers), which are the subject of the above referred Show Cause Notice were not incomplete or incoherent Ambulances, but were fully completed Delivery Vans and the changes made therein specifically for the vehicles supplied to EMRI did not convert the said type of vehicle from a Delivery Van to an Ambulance. In this regard, I observed that there was no dispute on the fact that the Noticee No. 1 was aware ab initio that they had to supply the vehicles to be used as ambulances. Accordingly they designed those vehicles suitably to be used as ambulances. They only disputed that at the time of removal from the factory, the said vehicles cannot be used as such as ambulances. The said motor vehicles were modified by the Noticee No. 2 to 5 as ambulances and thereafter used as ambulances by the customers. xxxxxxxxx Thus, I find t....
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....ith intention to evade payment of duty, has rendered themselves liable for penalty under Section 11 AC of the Central Excise Act, 1944." (emphasis supplied) 9. Learned counsel for the appellants placed reliance upon the tender document and submitted that as it specifically mentions that the OEM integral vans were meant „for construction of ambulances‟, it cannot be said that the tender document mentions that they were ambulances. Learned counsel also pointed that the tender committee which evaluated the bids recommending release of purchase order in favour of Force Motors also mentions that the price was inclusive of all taxes with a clear understanding that they were for transit to an assigned body fabricator. The purchase order also mentions transportation of the vehicles for delivery to the nominated fabricators. It is for this reason that the learned counsel submitted that it was only the fabricators who converted the delivery vans into incomplete ambulances by fitting them with a stretcher, attendant seats, wailing horn, medical cabinets, fans, hooks for intravenous bottle and oxygen cylinder in patient compartment. Learned counsel also pointed out that....
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....n was started. Thus, the extended period of the limitation was correctly invoked in the facts and circumstances of the case. 12. The submissions advanced by the learned counsel for the appellant and the learned authorised representative appearing for the department have been considered. 13. Force Motors deals in various types of motors vehicles like light commercial vehicles, utility vehicles, off-road vehicles, tractors, parts and accessories. For manufacture of motor vehicles it established a manufacturing base at Pithampur in the State of Madhya Pradesh. According to the appellant, before any vehicle is marketed, in view of the provisions to the Motor Vehicles Act, 1988 [the Motor Vehicles Act], a manufacturer is required to get the type of vehicle certified from notified institutions and only upon certification the Regional Transport Authorities allow registration of that vehicle. The appellant also claims that vehicles like Traveller have different models such as Traveller Delivery Van, Traveller Ambulance, Traveller Mini Bus and Traveller Bus and these types and models are certified by the department. 14. In the year 2009, four institutions namely, Emergency Manageme....
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.... the demand that was raised was confirmed with interest and penalty. 19. The issue that arises for consideration in these appeals is as to whether the integrated OEM delivery vans, for which an order was placed by GVK Research Institute on Force Motors, would be classifiable under ETI 8703 33 92 as held in the impugned order or would be classifiable under ETI 8704 21 90 as classified by Force Motors. 20. Emphasis has been placed by both the learned counsel for the appellant and the learned authorised representative appearing for the department on the tender documents floated by GVK Research Institute and the purchase order for the procurement of the OEM integral vans. 21. It would, therefore, be useful to reproduce the relevant portions of the tender document which are as follows: "TENDER NOTIFICATION Sealed tenders are invited by Emergency Management and Research Institute (EMRI) from reputed Manufacturers / Suppliers with authorization from original manufactures has to be enclosed for supply of the items mentioned below. OEM INTEGRAL VANS. (For construction of Ambulances) 367 Nos. ***** Sale of Tender Form 28/1/2009 to 15/02/2009 La....
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....nt must have all six sides, one partition, two side walls and one rear wall (doors) and roof and floor and should not be accessible to dust and water (rain or road splashes) with all doors and windows closed. The patient compartment will have all six sides, one partition, two side wall and one rear wall (doors) and roof and floor and it will not be accessible to dust and water (Rain or road splashes) with all doors and windows closed. ***** ***** ***** Doors Dual hinged doors for easy entry and exit of paramedic/Ambulance stretcher, with 270 degree open out at the rear (positively securable in fully open condition of 270 degrees) with glass view panels. The doors would be completed in all respects including trimmings. Dual hinged doors with 270 degree open out at the rear with glass view panels. Positively securable in fully open condition of 270 degrees. The doors will be completed in all respects including trimmings. Windows Two quarter plate tinted windows minimum 1500 mm from the ground level. Two quarter plate tinted windows minimum 1450 mm from the ground level. Footboard One foot board (1600 mm long x 150 mm wide) 250-400 m....
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....or construction of ambulances‟. They do not mention that they are meant „for ambulances‟. It would also be seen from the specification contained in the tender and the specification offered by Force Motors that the manufacturer would have to take a modular approach suitable for air conditioned ambulances with stretcher cum trolley. The finished version will have adequate space in the patient cabin, where apart from positioning of the patient in a comfortable position, a number of medical and communication equipments would also have to be fixed besides the patient. It also required that patient cabin to have enough space to accommodate two paramedics for care of the patient. 26. According to the appellant, the vehicles that are supplied by Force Motors are delivery vans and not ambulances and in this connection the appellant has pointed out that after the vehicles are received from Force Motors they are sent to the fabricators for fabrication as ambulances. In this connection, the appellant has placed the tender notice issued by Emergency Research Institute, Bangalore inviting tenders from vehicle fabricators/body builders for fabrication as ambulances. 27. It....
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....t the above requirements, the delivery vans do not become full-fledged ambulances because after the said vans are received from the fabricators, the vans are equipped with ventilator, defibrillators, pulse oxymeters, stretchers, wheel chairs etc., to make them into full-fledged ambulances. These vehicles are then registered with the Regional Transportation Authority as Ambulances. 30. The goods have to be assessed in the form in which they are presented at the time of clearance and not what they may ultimately become after going through various processes. In order to invoke rule 2(a) of the General Rules of Interpretation, the goods should have the essential character of complete/finished articles. What was purchased by the appellant from Force Motors were bare delivery vans without any fittings, and as such they do not have the essential character of an ambulance. As the evidence placed on record clearly shows, it was subsequent to the clearance of the delivery vans, that the work of fabrication of the delivery vans into ambulances was entrusted to the fabricators. 31. The Commissioner, after noticing that though the vehicles at the time of delivery could not be used as ambu....