2004(08)LCX0315
IN THE CESTAT, WEST ZONAL BENCH, MUMBAI
S/Shri Krishna Kumar, Member (J) and C. Satapathy, Member (T)
VOLVO INDIA PVT. LTD.
Versus
COMMISSIONER OF CUSTOMS, NHAVA SHEVA
Order No. A/779/2004-WZB/C-II, dated 23-8-2004 in Appeal No. C/930/98-Mum.
CASE CITED
General Marketing and Manufacturing Co. Ltd. v. The State of Tamil Nadu — 1980 (45) STC 96 (Mad.) — Referred [Para 1]
DEPARTMENTAL CLARIFICATIONS CITED
C.B.E. & C. Circular No. 156/15/75-CX. 4, dated 13-2-1976.............................................. [Para 1]
C.B.E. & C. Circular No. 156/21/76-CX. 4, dated 10-1-1978.............................................. [Para 1]
Advocated By : S/Shri S.N. Kantawal and V. Sridharan, Advocates, for the Appellant.
Shri Vimlesh Kumar, JDR, for the Respondent.
[Order per : C. Satapathy, Member (T)]. - Heard both sides. Shri V. Sridharan, learned advocate for the appellants states that both the lower authorities have classified the impugned goods under Heading 87.04 as “Truck” whereas the appellants seek classification under Heading 87.01 as “Tractor”. He produces Bills of Entries assessing identical goods imported by the appellants themselves at Mumbai and Chennai Custom Houses under Heading 87.01 whereas the impugned goods under the present appeal have been assessed under Heading 87.04 at Nhava Sheva Custom House. He further states that in other countries, such goods are classified under Heading 87.01 and submits an e-mail dtd. 16-8-2004 to this effect. He states that the Automotive Research Association of India have certified the impugned goods to be tractors as also the registration certificates issued by the motor vehicle authorities under the Motor Vehicles Act, 1988 and Rules made thereunder. He submits illustration of the impugned goods (vide Page 2) which, when coupled with semi-trailers (illustration at Page 3) results in the combination (illustration at Page 3) which is used for transporting goods. According to him the impugned goods as imported are only prime movers. He states that according to Chapter Note No. 2 to Chapter 87, “Tractors” means vehicles constructed essentially for hauling or pushing another vehicle, appliance or load and that in the instant case, the impugned goods have been constructed solely for hauling another vehicle namely Semi Trailer which is classifiable as a vehicle under Heading 87.16 as seen from the Explanatory Note to HSN. He states that Heading 87.01 covers tractors of various types including road tractors which the impugned goods are. He also states that since the impugned goods, on their own without a trailer, cannot carry any goods, they cannot be classified under Heading No. 87.04 as motor vehicles for transport of goods. He also draws our attention to the Classification Decision issued by the WCO (No. 442) which clearly indicates that even when the tractor vehicle is coupled to a semi-trailer by a 5th wheel coupler, the tractor vehicle should be classified under sub-heading 8701.20 as a Road Tractor and the Semi-Trailer, as per the another classification decision of WCO (No. 474), has to be classified separately under sub-heading 8716.39. He also refers to Board’s Circular No. 156/15/75-CX.-4, dtd. 13-2-1976 and No. 156/21/76-CX-4, dt. 10-1-1978 issued under the earlier Central Excise Tariff to show that tractor tuggers and tractor haulers which are akin to the impugned goods were always classified as tractors without making distinction between Industrial tractors and agricultural tractors. He also refers to the decision of the Hon’ble Madras High Court in the case of General Marketing and Manufacturing Co. Ltd. v. The State of Tamil Nadu - 1980 (45) STC 96 to show that the difference between a tractor and another vehicle is that the tractor merely pulls another item of machinery. It is his contention that the lower authorities have wrongly presumed that tractor is meant only for agricultural use.
2. Shri Vimlesh Kumar, learned S.D.R. is not in a position to explain why the decision taken in respect of imports through Nhava Sheva treats the impugned goods differently from the imports taking place at Mumbai and Chennai ports. He, however, supports the impugned orders passed by the lower authorities and places heavy reliance on the catalogue of the supplier of the impugned goods to show that the suppliers themselves have described the impugned goods as trucks. He particularly draws our attention to the following text appearing in the catalogue of the supplier company “Volvo”:-
“The FH12-340 is the right truck to choose when low fuel consumption means more than high average speed. It is ideal for long haul transport operations involving gross combination weights of between 34 and 42 tonnes, on good and moderately hilly roads. The fuel consumption is low, and the performance rating of the driveline is quite sufficient to give a cruising speed that matches the traffic situation, The recommended maximum GCW is 44 tonnes.
The FH12-380 is the perfect truck for fast, economical long haul transport involving GCWs of between 38 and 48 tonnes. The performance rating of the driveline permits a high average spped on not too hilly roads. The recommended maximum GCW is 52 tonnes.
The FH12-420 is designed for heavy duty and demanding long haul transport operations involving GCWs of between 44 and 52 tonnes. The driveline has a high performance rating that permits a high average speed and driving on very hilly roads. The recommended maximum GCW is 60 tonnes on flat roads.”
3. After hearing both sides at length and perusal of the case records, we find that the lower authorities have classified the impugned goods as trucks under Headings 87.04 mainly on account of the fact that these have been described as trucks in the supplier’s own catalogue. They have also emphasized the fact that these are not used for agricultural purposes. We are of the view that while the catalogue of the manufacturer/supplier can have a hearing on the classification, the same cannot be the sole basis or the determining factor for arriving at classification of a product. At times, the catalogues either emphasize a particular aspect of the goods to attract the buyers or they may have been tailor-made to mis-lead the customs authorities (though not in this case). It appears that the catalogue in this case is emphasizing the fact that the impugned goods will perform the function of truck without stating that this can only be achieved when coupled with the semi trailer. Such a description in the catalogue cannot alter the characteristics of the goods under import whose classification is to be determined irrespective of how it has been described in the catalogue. The emphasis on non-use for agricultural purposes is also misplaced as Heading 84.01 includes all kinds of tractors including road-tractors for semi-trailers.
4. We find from the affidavit filed by the appellants that:-
At the time of import, the impugned goods were not attached or coupled with semi-trailer but are designed solely to be coupled with semi-trailers so as to be used as Road tractors. Thus, the sole use of the product is to haul a semi-trailer. The product as imported did not have any body fitted to it nor can a body be subsequently fabricated and fitted or mounted on it. It is always used as a prime mover to haul another trailer. The product as imported has no payload capacity of its own. Therefore, it is not capable of transporting any goods on its own. Being a prime mover, its sole purpose is to couple it with a semi-trailer. For this purpose, the goods as imported were duly fitted with ‘fifth wheel’ assembly. The ‘fifth-wheel assembly’ is a nomenclature peculiar to the tractor industry. It is a device that is fitted on the impugned goods so as to enable the impugned goods to be connected to a trailer or semi-trailer. ‘Kingpin’ is a device that is fixed on the front portion of the semi-trailer to enable the impugned goods to be connected to the semi-trailer. The ‘King-pin’ gets locked with the fifth-wheel mounted on the rear portion of the impugned goods. The ‘King-pin” enables the semi-trailer to be hauled by the impugned goods. The cabin is so designed that it supports the braking system and electrical connections of the trailer through hoses which run from the cabin to the trailer. The impugned goods in question as imported are not designed to carry any payload by themselves. The payload is carried only by the semi-trailer attached to the impugned goods. The impugned goods without a semi-trailer do not serve any purpose of carrying any load and cannot transport any goods on their own.
5. The Dictionary of Automotive Engineering, extracts of which were submitted by the learned advocate for the appellants gives the meanings of the related terms as follows: -
“Articulated vehicle: Vehicle consisting of two or more usually separable wheeled units, and consisting of a towing vehicle, or tractor, and a towed unit, such as a Semi-trailer. Articulation is primarily in the steering mode, though some degree of horizontal axis articulation will be necessary to enable the vehicle to negotiate road surface irregularities. The term usually refers to a tractor and semi-trailer commercial vehicle combination, though it may also describe a close-coupled city bus.
Semi-trailer: Trailer of which the forward end is normally supported by and coupled to a tractor unit, normally by means of a fifth-wheel, the combination of tractor and semi-trailer making an articulated vehicle.
Tractor: A steerable vehicle for towing, but particularly an agricultural vehicle, or a commercial vehicle equipped with fifth-wheel for towing a semi-trailer.
Truck (UK: lorry): A commercial goods vehicle, other than a light delivery vehicle.
Truck-tractor: Heavy vehicle equipped for towing a semi-trailer by supporting its forward end on a fifth-wheel.
Truck-trailer: A commercial vehicle trailer.”
6. After going through these meanings, we are of the view that the impugned goods can be appropriately described as truck-tractor and the same are classifiable as tractor particularly keeping in view the Chapter Note 2 to Chapter 87 and the relevant Classification Decisions of the World Custom Organization which require such vehicles and the semi-trailer to be separately classified respectively under Heading 87.01 & 87.16. We are also of the view that the lower authorities are unjustified in classifying the product differently in regard to the impugned imports at Nhava Sheva under Heading 87.04 when their counterparts at Mumbai and Chennai Custom Houses have classified identical goods imported by the same importer under Heading 87.01. Such diversity in classification clearly shows a systemic deficiency and inability of the department to take advantage of computerization, networking between the custom houses and the institution of tariff conferences.
7. In view of foregoing, we order classification of the impugned goods under Heading 87.01 as claimed by the appellants. The impugned orders passed by the lower authorities are set aside and the appeal is allowed by way of remand with the direction that the refund claim filed by the appellants shall be considered by the Original Authority after allowing a reasonable opportunity of hearing to the appellants. Since the issue of unjust enrichment was not considered earlier by the Original Authority, he will be at liberty to consider the same.
8. Appeal is allowed by way of remand in the above terms.
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Equivalent 2004 (174) ELT 36 (Tri. - Mumbai)