The Delhi bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that Electric and Non-Electric Ranger are classifiable as vehicles to carry goods, material shift and pushing and hauling activities.
Polaris India Private Limited has filed the appeal to assail the order dated 27.08.2019 passed by the Principal Commissioner of Customs (Import), New Delhi. The Principal Commissioner has confirmed the demand for customs duty of Rs. 41,61,609/- under section 28(4) of the Customs Act, 1962 with interest under section 28AA of the Act and penalty of Rs. 41,61,609/- under section 114A of the Act. A redemption fine of Rs. 5,00,000/- has also been imposed instead of confiscation under section 125 of the Act.
Appellant is a wholly owned subsidiary of Polaris Industries Inc., USA. Polaris USA designs, engineers, manufactures and markets innovative high-quality Off-Road Vehicles, including All Terrain Vehicles, snowmobiles, motorcycles and electric-powered vehicles for various applications.
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”.
The appellant vehicles under Customs Tariff Heading 8704 and 8709, as vehicles to carry goods, material shift 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.
A show cause notice was issued rejecting the declared classifications of ATVs in the Bills of Entry filed and reclassifying the same under CTH 8703. Confiscation of 12 seized ATVs under section 111(m) of the Customs Act, 1962.
The Principal Commissioner passed the impugned order upholding the classification under CTH 8703 and the demand proposed in the show cause notice.
In Mahindra and Mahindra Ltd. vs. CCE & ST, Hyderabad, the Tribunal observed, “In the event, we have no hesitation in holding that the test laid down in the earlier Tribunal decision viz; that a motor vehicle would be classifiable under 8703 or 8704, depending on how the gross vehicle weight in design of the vehicle was distributed and whether the major portion of it was used for transportation of passengers or transportation of goods, is still the settled yardstick to be applied in such a controversy.”
The documents filed by the appellant establish that the design and build of the imported Vehicles are not principally meant for the transportation of passengers, as from the distribution of the payload capacity between the area designed for passengers and cargo, it can be seen that out of the total capacity, more is designed to be used for carrying of cargo only and not passengers. This shows that the principal design is not for the transportation of passengers but for the transportation of goods. Thus, even if passengers are transported in the Vehicles, it would not mean that the Vehicles cannot be classified under CTH 8704 and CTH 8709.
A two-member bench comprising Justice Dilip Gupta, President and Ms Hemambika R Priya, Member (Technical) held that the Ranger (non-electric) Vehicles deserve to be classified under CTH 8704 and Ranger (electric) and Brutus Vehicles deserve to be classified under CTH 8709. The CESTAT set aside the order dated 27.08.2019 passed by the Principal Commissioner and allowed the appeal.
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