Custom, Excise & Service Tax Tribunal
Force Motors Limited vs Commissioner, Central Excise & ... on 6 December, 2023
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. 1
Excise Appeal No. 51711 of 2021
(Arising out of Order-in-Original No. 02/COMMR/CEX/UJN/2021-22 dated 28.06.2021
passed by The Commissioner, CGST & Central Excise, Ujjain)
Force Motors Limited ...Appellant
Plot No. 3, Sector-1, Industrial Area,
Pithampur-454775, District Dhar,
Madhya Pradesh.
VERSUS
The Commissioner, Central Goods ...Respondent
and Service Tax & Central Excise,
Ujjain Commissionerate,
29, Bharatpuri, Administrative Area,
Ujjain, Madhaya Pradesh-456010.
APPEARANCE:
Shri S.A. Gundecha, Learned Counsel for the Appellant
Shri Rakesh Agarwal, Authorized Representative of the Department
WITH
Excise Appeal No. 51661 of 2021
(Arising out of Order-in-Original No. 02 to 06/COMMR/CEX/UJN/2021-22 dated
28.06.2021 passed by the Commissioner of CGST & Central Excise, Ujjain)
GVK Emergency Management & ...Appellant
Research Institute.
Coronation Hospital, 2nd Floor
Curzon Road Dalwanwala,
Dehra Dun (Uttarkhand).
VERSUS
Commissioner of CGST & Central ...Respondent
Excise,
Ujjain Commissionerate,
29, Bhartpuri Administrative Area,
Ujjain, Madhaya Pradesh-456010.
WITH
Excise Appeal No. 51662 of 2021
(Arising out of Order-in-Original No. 02 to 06/COMMR/CEX/UJN/2021-22 dated
28.06.2021 passed by the Commissioner of CGST & Central Excise, Ujjain)
GVK Emergency Management & ...Appellant
Research Institute.
MP State TB Association Building,
Near TB Hospital, Idgah Hills, Bhopal-M.P.
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E/51711/2021 & 4 others
VERSUS
Commissioner of CGST & Central ...Respondent
Excise,
Ujjain Commissionerate,
29, Bhartpuri Administrative Area,
Ujjain, Madhaya Pradesh-456010.
WITH
Excise Appeal No. 51663 of 2021
(Arising out of Order-in-Original No. 02 to 06/COMMR/CEX/UJN/2021-22 dated
28.06.2021 passed by the Commissioner of CGST & Central Excise, Ujjain)
GVK Emergency Management & ...Appellant
Research Institute.
STDC Housing Board Colony
Basaveshwara Nagar Entrance
Opposite to Govt. Unani Medical College
GMS Compound, Magadi Road
Bangalore-560079
VERSUS
Commissioner of CGST & Central ...Respondent
Excise,
Ujjain Commissionerate,
29, Bhartpuri Administrative Area,
Ujjain, M.P.-456010.
AND
Excise Appeal No. 51664 of 2021
(Arising out of Order-in-Original No. 02 to 06/COMMR/CEX/UJN/2021-22 dated
28.06.2021 passed by the Commissioner of CGST & Central Excise, Ujjain)
GVK Emergency Management & ...Appellant
Research Institute.
Sarusajai Sports Complex
Express Highway-37, Lokhra,
Guwahati-781034, Assam
VERSUS
Commissioner of CGST & Central ...Respondent
Excise,
Ujjain Commissionerate,
29, Bhartpuri Administrative Area,
Ujjain, M.P. -456010.
APPEARANCE:
Shri Pankaj, Finance Head for the Appellant
Shri Rakesh Agarwal, Authorized Representative of the Department
CORAM:
HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT
HON'BLE MS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL)
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Date of Hearing: 05.07.2023
Date of Decision: 06.12.2023
FINAL ORDER NO's. 51598-51602/2023
JUSTICE DILIP GUPTA:
All the aforesaid five Excise Appeals seek to assail the order
dated 28.06.2021 passed by the Commissioner CGST and Central
Excise, Ujjain1 that adjudicates the show cause notice dated 31.10.2014
issued to Force Motors Limited (Noticee-1)2, Emergency Management
and Research Institute, Bangalore (Noticee-2), Emergency Management
and Research Institute, Guwahati (Noticee-3), GVK Emergency
Management and Research Institute, Bhopal (Noticee-4) 3, and GVK
Emergency Management and Research Institute Dehradun-UK (Noticee-
5).
2. 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
Manufacturer4 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
1. the Commissioner
2. the Force Motors
3. GVK Research Institute
4. OEM
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delivery vans falling under Excise Tariff Item5 8704 21 90 or as
ambulance under ETI 8703 33 92 of the Central Excise Tariff Act 19856.
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 Emergency Management and Research Institute, Bhopal (appellant
of Excise Appeal No. 51662 of 2021), GVK Emergency Management and
Research Institute, Bangalore (appellant of Excise Appeal No. 51663 of
2021) and GVK Emergency Management and Research Institute,
Guwahati (appellant of Excise Appeal No. 51711 of 2021). These five
appeals have, accordingly, been filed.
5. To appreciate the contentions that have been advanced by Shri
S.A. Gundecha, learned counsel of Force Motors and Shri Pankaj,
Finance Head of GVK Research Institute as also Shri Rakesh Agarwal,
learned authorized representative appearing for the department, it
would be appropriate to briefly examine the show cause notice issued
by the department, the reply submitted by the appellant and the order
passed by the Commissioner.
6. The show cause notice, in brief, alleges that from the technical
specifications contained in the tender it would be clear that GVK
Research Institute invited tender for supply of incomplete ambulances
having the essential character of an ambulance and Force Motors
offered to supply vehicles having additional features suitable for
5. ETI
6. the Tariff Act
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conversion into ambulance and thus, as the vehicles sought by GVK
Research Institute were for use as an ambulance, Force Motors mis-
classified the vehicles as traveler delivery vans instead of ambulances
and did not pay the proper central excise duty. The show cause notice,
after referring to rule 2(a) of the General Rules for the Interpretation of
the First Schedule to the Tariff Act7, alleges that the vehicles cleared by
the Force Motors would, therefore, be appropriately classifiable under
ETI 8703 33 92 and not under ETI 8704 21 90. The show cause notice
also invoked the extended period of limitation contemplated under
section 11A(4) of the Central Excise Act, 19448. The relevant portions of
the show cause notice dated 31.10.2014 are reproduced below:
Show Cause Notice
"3. On going through the Technical
Specification of the tender it is explicit that the
Noticee No. 2 has invited tender for supply of
incomplete ambulance having essential character
of ambulance. The Noticee No. 1 has offered for
supply of vehicle having additional features suitable for
conversion into ambulance.
xxxxxxxxxxxx
6. xxxxxxxx. Thus as per rule 2 (a) of the
Central Rules of the Intermations 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
7. the General Rules for Interpretation
8. the Excise Act
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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 Excise
Act, 1944 and Rule 25 of the Central Excise Rules,
2002. Further, the Noticee No. 2, 3, 4 and 5
abetted in short payment of duty by Noticee No. 1
in fraudulent manner by giving Purchase Orders
in the name of Delivery Vans and therefore, the
Noticee No. 2, 3, 4 and 5 also appear liable for
penalty under Rule 26 of the Central Excise Rules,
2002."
(emphasis supplied)
7. The appellant filed a reply to the show cause notice pointing out
that the status of the vehicles at the time of clearance determines the
classification of goods and what was actually supplied by Force Motors
were delivery van vehicles. The appellant, therefore, submitted that
merely because such delivery vans were converted into ambulances by
GVK Research Institute would not mean that they were required to be
classified as ambulances. Learned counsel also pointed out that
whenever customers placed order for procurement of traveler
ambulances they were classified as ambulances. The appellant also
contended that the extended period of limitation could not have been
invoked. The relevant portions of the reply submitted by the appellant
are reproduced below:
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Reply
"15. Thus, in our respectful submission, the
classification of a particular model of a particular type
of vehicle, depends on the design, the specifications,
the fitments and the status of the goods when cleared
from the Factory. The status of a vehicle at the time
of clearance determines and has to be considered
for the purpose of arriving at classification of
such goods, under different Tariff Headings, sub-
Headings, or Items of Chapter 87 of the CETA.
16. Our customer, Emergency Management and
Research Institute (later known as GVK Emergency
Management and Research Institute), floated 4 (four)
different tenders, for supply of vehicles, which
resulted in clearance, sale and supply of the 212
vehicles covered by the Show Cause Notice under
reply.
xxxxxxxxxx.
It would be kindly observed from the tenders that,
these tenders were floated for supply of vehicles, which
should have certain technical specifications and which
were defined by the said Customer, as integral vans.
The Customer, in order to enable the bidders, also
indicated the purpose for which the said vehicles,
if procured, are to be put after carrying out the
futher operations, by other agencies, like body
builders.
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
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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
the provisions of the Central Excise Rules, 2002.
The monthly returns filed for the respective months,
disclose the invoice numbers.
xxxxxxxxxxx
23. The Customer and other customers of our,
placed specific order for procurement of Traveller
Ambulances, from us, e.g. Tamil Nadu Medical Services
Corporation Limited, Chennai, floated tenders for
procurement of ambulances having the technical
specifications, of Ambulances, with all internal fittings
such as Hooks for intravenous bottles, Brackets for
oxygen cylinders with adjustable straps, factory made
stretcher, seats, Medicine box. Annexed hereto and
marked as Annexure 37 is a copy of one of such tender.
We submitted the bid and accordingly received the
Purchase Orders for supply of Traveller Ambulances
from these two entities. xxxxxxxxx.
27. Thus, it would be kindly observed from the
above documentation that two different models of
Traveller type of vehicles, were sold by us, to the
Customer, either as Delivery Van or as
Ambulance, depending on the technical
specification, Purchase Orders received, status of
the vehicle at the time of clearance.
xxxxxxxxxxxx
It is pertinent to and we wish to record that, no
evidence whatsoever regarding the alleged suppression,
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willful misstatement or fraud or the abetment or our
intent to evade payment of duty, has been made
available to us, either as a part of Show Cause Notice
or relied on documents or otherwise."
(emphasis supplied)
8. The Commissioner did not accept the contentions raised by the
appellant. In the opinion of the Commissioner, Force Motors was aware
right from the beginning that they had to supply vehicles which were to
be used as ambulances and so they designed the vehicles so as to make
them suitable to be used as ambulances. The Commissioner, therefore,
concluded that the vehicles manufactured and supplied by Force Motors
were incomplete or unfinished vehicles having the essential character of
complete or finished ambulances. Thereafter, placing reliance upon rule
2(a) of the General Rules for Interpretation, the Commissioner observed
that the goods supplied by Force Motors had the essential character of
complete or unfinished ambulances and hence appropriately classifiable
under ETI 8703 33 92. The Commissioner also observed that the
appellant had suppressed facts and, therefore, by making 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.
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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 that those vehicles manufactured and
supplied by Noticee No. 1 were incomplete or
unfinished vehicle having the essential characters
of 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 were going to be
used as ambulances.
xxxxxxxxx
9.3. In this regard, I find that Rule 2(a) of the
Interpretative Rule of the First Schedule to the Central
Excise Tariff Act, 1985 makes it clear that any
reference to an article under any heading shall be taken
to include a reference to that article unfinished or
incomplete provided the same has attained the
"essential character" of the complete or finished article.
11. I also find that the Noticee No 1 had knowingly
delivery van in their invoices with sole intention to pay
lesser rate of duty, the duty owingly which was
appropriately payable on that and the Noticee No: 2 to
5 had willfully facilitated them in the same. It is
observed that the goods manufactured and
supplied by Noticee No. 1 to Noticee No.2 to 5
were having the essential characters of the
complete or finished ambulance and hence
appropriately classifiable under Tariff
Item/heading No. 87033392 of the first schedule
to the Central Excise Tariff Act, 1985. In the facts
and circumstances as above, I find that the Noticee
No.2 to 5 had wilfully facilitated Noticee No. 1 in the
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same even when they clearly knew that
what they were purchasing from the Noticee No. 1 is
not Traveller Delivery Van.
Noticee No 1 have submitted that there was no
suppression of facts. In this regard, I find that the
Noticee No. 1 had never informed to the department
about supply and removal of ambulances. Had the
enquiry/investigation not been initiated by the
Department, the facts would have remained unearthed.
They had also misdeclared the said ambulances as
delivery van in their invoices and periodical returns
submitted to the department.
By misdeclaring the same in their invoices and
removing the same on short payment of duty,
with intention to evade payment of duty, the
Noticee No 1 had contravened the provisions of
Rule 4, 6 and 8 of the Central Excise Rules, 2002.
Therefore, I find that the extended period of 5
years under Section 11 A of the Central Excise
Act, 1944 is invokable in this case for recovery of
demand. The Noticee No 1, for the said acts/omissions
with 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
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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
even after the fabrication work, the vans did not become full-fledged
ambulance because after receipt of the vans from the fabricators they
are equipped with ventilator, defibrillators, pluse oxymeters, stretchers,
wheel chairs, etc., to make them full-fledged ambulances. Learned
counsel also pointed out that it is thereafter that the vehicles were
registered with the Regional Transport Authority as ambulances.
10. Thus, according to the learned counsel, GVK Research Institute
had placed order on Force Motors for delivery vans and not for
ambulances. The vans which are supplied by Force Motors to GVK
Research Institute did not have the fittings necessary to treat them
even as incomplete ambulances, much less a complete ambulances.
According to learned counsel for the appellant, the goods have to be
assessed in the form in which they are presented at the time of
clearance and not as what they may ultimately become after going
through various processes. Under rule 2(a) of the General Rules for
Interpretation, the goods should have the essential character of
complete/finished articles, but in the present case what was purchased
by GVK Research Institute were bare delivery vans without any fittings
and as such the vans did not have the essential character of an
ambulance. Learned counsel also submitted that the extended period of
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limitation could not have been invoked in the facts and circumstances of
the case.
11. Learned authorised representative appearing for the department,
however, supported, the impugned order and submitted that in view of
the clear provisions contained in rule 2(a) of the General Rules for
Interpretation and in view of the decision of the Tribunal in Bajaj Auto
Limited vs. Collector of Customs, Bombay9, the goods
manufactured by Force Motors had the essential character of an
ambulance and, therefore, would be classifiable under ETI 8703 33 92.
Learned authorised representative also submitted that the tenders
floated by GVK Research Institute and accepted by Force Motors and
the purchase orders clearly evidence that the delivery vans were
converted to be used as ambulances. Thus, despite knowing that the
vehicles supplied were ambulances, Force Motors with the view to evade
payment of duty cleared the vehicles as delivery vans and this fact
came to the notice of department only when the investigation 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
9. 1988 (33) E.L.T. 367 (Tri.-Del.)
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the provisions to the Motor Vehicles Act, 198810, 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
Management & Research Institute, Guwahati, Assam, Emergency
Management & Research Institute, Bangalore, Karnataka, GVK
Emergency Management & Research Institute, Dehradun, Uttarakhand
and GVK Emergency Management & Research Institute, Bhopal, Madhya
Pradesh, floated tenders to procure vehicles of a certain type. The bid of
the Force Motors was accepted and the aforesaid four customers placed
orders for supply of Traveller Delivery Vans.
15. Based on these order, Force Motors supplied 212 vehicles to the
aforesaid institutions between October 2009 to July 2010 and it is as
follows:
Sr. Name of the Institution Number of
No. vehicles
supplied
(a) Emergency Management & Research Institute, 5
Guwahati
(b) Emergency Management & Research Institute, 144
Bangalore
(c) GVK Emergency Management & Research Institute, 18
Dehradun
(d) Emergency Management & Research Institute, Bhopal 45
Total 212
10. the Motor Vehicles Act
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16. According to Force Motors, these vehicles were delivered to body
builders, on instructions, and the details are as follows:
Sr. Name of the Institution Number of
No. vehicles
delivered
(a) M/s. Perfect Mechanical Industry, Faridabad, Haryana 5
(b) Bafna Healthcare, Faridabad, Haryana 144
(c) M/s. Perfect Mechanical Industry, Faridabad, Haryana 18
(d) Sarvottam Appliances Private Limited, Faridabad 45
Total 212
17. Force Motors claims that none of the body builders or the
customers are related persons or connected with Force Motors within
the meaning of section 4 of the Excise Act.
18. However, the officers of the department visited the factory of
Force Motors and based on the allegation that the Traveller Delivery
Vans supplied by Force Motors were not delivery vans but were
incomplete ambulances it was stated in the show cause notice that the
said vehicles were wrongly classified by Force Motors under ETI 8704 21
90 in place of ETI 8703 33 92 with intent of evade payment of duty. Not
being satisfied with the reply filed by the appellant, the Commissioner
passed the order dated 04.03.2016. This order was assailed before the
Tribunal and the matter was remanded for passing a fresh order.
Thereafter, the order dated 28.06.2021 was passed by the
Commissioner holding that 212 delivery vans needed to be classified as
incomplete ambulances and, accordingly, 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
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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 Last Date & Time for obtaining Tender Form 15/02/2009 up to 5:30 P.M. Pre-Bid meeting at EMRI Bangalore 03/2/2009 at 11 A.M. Last date & Time for submission of Tenders: 16/02/2009 up to 10 A.M. Opening of Tenders 16/02/2009 at 10:30 A.M. TENDER DOCUMENT FOR ORIGINAL EQUIPMENT MANUFACTURER (OEM) INTEGRAL VANS QUANTITY -
367NOS.
General Terms and Conditions for supply of OEM Integral Vans (For Construction of Ambulances) (For this tender OEM INTEGRAL VAN means a vehicle with integrated pilot and patient compartments separated by a partition. The integral van would not allow for dust or water (rain/road splash) with all doors and windows closed.
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1. Eligibility criteria:
Only India based OEM Vehicle manufactures are eligible to participate in the tender. The Bidder should quote for complete quantity i.e. 367 nos."
22. With the show cause notice, a commercial evaluation cover dated 13.02.2009 was enclosed as Annexure 1 as a relied upon document.
This contains the offer and the commercial bid. In this Annexure the required technical specifications and the technical specifications offered by Force Motors for Traveller Delivery Van, 3350 mm WB, BS-II were given and the relevant portions are reproduced below:
Technical Specifications of the offered Model : Traveller Delivery Van, 3350 mm WB, BS-II Vehicle Specifications Required Tender Technical Specifications Offered Model Technical Specification Engine Diesel - 4 Cylinder, 4 Stroke, Diesel - 4 Cylinder, 4 Stroke, DI DI Emission Norms Complaint with Bharat Stage - Complaint with Bharat Stage II - II Capacity 2500-3500 c.c 2596 c.c Maximum Output 45-60 KW 56 Kw @ 3200 RPM Max. Torque 175-225 N-m @ 1750 - 2200 195 N-m @ 1800-2000 RPM rpm Body Dimensions Overall Length 4350-5300 mm 5235 mm Overall Width 1650-2100 mm 1975 mm Overall Height 2470-2800 mm 2550 mm Aspect Ratio 1.2 to 1.3 1.29 (Height / Width) Ground Clearance 190-210 mm 190 mm Floor Loading Height Maximum of 700 mm 695 mm - For Bare Vehicle without Plyboard on flooring Turing Circle Radius Not More than Chassis/Body 6.5 m OEM Standard Steering Ordinary Mechanical Steering Patient Compartment The patient compartment must The patient compartment will have all six sides, one have all six sides, one partition, two side walls and partition, two side wall and one rear wall (doors) and roof one rear wall (doors) and roof and floor and should not be and floor and it will not be accessible to dust and water accessible to dust and water (rain or road splashes) with all (Rain or road splashes) with doors and windows closed. all doors and windows closed.
***** ***** *****
Doors Dual hinged doors for easy Dual hinged doors with 270
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entry and exit of degree open out at the rear
paramedic/Ambulance with glass view panels.
stretcher, with 270 degree Positively securable in fully
open out at the rear (positively open condition of 270
securable in fully open degrees.
condition of 270 degrees) with The doors will be completed
glass view panels. The doors in all respects including
would be completed in all trimmings.
respects including trimmings.
Windows Two quarter plate tinted Two quarter plate tinted
windows minimum 1500 mm windows minimum 1450 mm
from the ground level. from the ground level.
Footboard One foot board (1600 mm long Fixed Foot step - 1600 mm
x 150 mm wide) 250-400 mm long x 190 mm wide.
high at the rear door for east 375 mm high at the rear door
exit and entry into the vehicle for easy exit & entry in to the
vehicle.
***** ***** *****
General Criteria The manufacturer has to take a It is possible to fit Air
modular approach suitable for conditioner with stretcher
Air Conditioned ambulances cum trolley inside the quoted
with stretcher cum trolley. Traveller Delivery van model.
Completed floor with marine We will provide completed
grade fire retardant ply board floor with marine grade fire
will be provided by the OEM. retardant ply board behind
Finished version of the partition.
ambulance will have adequate As per out Traveller vehicles
space in the patient cabin, running on road, we confirm
where apart from positioning of that finished version of the
the patient in comfortable, a Traveller Ambulance will have
number of medical and adequate space in the patient
communications equipment cabin. Positioning of the
shall need to be fixed beside patient will be comfortable.
the patient. Patient cabin Also it is possible to fit
should have enough space to number of medical and
accommodate two paramedics communications equipment.
for care of patient. The The patient and the patient
ambulance shall be suitable for cabin have enough space to
continuous running/operation accommodate two
under prevailing environment paramedics for care of
and road conditions in patient. The ambulance will
Karnataka urban and rural be suitable for continuous
areas. running/operation under
prevalent environment and
road conditions in Karnataka
urban and rural areas.
23. The two purchase order dated 24.02.2009 relating to 180 Traveller Delivery Vans and purchase order dated 08.07.2009 relating to 187 Traveller Delivery Vans were issued. The show cause notice 19 E/51711/2021 & 4 others encloses purchase orders issued for delivery of 212 Traveller Delivery Vans.
24. It needs to be noted that the effective rate of central excise duty on Traveller Van is lesser then Traveller Ambulance Van and it is for this reason that the department alleges that Force Motors with an intent to evade payment of duty connived with GVK Research Institute and mis-
classified the vehicles as Traveller Delivery vans instead of ambulance vans.
25. The tender document and the price schedule clearly mention that the OEM integral vans are meant „for 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. 20
E/51711/2021 & 4 others
27. It would be seen from the tender document that the fabrication specifications have to as per Annexure 1. A typical ambulance fabricated as per Emergency Management & Research Institute specifications would be demonstrated to the tender participants during the pre-bid meet. Detailed drawing Bills of Materials would be passed on to the successful bidders on whom the tender committee decides to place the purchase order. The description of work would show that the fabricator has to make the following fitments in the delivery vans to make them into ambulances. The bids were called with the following specifications:
(i) Steel/plywood cabinet for storing medical equipment/supplies/ wash basin/dustbins.
(ii) Squad bench/Attendant Seat - (to seat with neat belts) with storage for EM rescue tools.
(iii) EMT Seat/foldable
(iv) Oxygen Cylinder compartment and delivery system
(v) Flooring
(vi) Wall paneling works and partition between ambulance pilot
compartment.
(vii) Head racks and grab rails in the ceiling
(viii) Scoop stretcher and wheelchair hold
(ix) Fire extinguisher hold
(x) Curtain rods and curtains
(xi) Water dispenser
(xii) Electrical Work -
(a) Air Conditioner
(b) Inverter
(c) Light bar
(d) Automobile grade
(e) Electrical Wiring and separate fuse boxes - clock
(f) DC Connections and Outlet Points
(g) Roof/wall mounted fans - half safety metal guard
(h) Bush-less exhaust fans
21
E/51711/2021 & 4 others
28. On the basis of the tenders received and after the tender Committee scrutinized the bids, Bafna Healthcare Pvt. Ltd., Faridabad was found to be the lowest bidder and accordingly purchase orders dated 30.03.2009, 04.05.2009, 12.08.2009 and 17.09.2009 were placed on them. Copies of the purchase orders placed on Bafna Healthcare for conversion of Force Traveller Van No. 3350 mm WB into Emergency Response Van have been enclosed.
29. It is seen that after the vehicles are received from Force Motors, at the instance of Emergency Management & Research Institute, the fabricators convert the delivery vans into ambulances by fitting them with a stretcher, attendant seats, wailing horn, medical cabinets, fans, hooks for intravenous bottle and oxygen cylinder in the patient compartment. Even after the fabricators fit 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 22 E/51711/2021 & 4 others 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 ambulances and they had been modified subsequently, proceeded to hold that the vehicles supplied by Force Motors "were incomplete or unfinished vehicles having the essential characters of complete or finished ambulance" and thus would be classifiable under ETI 8703 33 92 in view of the provisions of rule 2(a) of the General Rules of Interpretation.
32. The Commissioner was not justified in drawing such a conclusion.
As observed earlier, the goods have to be assessed in the form in which they are presented at the time of clearance and not in the form they may ultimately take. The vehicles at the time of clearance did not have the essential character of an ambulance. What was purchased were bare delivery vans without any fittings. It cannot, therefore, be said that the vans had the essential character of an ambulance. Rule 2(a) of the General Rules for Interpretation would not come to the aid of the department. The order passed by the Commissioner classifying the vehicles under ETI 8703 33 92 of the First Schedule to the Tariff Act cannot, therefore, be sustained.
33. In this view of the matter, the penalty imposed upon the other appellants also cannot be sustained.
34. It would, therefore, not be necessary to examine the contention raised by the learned counsel for the appellant that the extended period of limitation could not have been invoked in the facts and circumstances of the case.
23
E/51711/2021 & 4 others
35. Thus, for the reasons stated above, the order dated 28.06.2021 passed by the Commissioner is set aside and the five appeals are allowed.
(Order pronounced on 06.12.2023) (JUSTICE DILIP GUPTA) PRESIDENT (HEMAMBIKA R. PRIYA) MEMBER (TECHNICAL) Jyoti, Shreya