Custom, Excise & Service Tax Tribunal
Mahindra & Mahindra Ltd vs The Commissioner Of Central Excise on 7 December, 2009
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No.II APPEAL No.E/2053/05 (Arising out of Order-in-Original No.50 to 87/Commr (AH)/05 dated 30/03/2005 passed by Commissioner of Central Excise (Adj), Belapur) For approval and signature: Honble Mr.B.S.V. Murthy, Member (Technical) Honble Mr.Ashok Jindal, Member (Judicial) ====================================================
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : Yes
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Yes
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
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Mahindra & Mahindra Ltd., Appellants
Vs.
The Commissioner of Central Excise,
Mumbai-V Respondents
Appearance:
Shri.Rohan Shah, Anil Wani M. Shah, Advocates for the Appellants
Shri.M.I.Sethna, Sr. Advocate for Appeal No.E/2053/05
CORAM:
Mr.B.S.V. Murthy, Member (Technical)
Mr.Ashok Jindal, Member (Judicial)
Date of hearing : 07/10/2009
Date of decision :
O R D E R No:..
Per: Shri B. S. V. Murthy, Member (Technical)
1. The appellants are engaged in the business of manufacture of Motor Vehicles, having its automotive manufacturing facility at Kandivli (Mumbai) and Satpur (Nashik).
2. The present appeal is against the order-in-original No.50 to 87/Commr (AH)/05 dated 30/03/2005 and received by the appellants on 04/04/2005. By the said order dated 04/04/2005, the Commissioner confirmed the duty demands of Rs.216,02,50,404/- and imposed penalty of Rs.88,07,57,277/- in respect of 38 Show Cause Notices issued to the facilities at Kandivli and Nashik.
3. The issue in the present appeal is the classification of Commander range of vehicle manufactured by the appellants at Kandivali and Nashik. The appellants claim classification under heading 8702 of the Schedule to the Central Excise Tariff Act, 1985. The departments contention is that the vehicle is classifiable under heading 8703. For the period prior to 28/02/1992, the tariff headings are as follows:
Heading: 8702: Public Transport Type Passenger Motor Vehicle Heading.8703: Motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading No.87.02) including station wagons and racing cars.
Chapter Note 3 to Chapter 87 read as under:
For the purpose of heading Nos.8702 the expression public transport type passenger motor vehicles means vehicles designed for the transport of ten persons or more including the driver By the Finance Act, 1992, the Heading 8702 with effect from 01/03/1992 read as under:
Motor Vehicles for the transport of ten or more persons including the driver.
4. In July 1991 the appellants commenced manufacture of motor vehicle Commander 750 DP (10 seater) and submitted classification list No.1/91 dated 25/07/1991 classifying the vehicle under heading 8702. As required under Rule 126 of the Central Motor Vehicles Rule 1989 the appellants offered a prototype of this vehicle for certification to Automotive Research Association of India (ARAI). The vehicle was also submitted to various State Transport Commissioners for certification for registration of vehicles in various states. The State Transport Commissioners of Gujarat and Maharashtra classified the vehicle as an omni-bus in the non-transport category capable of carrying 10 persons. The other Transport Commissioners at Karnataka, Pondicherry approved the vehicles as a ten seater without any categorization.
5. The Assistant Collector on 21/10/1991 after inspecting the vehicle and making due enquiries approved the classification list No.1/91 dated 25/07/1991 classifying the vehicle under Heading 8702. Against the aforesaid approval, the Excise department filed an appeal before the Collector of Central Excise (Appeals) contending that the vehicle was classifiable under Heading 8703 and not under heading 8702 as classified by the appellants and approved by the Assistant Collector.
6. The Collector (Appeals) by his order dated 23/06/1993 dismissed the Departments appeal and confirmed the classification by the Assistant Collector. The Collector (Appeals) also observed that the order dated 10/04/92 of the Collector of Central Excise dropping the demands of Rs.8.90 crores and approving the classification under heading 8702 had become final and had been accepted by the department.
7. The department being aggrieved by the aforesaid order passed by the Collector (Appeals) filed an appeal before the CEGAT. The Tribunal dismissed the departments appeal by its order dated 20/09/2000. The department has not challenged this order before the Honble Supreme Court.
8. In another proceeding, with respect to the same vehicle (viz. Commander 750 DP) the Collector of Central Excise Mumbai-II issued a Show Cause Notice dated 23/12/1991 contending that the classification of the Commander vehicles under heading 8702 was erroneous and sought to demand a duty amount of Rs.8.90 crores by classifying the same under 8703 of the Central Tariff. This was for the period June 1991 to November 1991. This Show Cause Notice relied upon the provisions of the Motor Vehicles Act for determining the Classification under the Central Excise Tariff Act. The Appellants contested the show cause notice and filed reply dated 15/02/1992.
9. The Collector of Central Excise by his Order dated 10/04/92 discharged the show cause notice. The Collector accepted the contention of the Appellants that the provisions of the Motor Vehicles Act were not relevant and could not be taken into consideration in interpreting the Heading under the Central Excise Tariff Act. The Commissioner also accepted the position that the only criterion was whether or not the vehicle was designed for the transport of ten persons or more after considering the relevant tariff headings and the chapter notes.
10. The appellants thereafter filed a further classification List No.1/92-93 with effect from 1/3/92 in respect of Commander Vehicle. The classification list was once again approved by the Assistant Commissioner of Central Excise on 26/06/1992.
11. Being aggrieved by the said approval, the Department filed an appeal against the approval of the aforesaid classification list no.1/92-93. The ground stated in the appeal filed by the department were that applying Rule 171 as also Rule 79 (7), 82 and 84 of the Maharashtra Motor Vehicle Rules 1989 (MMVR, 1989), the vehicle merited classification under heading 8703 and not under 8702, as claimed by the assessee.
12. The Commissioner of Central Excise (Appeals) by his order dated 01/11/2000 rejected the appeal of the department and held that the vehicle was correctly classifiable under heading 8702 of the Central Excise Tariff. Being aggrieved by the said order-in-appeal dated 01/11/2000, the department filed an appeal before the CEGAT challenging said approval of the classification.
13. The Superintendent of Central Excise also issued 2 show cause notices dated 03/12/1992 and 29/12/1992 to the appellants seeking to recover duty of Rs.0.71 crores and Rs.1.27 crores on the basis that the vehicles were not Public Transport Type Motor vehicles and hence the concessional rate of 20% adv prescribed under Notification No.162/86 dated 01/03/86 (as amended) would not be admissible. Therefore, the department alleged in the show cause notices that the correct duty that was required to be paid was @ 25% adv, as applicable to the Central Excise Tariff heading 8702.00. The premise on which this show cause notice proceeded was that the vehicle was in fact correctly classified by the appellants under 8702, but however, due to the mismatch in the wordings in the notification granting exemption (viz. 162/86) and the Central Excise Tariff, the benefit of the exemption would not be available.
14. The department issued show cause notice dated 27/04/1993 and the corrigenda dated 24/06/1993 for the period 01/04/1991 to 23/11/1992 calling upon the Kandivali facility of the appellants to show cause as to why:-
i) the vehicle namely Commander 750DP should not be classified under 8703 of the SCETA 1985) and the chassis fitted with engine for the said vehicle should not be classified under heading 8706.30 of the SCETA.
ii) differential Central Excise duty on the model Mahindra Commander 750DP totally amounting to Rs.52,62,75,110/- (Basic Rs.46,64,29,700/- and special Rs.5,98,45,410/-) short paid on the said vehicle valued at total Rs.1,16,61,03,000/- during the period 01/04/1991 to 23/11/1992 should not be recovered under proviso to sub section (1) to Section 11A of the Central Excise and Salt Act, 1944.
iii) Penalty should not be imposed under Rule 52A and Rule 173Q of the Central Excise Rules, 1944;
iv) land, building, plant, machinery, materials, conveyance, or any other things used in connection with the manufacture, production, storage removal or disposal of such goods, or any other excisable goods on such land or in such building or produced or manufactured, with such plant, machinery, materials or things should not be confiscated under Rule 173Q (2) of the Central Excise Rules, 1944.
15. The appellants, at their Nasik factory manufactured Commander 650 DI (10 seater) and filed classification list on 17/12/90 and 02/03/92 both of which were approved and there was no dispute. In respect of Commander 750 DP HT (11 seater & 10 seater vehicles) also classification lists filed on 26/8/91, 9/9/91 and 25/11/91 clarifying the vehicle under heading 8702 were approved.
In respect of both the Commander 650 DI and Commander 750 DP (HT) show cause notices similar to the ones issued in respect of the Kandivali facility were issued on 27/09/93 and 19/11/93. Differential duty demand in respect of Commander 650 DI was Rs.75,29,76,085/- and in respect of Commander 750 DP HT was Rs.19,53,78,560/-. As in the case of Kandivali facility here also periodical show cause notices were issued subsequently.
Appellants made common written submission in respect of all the show cause notices. Since the issue involved is similar, all discussions subsequent to this would be in respect of Commander 750 DP HT.
16. The aforesaid demands were confirmed on the basis of following findings according to the written submission filed by the appellants.
a) The said vehicle is only an extended version of the model MM 540 of the said appellants using a similar chassis frame as used in the model MM 540;
b) The road worthiness certificate issued by ARAI, Pune did not certify the seating capacity of the said vehicle;
c) The blue prints supplied by the said appellants to the office of the Transport Commissioner are incorrect and unreliable as the dimensions specified therein do not pertain to the seating capacity and the actual dimensions of the seats fitted into the said vehicle which are less than the statutory minimum specified by Maharashtra Motor Vehicle Rules 1989 (MMVR 89);
d) The office of the Transport Commissioner has wrongly relied upon the blue prints supplied by the appellants and the road worthiness certificate issued by ARAI, Pune, for assigning the seating the capacity of 10 persons to the said vehicle;
e) The said vehicle was wrongly categorized by the Transport Commissioner Maharashtra as Omnibus under non-transport category prior to 24/11/1992;
f) The said vehicle merits categorization as Jeep under transport category prior to 19/06/1992 and as omnibus under transport category during the period 19/06/1992 to 23/11/1992;
g) As the provisions of Rule 171, 79, 82 & 84 of Maharashtra Motor Vehicle Rules, 89, are applicable to transport vehicles, the seating capacity of the said vehicle is eight persons and seven persons for public service and private service vehicles respectively.
h) As the said vehicle was only an extended version of model MM540 (seating capacity of six (5+1) persons), having a possible statutory seating capacity of only eight persons as transport vehicle it appears that the said vehicle is designed to transport eight persons only.
i) The said vehicle is designated to statutorily transport only eight persons and therefore, it merits classification under 8703 of the SCETA and is chargeable to duty accordingly.
j) The circular No.214/Mahindra Commander 750DP-2WD/D-II (4)/ ON-11668 dated 19/08/1991 has been issued by the Transport Commissioner based on incorrect facts and therefore, it cannot be relied upon for accepting the seating capacity of the said vehicle;
k) The appellants deliberately and intentionally misdeclared to the Transport Commissioner their vehicle Commander 750DP as Omnibus under Non-Transport category having a seating capacity of Ten (10) persons, when they were aware that such a category did not exist, so as to evade Central Excise Duty, and therefore, the proviso to Section 11A of the Central Excise and Salt Act, 1944 is applicable in the present case.
l) The appellants contravened the provisions of Rule 173B of the Central Excise Rules, 1944 in as much they have not filed appropriate classification list for their product Mahindra Commander 750DP (10 seater);
m) The appellants contravened the provisions of Rule 173F of the Central Excise Rules, 1944, in as much as they have not determined the correct duty liability on the said excisable goods and removed the same without payment of appropriate Central Excise duty;
n) The appellants contravened the provisions of Rule 173G read with Rule 52A of the Central Excise Rules, 1944, in as much as they have removed the excisable goods without payment of appropriate duty;
17. While there was no show cause notice for the period 24/11/1992 to 31/03/1993, for the period 01/04/1993 to 22/07/1996, the concerned Superintendent of Central Excise issued Show Cause Notices periodically clearly stating that the said Show Cause Notices have been issued to protect the interest of the government revenue in view of the order passed by the Collector of Central Excise Mumbai-II, directing the department to make an application before the Collector (Appeals) under section 35E(4).
18. At the end of hearing both sides requested for permission and time to file written submissions within a month, exchange the same and file rejoinder, if any, within 15 days hereafter. While appellants filed written submission within a month, Respondents did not file either the reply or the rejoinder to written submissions within the specified period. However, on 18/11/2009, the respondent requested for extension of time to file rejoinder, which was rejected, on the ground that sufficient time was given initially and further Tribunal is required to pass orders within two months failing which reference has to be made to the Honble President for extension of time to pronounce the order. However, the Ld. Counsel for the Revenue made a request on health grounds and time was extended up to 24/11/2009 orally to file rejoinder. The same has been filed on 24/11/2009 and taken into account.
19. Following written submissions of the appellants are summarized in the following paragraphs from 20 to 33.
20. Issue of classification in controversy in this proceeding is squarely covered in favour of the appellants on the same issue, same vehicle and for the same period.
20.1 Approval of classification of Commander 750DP (ST) had been challenged by the Department in previous proceedings initiated by the Department. The issue has been concluded in favour of the appellants and the classification of the Commander vehicles under 8702 of SCETA has been upheld by the order of this Tribunal reported in 2006 (197) E.L.T. 341 (Tribunal). Tribunals order approving the classification under 8702 of SCETA ought to have been followed. While the Departments appeal filed before the Honble Supreme Court has been admitted, no stay has been granted. The classification of Commander vehicles under 8702 having being upheld in several orders, which have not been set aside, and the proceedings having attained finality, it would not be permissible for the Department to seek to reopen issues once again.
20.2 The issue in the present show cause notices and the appeal filed by the Department before the Honble CESTAT referred to above are identical. In the appeal filed by the Department, the Department was seeking to dispute the classification of the vehicle only on the ground that the same did not comply with Rules 79, 82, 84 and 171 of the Maharashtra Motor Vehicle Rules, This is the identical cause of action adopted by the Department in the present case. The appeal (based on an identical basis) having being dismissed by the Honble CESTAT, the issue stands concluded in favour of the Applicants. Since the classification list pertaining to the very same period has attained finality in respect of the very same appellants, the same cannot be challenged in the subsequent proceedings until the order is reversed by higher judicial forum.
21. The impugned order has been passed in gross breach of principles of natural justice in as much as the Commissioner, after the personal hearing sought to elicit information from the Transport Commissioner and received some response which was not disclosed to the Appellant. The relevant discussion is in para 32.6 which is reproduced herein below:
The TC also stated that there were no specifications laid down for governing seating capacity of Non-Transport Omnibuses i.e. the category assigned to the impugned vehicles. However, I observe that for the purpose of assigning the searing capacity to the impugned vehicle, the TC had relied upon such blue prints which did not indicate the seating specifications and also relied upon the roadworthiness certificate which was issued by ARAI, where the words (10 seater) was part of the nomenclature of the vehicle with no intention of specifying the capacity. Therefore, both the documents, i.e. blue prints supplied by the notice and the certificate of roadworthiness issued by ARAI, not being reliable documents for the purpose of determining/assigning the seating capacity to a vehicle, the circular issued vide letter no. 214/Mahindra Commander 750DP-2WD/CR 802/Desk-II (4)/ON-11668 dated 19.08.91 cannot be relied upon for accepting the statutory seating capacity of the impugned vehicle. When the cases were taken up for adjudication, the office of the TC Maharashtra was asked by me to clarify certain issues with regard to the categorization of the vehicle as Omnibus in Non-Transport category and to elicit his comments on the fact it that it was mandatory for the TC to specify the category to which the vehicle belongs. However, from the reply of the office of the TC, I find that the said issues have not been clarified satisfactorily. (Emphasis added)
22. Various authorities dealing with the Motor Vehicles, viz. Automotive Research Association of India (ARAI) and the Transport Commissioners (TC) of various States have approved and repeatedly confirmed that the vehicle was indeed for carrying 10 persons.
23. Classification is to be determined based on description in heading of SCETA.
23.1 The classification of goods has to be determined only on the basis of the description in the Heading read with relevant section or chapter notes. Since notes are part of the tariff, they have statutory effect.
23.2. In view of the aforesaid position, to determine the question as to whether the said vehicles merited classification under heading 8702 the only question to be determined is whether the vehicle was designed to seat 10 or more persons.
23.3. That this is correct interpretation is also clear from the Explanatory Notes to heading 8702 in the HSN which reads as under:
This heading covers all vehicles designed for the transport of ten persons or more (including the driver)
24. No evidence has been produced by the department that the vehicle is not a ten seater.
24.1. It is for the Department therefore to establish by evidence that the vehicle was not capable of carrying 10 persons, which is the ONLY relevant criterion under Central Excise Tariff.
24.2. The Department has not established anywhere in the show cause notice that the vehicle is not a 10 seater and in fact accepts that the same is a ten seater in earlier proceedings wherein it sought to demand duty on the basis that the vehicle was a non-transport category of vehicle.
24.3. It is submitted that the onus is on the Department to prove that the classification of the said vehicles ought to be under Heading 8703 and not Heading 8702 as claimed by the Appellants. The Department does not dispute that the vehicle is not capable of seating ten persons or that it was not designed as a ten seater. What it seeks to do is to apply certain provisions contained in the MMVR (which do not apply to non-transport vehicles which the Commander vehicles are approved for registration) and, therefore, seek to contend that the same are not 10 seaters.
25. As per commercial parlance test, Commander is a ten seater.
The Commander range of vehicles were specifically approved for carriage of 10 persons, as the same was approved by all the respective Regional Transport Authorities as a 10 seater and was bought and sold as 10 seater. Further, they were permitted, in law, to carry 10 persons by the authorities administering the law relating to transportation in the respective jurisdiction. Thus, these vehicles apart from passing the commercial parlance test of 10-seaters are also in law, permitted to carry ten persons. This has been totally overlooked in the impugned order.
26. Reference to motor vehicles act is not permissible.
26.1. The impugned order of the Commissioner seeks to rely upon various provisions of Motor Vehicles Act 1988 and the Maharashtra Motor Vehicles Rules 1989 to arrive at a conclusion that the vehicle was not a 10 seater.
26.2. Reference to the Motor Vehicles Act 1988 for the purpose of determining the classification under Excise Tariff is misplaced and is contrary to law. The Central Excise Tariff does not prescribe any reference to Motor Vehicle Act or any State Motor Vehicle Rules to determine the classification of excisable goods. Entire foundation on the basis of which the Department seeks to demand differential duty is fallacious and contrary to the provisions of Excise Law.
27. The Motor Vehicles Act & Rules relied upon in the show cause notice/impugned order do not apply to these vehicles under non-transport category.
27.1. The Department is seeking to rely upon certain provisions in the MMVR in support of its contention that the vehicle does not meet with the seating size requirements. The rules relied upon by the Department are Rules 79, 82, 84 and 171.
27.2. It is submitted that for interpreting the provisions of the Central Excise Tariff (Central Statute) it is not permissible for the Department to rely upon the provisions of State Rules. As stated hereinabove. this issue came up for determination before this Honble Tribunal in the case of Premier Automobiles reported in 2007 (209) ELT 439 wherein the CESTAT accepted the Departments argument that Central Excise Act being a Central Statute, it was not permissible in law to refer to or rely upon State Laws. In the present appeal, the Department seeks to apply the State Rules while determining classification under Central Excise Act. As stated in the appeal, the vehicle is in full compliance with the seating size regulations applicable in the Punjab Motor Vehicle Rules. Some of the States do not contain any provision relating to seating size. Hence, it is submitted that reference to State Rules would result in a state of confusion with regards to the classification.
28. The Central Excise Department cannot challenge certification by ARAI and Transport Commissioner.
28.1 It is submitted that the Department has engaged itself with the issue of whether or not the non-transport categorization given by the Transport Commissioner is accurate. It is submitted that this is an issue under the registration provisions of the Motor Vehicles Act/Rules and is solely within the domain of the Transport Commissioner. The issue of transport/non-transport is of no significance to classification under the Central Excise Tariff. As against the settled law, the entire basis of the Central Excise Department in the show cause notice and the impugned order seeks to go behind the categorization made by the Transport Commissioner, which is wholly without the authority of law in terms of the settled law.
28.2. It is submitted that the Excise Department is not competent to challenge the validity of the certificate issued by the Transport Commissioners. It is submitted that the Transport Commissioners have till date neither revoked the certificate of registration granted nor have they initiated any steps to do so. The Excise Department cannot usurp the power of the Transport Commissioner and seek to contend that the certificate is erroneous or not in the format. The Excise Department can not challenge the genuineness of the certificate and has therefore to accept the certificate as valid.
29. The Transport Commissioners certification as omnibus under non-transport category is perfectly valid.
29.1. The Department seeks to contend that the vehicles in question were approved for registration by the Transport Commissioner under a category that did not exist and therefore the vehicle ought to be registered as a Transport Vehicle.
The factual position as evident from the documents annexed to the show cause notice itself is as under:
The Transport Commissioner in his certificate has classified the vehicles as Omnibus under Non transport Category This classification was based on the fact that all these terms viz omnibus, non-transport etc were defined in the Motor Vehicles Act and the Rules, at the time of certification which was prior to 18.6.1992.
29.2. Between the period from 22.5.1989 to 18.6.1992 there was no distinction or classification of vehicles as transport and non-transport.
29.3. Thereafter on 19.6.1992 the Notification was issued by which omnibus was shown under the transport category.
29.4. In view of the fact that the Transport Commissioners were classifying the vehicles of various manufacturers including that of the appellant as Omnibus under Non-Transport Category, a reference was made by the Transport Commissioner to the Ministry of Surface Transport. This fact is evident from the Circular issued by him the August, 1992. By the said communication as also Circular dated 1.9.1992 the Transport Commissioner ordered status quo for all the registration already granted.
29.5. A reference was made to the Ministry of Surface Transport which confirmed that the same was correct and the vehicles so registered would continue to be so registered.
29.6. By a further notification dated 24.11.1992 the categories were harmonized and the vehicle registration was finally settled.
29.7. It may be pertinent to note here that all through the Government has not challenged the actions of the Transport Commissioner nor has it ever held that what the TC did was wrong or erroneous. In fact it directed status quo to be maintained.
30. Transport Commissioner has reaffirmed his stand that the vehicle was 10 seater and continued to approve the vehicle as a 10 seater.
31. Allegation of suppression is unsustainable.
32. The Department cannot contend that the ARAI is not the competent authority to certify the seating capacity of the Vehicle.
33. There are no circumstances which warrant invocation of penal provisions. The Appellants submit that its conduct has been absolutely bonafide and the appellant cleared the motor vehicles on the basis of approved classification lists.
DEPARTMENTS SUBMISSIONS
34. The Counsel on behalf of the department submitted that he agreed that the Central Excise Tariff cannot be interpreted by reference to the MVA. However, for determining classification, the Excise Department needs some guidance and can therefore, reach out to principles under the MVA, since it is an Act in pari-materia.
35. The Appellant did not produce the relevant documents including the blue prints before the Transport Commissioner and ARAI. This was adversely commented upon also in the High Court Order. The documents were not produced even before the adjudicating authority.
36. ARAI has no statutory authority to decide seating capacity. Reliance was placed on the statement of Mr. Mujawar said at page 184.
37. Category of non-transport did not exist in 1989 and therefore the categorization of the TC namely Omnibus under Non Transport Category was erroneous
38. The Department also sought to rely upon correspondence/internal noting in support of its allegation that the Appellants were aware of Rule 171 and the seating spaces.
39. We have considered the submissions made by both sides and gone through the records.
40. The issue involves classification of Commander range of vehicle manufactured by the appellants at Kandivali and Nashik. The departments contention is that the vehicle is required to be classified under 8703 of CETA, whereas the appellants claimed the classification under 8702 of CETA. The production of the vehicle commenced somewhere in July 1991. At that time, the CETA Heading 8702 read as public transport type passenger motor vehicle. The CETA Heading 8703 covered motor cars and other motor vehicles principally designed for the transport of persons (other than those Heading No.8702) including station wagon and racing cars. Chapter Note No.3 to Chapter 87 provided that for the purpose of Heading 8702, the expression public transport type passenger motor vehicle means, vehicles designed for the transport of 10 persons or more including the driver. Before we consider the rival arguments and the correctness of contentions of both sides, it will be appropriate to consider how an Assessing Officer would approach the classification when a classification list is filed as per the provisions of law and also arrive at a correct classification and thereafter apply the different arguments put forth and come to the conclusion as to what is the correct classification.
41. The appellants filed a classification list and claimed classification of their Commander range vehicle as a public transport type passenger motor vehicle. The Chapter Note provides that the meaning of the heading is that such vehicles are designed for the transport of 10 persons or more including the driver. Therefore, the Assessing Officer is required to see whether the vehicle has been designed for this purpose.
42. The next question that arises is how should the Assessing Officer examine this aspect? Can he do this by requiring the assessee to transport or fill up the vehicle with 10 persons including the driver and come to the conclusion that the vehicle has been designed for 10 persons? Obviously, the answer would be NO. Since the Assessing Officer cannot be said to be having the expertise which is required to consider this aspect. Further, there are so many variables when 10 persons are loaded in the vehicle. The actual number of persons that can travel in a vehicle is not really relevant for the purpose of deciding whether a vehicle has been designed to carry that many persons. It is usual to find that a large number of people (much more than the capacity of the vehicle certified) traveling in vehicles in India. A bus, which is supposed to carry 50 persons often, carries more than 100 persons in this country. The cars, which are designed to carry 5 or 6 persons, carrying more than 10 persons are not rare to be seen. Therefore, as a lay man an Assessing Officer cannot decide whether a vehicle has been designed to carry 10 persons. In such a situation, naturally the Assessing Officer would ask the manufacturer himself to explain the basis on which the conclusion that the vehicle is designed to transport 10 persons has been arrived at. Naturally, the manufacturer of the motor vehicle in such a situation would explain that in India, any vehicle, before it is put on the road, is required to get a certificate from ARAI or VRDE. Further, the manufacturer would also explain that each and every vehicle manufactured in India, is required to be registered and get a registration number for plying on the road in India. In such a situation, the Assessing Officer would call for the certificate issued by the organization recognized for this purpose viz., ARAI or VRDE and if the certificate certifies that the vehicle is designed for carrying 10 persons, he would accept the classification claimed by the manufacturer. He may also verify the certificate of registration issued by the concerned transport authorities, if he is satisfied with the certificate issued by the organization required to certify the vehicle before it is put on the road; naturally he would not have to proceed further. This requirement arises, because as explained earlier, there has to be a standard, based on which a vehicle can be said to have been designed for the transport of 10 persons or more. These standards would be either available in standard text book or scientific literature or with the organizations, which are entrusted to prepare standards or with the organization, who are required to decide such factors and sometimes standards are also prescribed in the relevant acts framed for such purpose. In this case, the Motor Vehicles Act and Rules there under, lay down the standards. Even if the Motor Vehicle Act does not lay down the standards, the experts opinion rendered by the organizations like ARAI or VRDE can be accepted in view of the fact that these organizations have been recognized for these purposes. If this procedure to decide whether a vehicle is designed for carrying 10 persons or not is not followed, the situation can be chaotic and different types of vehicles in different sizes and in different designs can be manufactured and claimed to be designed for carrying a number of persons. To prevent such chaotic situation, regulatory agencies like transport authorities and organizations like, ARAI or VRDE are recognized so that certain level of uniformity can be achieved and certain uniform standard are followed in the country. Once a vehicle is certified by ARAI or VRDE as the vehicle designed for the transport of 10 persons or more including the driver, the classification claim has to be accepted and approved. But if no such expert concurrence is available or if they have not certified the requirement of the tariff heading as is the case, assessing officer has to consider whether he can decide the seating capacity himself or he needs expert assistance. If provisions of law are simple and do not need expertise, assessing officer himself can decide whether vehicle fulfills the condition.
43. In this background, it is necessary to examine the chronological events in this case, which have lead to the dispute before us.
July 1991 The company commenced manufacture of a ten seater motor vehicle Commander 750 DP and submitted CL No.1/91 dated 25/07/1991 classifying the vehicle under CHN 8702; that the vehicle was tested and certified by the ARAI as a ten seater vehicle; the State Transport Commissioners of Gujarat, Maharashtra classified the vehicle as an omnibus in the non-transport category capable of carrying 10 persons, the other Transport Commissioners certified the vehicle of being capable of carrying 10 persons without any category;
21/10/1991 The Asst Collector approved the CL No.1/91 dated 25/07/1991 classifying the vehicle under CHN 8702; that against the aforesaid approval, the Excise Department filed an appeal before the CCE (Appeals) contending that the correct classification was under CHN 8703.
23/12/1991 Notice was issued by the CCE Mumbai II contending that the classification of the ten seater vehicles under CHN 8702 was erroneous and hence demand for amount of Rs.8.90 crores was made for the period June 1991 to November 1991.
16/06/1992 Order dated 10/04/92 passed by the CCE, Mumbai II accepted the contention of the company that the provisions of the MV Act were not relevant and could not be taken into consideration in deciding the CETH of the vehicle. CCE also accepted the position that the only criterion was whether or not the vehicle was designed for the transport of ten persons or more.
23/06/1993 In respect of the Appeal filed by the Department challenging the approval of the classification of Commander under CETH 8702, the CCE (Appeals) dismissed the Departments appeal inter-alia holding that the order of the CCE dated 10/04/92 had become final and had been accepted by the Department.
20/09/2000 Department being aggrieved by the aforesaid order passed by the CCE (Appeals) filed an appeal before the CEGAT and CEGAT dismissed the Departments appeal by its order dated 20/09/2000. The Department has not challenged that order before the Supreme Court.
01/03/1992 That CL No.1/92-93 with effect from 01/03/92 filed in respect of Commander vehicle with a carrying capacity of 10 persons was approved by the Assistant Collector on 26/06/1992; that the Department filed an appeal against the approval of the aforesaid CL No.1/92-93.
01/11/2000 CCE (Appeals) rejected the appeal of the Department and held that the vehicle was correctly classifiable under CHN 8702; that the order in appeal dated 01/11/2000 was challenged by the Department before the CEGAT.
24/11/2005 - The appeal filed by the department was rejected by the Tribunal vide order No.1415/1125/2005/C-II/EB dated 19/07/2005.
The appeal filed by the department against this issue before the Honble Supreme Court is pending.
44. In fact, when we started hearing the appeal, as soon as the arguments were advanced and chronological history of the dispute was given and details were mentioned, we felt that the issue has already attained finality with the decision of the Tribunal dated 19/07/2005 and it would not be appropriate on our part to hear this case.
44.1 The Ld. Advocate also submitted that while granting unconditional stay to the appellants, this Tribunal had observed that since the classification list pertaining to very same period has attained finality in respect of the very same appellants, the same cannot be challenged in the subsequent proceedings until the order is reversed by the higher judicial forum. It was also pointed out that the Tribunal also observed that the vehicles manufactured by the appellants would merit classification under CETA Heading 8702 and the provisions of Maharashtra Motor Vehicle Rules are not relevant for the purpose of determination of classification of the vehicle.
44.2 We immediately asked the Counsel for the Revenue as to why should we not dispose of the appeal on the basis of these submissions alone, since we felt that if we proceed to decide the issue, it may amount to review of the order of this Tribunal. The Ld. Advocate for the revenue submitted that this is not the situation and submitted that he would be able to show that the issue involved in this case is entirely different. However, he also submitted that he would make a detailed submission only after the appellants complete the arguments in their case.
45. Since this issue is to be disposed off before we proceed further, this issue is taken up first.
45.1 The first submission made by the Ld. Counsel for the Revenue was that he was in full agreement with the decision of the Tribunal and also with the contentions of the appellants that the Central Excise Tariff cannot be interpreted by reference to the Motor Vehicle Act. He also submitted that for determining the classification the Excise Department needs some guidance and can therefore, reach out to principles under the Motor Vehicle Act, since it is an act in pari materia.
45.2 The Ld. Advocate for the appellants submitted that there is a long line of judgments including the appellants own case that the Motor Vehicle Act and the Rules cannot be referred to or relied upon for determining the classification. He also submitted that this submission seeks to bring in the provisions of Motor Vehicle Act by back door for determining classification. He cited Para 4 of the judgement of this Tribunal dated 19/07/2005 in support of his contention, which is reproduced below:-
Inasmuch as there is no dispute that the vehicle under consideration is meant for transport of 10 persons or more, the same would get specifically covered by Heading 8702. Heading 8703, by its very language applies to vehicles which are not covered by 8702 and is residual entry in nature. The explanatory Notes to Harmonized System are to be effect that Heading 87.02 covers all motor vehicles designed for the transport of 10 persons or more (including the drivers) without making any distinction about the use of the same as public transport vehicle or other. As such, we fully agree with Commissioner (Appeals) that there is nothing in the Heading 8702 to suggest the said provisions had to be interpreted in accordance with the provision of Motor Vehicles Act) 45.3 He also submitted that the issue of design was relevant only till 01/03/92 and not thereafter, in view of the change in the tariff heading. The Central Excise tariff is based on the HSN and there cannot be any question of dependence on any said laws for determination of tariff heading. In terms of the commercial parlance test declared by the Honble Supreme Court, for determining the classification, the fact that the vehicle is bought and sold as a 10 seater is determinative of classification and no further guidance is required. The CBEC itself has clarified that ARAI certificate/Transport Commissioners certificate will be definitive and, therefore, the Commissioner should have gone only by those certificates.
45.4 The Ld. Advocate for the Revenue submitted that the very starting sentence of para 4 Inasmuch as there is no dispute that the vehicle under consideration is meant for transport of 10 persons or more, the same would get specifically covered by Heading 8702 would make this decision (dated 19/07/2005) inapplicable to the facts of the present case. According to him the whole dispute before the Tribunal was whether the vehicle under consideration was designed for transport of 10 persons or more. The Tribunal went on to observe that the Heading 8702 covers motor vehicles designed for the transport of 10 persons or more without making any distinction about the use of the same as public transport vehicle or otherwise, which also be would urge as incorrect.
46. The first question is whether it can be said that there was no dispute that the vehicle under consideration is meant for transport of 10 persons or more.
46.1 We have already extracted the tariff description and chapter note. The tariff description prior to 01/03/92 was public transport type vehicles under Chapter heading 8702. The appellants contention is that the transport Commissioner of Maharashtra State Government as well as ARAI have accepted the vehicle as non-transport type and capable of carrying 10 persons. According to them the word design was relevant only till 01/03/92 and not thereafter, in view of the change in the tariff Heading. The very same issue as to whether the revision in description under 8702 of the CETA Heading made any difference to the classification of vehicle had come up before the Tribunal in the case of Bajaj Tempo Ltd., Vs. CCE, Pune (2001 (128) ELT 402 (Tri-Del) and the Tribunal had observed as follows:
The exemption under Notification 162/86 was for?. Public transport type passenger motor vehicles. The Revenue Authorities had granted this exemption to appellants motor vehicles, namely, Tempo Trax while approving the classification list. The impugned orders do not bring out any grounds for holding that the motor vehicle, Tempo Trax ceased to be public transport type passenger vehicle after 1-3-1992. No change had taken place in the motor vehicle to take it out of the category of public transport type passenger vehicle w.e.f. 1-3-1992. The records do not give any reason or offer any explanation as to why the vehicle in question was to be treated as public transport type passenger vehicle. As a result of the mere change in the tariff description, a vehicle which was a public transport type vehicle cannot be treated as any other type of vehicle. The impugned order notes that the appellants did not produce any proof that the vehicle was registered by Registration Authorities as a public transport. Except for this observation we find nothing on record to show that the vehicle in question was not a public transport type vehicle. The exemption was for public transport type passenger vehicles and not for vehicles registered by Registration Authorities as a public transport. The impugned order equated public transport type passenger vehicle with vehicles registered by Registration Authorities as a Public Transport. This is not a correct understanding of the entry. There is no requirement stipulated under the exemption notification that the vehicles, in order to become eligible for the exemption should be registered as public transport. Such a requirement cannot be read into the notification particularly so, since the exemption is for public transport type passenger vehicle (emphasis added) and not to public transport passenger vehicles registered as public transport. The equating of the two amounts to reading the exemption notification excluding the word type. For the purpose of the exemption it is sufficient that the motor vehicle is of the prescribed type; it does not have to be. Words are not to be supplied to or taken out of statutes while interpreting them. Therefore, the interpretation placed by the Commissioner is not correct. The Commissioner also rejected the appellants submission that the change in the wording of Tariff Item 8702 in the Budget for 1992-93 had no revenue effect by stating that it is not for the quasi-judicial authorities to ascertain the intention of the legislation and to interpret the provision accordingly, when there is no ambiguity in the notification whatsoever. We are not able to agree with this either. The appellant was not advancing an argument of seeking a particular interpretation. He was only stating that the Finance Bill itself made it clear that the change made in the Tariff Heading was without any revenue effect. When the Bill itself stated that the change was of editorial and textual nature, the issue involved was not one of interpretation but accepting the stated intention of the Legislation.
46.2 Therefore, the contention that the design ceases to be relevant after 01/03/92 cannot be accepted. We have also taken note of the fact that this aspect was not brought to the notice of the Tribunal when the order dated 19/07/2005 was passed. In fact, the Tribunal had taken note of the tariff heading description as it existed after 01/03/92 only. Further, the Tribunal also took note of the fact that the explanatory note covers motor vehicles designed for transport of 10 persons or more without making any distinction about the use of the same as public transport vehicle or other. But it has to be noted that the explanatory note to HSN also provided that heading 8702 covers of Motor vehicles designed for the transport of 10 persons or more. Therefore, the word design was very much in existence. In view of the decision of the Tribunal cited above and in view of HSN explanatory notes, we have to and shall proceed on the basis that the change of description of the Tariff heading did not make any distinction/difference to the issue of classification.
46.3 It is not for classification of the vehicle that one is required to look into the Motor Vehicle Act or Rules there under. It is to see whether the vehicle manufactured by the appellants is designed for carrying 10 persons or more. It is the first hurdle to cross. In fact, only after confirming the design of the vehicle and seating capacity manufactured by the appellants, the question of classification would arise. It is not the requirement of Central Excise Act or the Rules or the Central Excise tariff that a reference to Motor Vehicle Acts or Rules is required to be made. Another point that has to be kept in mind is that no vehicle can ply on the roads in India or bought and sold if the design, constructions, etc. have not been approved and are not in accordance with the provisions of MV Act & Rules.
46.4 Further, as rightly pointed out by the Ld. Advocate for the Revenue, the observation that there is no dispute that the vehicle is meant for transport of 10 persons led to the conclusion in favour of the appellants, whereas the very starting paragraph of the ground of appeal stated that the vehicle was actually not a 10 seater. The relevant paragraph is reproduced below:-
The Commissioner (Appeals) in his impugned order had failed to appreciate that M/s .Mahindra & Mahindra Ltd., had wrongly classified their motor vehicle under chapter heading 87.02 by declaring the motor vehicle as ten seaters. The vehicles were actually not ten seaters as they did not satisfy the conditions for such vehicles laid down under the provision of MMVA, 1988. To decide whether a vehicle could be classified as are with a capacity in carry 10 persons or more, the provisions of the Motor Vehicle Act relating to the seating capacity as well as weight loading capacity cannot be totally ignored and in absence of any statutory provisions under the C.Ex. Act, the provisions of other Act/Rules could be followed.
46.5 We have already observed earlier that if it is left to the manufactures and the Assessing Officer and the general public to decide whether a vehicle is designed for transport of specific number of 10 persons freely it would be chaotic and, therefore, certain standards are required to be prescribed. In this case, the certificate issued by the ARAI and the transport Commissioner for the Commander range vehicle was examined. The ARAI has certified that based on the trials conducted by them on the model, the model means the requirements of provisions of Central Motor Vehicle Rules 1991 as applicable with effect from 11/04/91. Technical specifications were enclosed. Neither in the technical specification nor in the certificate there is any mention about the seating capacity of the vehicle. The only mention of seating capacity is available in the first paragraph of the certificate wherein it says based on the trials conducted on the prototype of the basic model Mahindra Commander 750/2WD (10 seater) manufactured by Mahindra & Mahindra Ltd..
46.6 Shri Z.A.Mujawar, Dy. Director, ARAI, in his statement had clearly stated as follows:-
I would like to state that the vehicle length, width and height are measured by the measuring tape and recorded, curb weight and gross vehicle weight are measured on weigh bridge and cross checked with the technical specification given by the manufacturer, the load carrying capacity is computed from difference between gross vehicle weight and curb weight and the riding capacity checked visually for adequacy of seating. No physical measurements of the seat dimensions are conducted as it is not required as per the Central Motor Vehicle Rules 1989. However, for satisfying ourselves on seating capacity claimed by the manufacturer, we load the vehicle with the number of persons, which vehicle manufacturers claim/declare for seating capacity and ascertain if correct. He goes on to say The carrying capacity of 10 seater mentioned in the certificate has been verified by loading vehicle with number of persons, which vehicle manufacturers claim. No seating layout drawing was provided by the manufacturer nor dimensions of the seat provided by the manufacturer for verifying the same. He further says we have given the brief technical specifications of the model for ease of reference, which are called out from the vehicle data sheet filled by the manufacturer with no intention of specifically certifying the capacity. As regards the authority of ARAI to certify seating capacity we shall revert to you shortly. Subsequently, they clarified that they were not required to certify the seating capacity to Transport Commissioner.
46.7 On the other hand, the Transport Commissioner says that since they classified the vehicle of a non-transport vehicle, the compliance with the norms for seating capacity actually meant for public and private services vehicles has not been rigorously verified. He also says that in the blue prints available on the records of assessing officer it is possible that the seating capacity would fall slightly short of the one assigned presently, if it were to be approved as a transport vehicle. Thus, the both ARAI and the Transport Commissioner do not specifically say that the vehicle is designed for carrying 10 persons. Both of them in fact say that they were not required to verify this aspect. The Transport Commissioner was not required to do so, since he had classified the vehicle as a non-transport vehicle and the ARAI was also not required to verify since he was not required to verify this as per Rules.
46.8 Ld. Advocate for the revenue took us through the impugned order wherein this issue has been elaborately discussed. From the order, we find that internally a note was received from the marketing department as rough guidelines for development of seats in June 1991, wherein it was indicated that the length of the seats required per person was to be taken as 15 minimum. It has to be noted that this is the minimum required as per Rule 171 of Maharashtra Motor Vehicle Rules (MMVR). This shows that the appellants also wanted to design a vehicle and were very well aware that minimum length of the seat as per law was 15. What happened subsequently is interesting. As per the vendors request, the appellants sent a body shell of the Commander vehicle and based on the rough guidelines given by the appellants and the body shell of Commander vehicle, the vendor developed the seats. After the seats were developed since the vendor could not give drawing for inspection purpose, the R&D section of Mahindra & Mahindra then got one set of seat without cover and cushion, through material control department and prepared the drawing for seat and backrest carcass in September 1991. Apparently, the drawings prepared by the company and forwarded, after development were found unsuitable since the vehicle could not accommodate 10 persons if manufacture of the seat was as per the original design. This shows that irrespective of the contentions of the appellants that they had designed a vehicle, which was a 10 seater, what comes out from this results of investigation is that the appellants found that the design of the vehicle manufactured by them was not suitable for transporting 10 persons as per law even though they had intended to manufacture a vehicle with capacity of 10 seats in accordance with the Rule 171 of Motor Vehicle Rules. Having failed to design the vehicle to carry 10 persons and knowing fully that the vehicle could not carry 10 persons, which is what they intended to design, the appellants prepared drawings and blue prints as per the seats manufactured by the vendor and proceeded to get the approval of the ARAI and the Transport Commissioner. It has to be noted that the Transport Commissioner did not certify the vehicle as Transport vehicle. It was contended by the Ld. Advocate for the appellants that till date the vehicle continues to be classified as a non-transport vehicle. When we think of drawings and design, the question is not of quantum of difference between the standard and the actual unless the standard itself provides for difference between the standard and actual. Admittedly, the seating requirements for seating capacity under Rule 171 of MMVR prescribed the minimum length required. Therefore, the fact that the length of the seat was marginally lower would not help the appellants at all unless such margin is provided by law and is acceptable. In this case, the appellants themselves found seats as per design could not be fitted into the vehicle and if the same could be fitted there would have been no problem what so ever. From the above discussion what emerges is that the appellants proceeded to design a vehicle for transporting 10 persons by making modification in one of their existing model and fell marginally short and subsequently proceeded to manufacture the vehicle anyway and released it to the market. If they were to reveal that these vehicles could not be classified as a public transport type vehicle, the classification list as proposed would not have been proved. It has to be noted that the classification list No.1/91 was submitted on 25/07/91, whereas the drawing for the seats were finally prepared only in September 1991. Further, we have to observe that our conclusion above that vehicle was not designed for carrying 10 persons is not based on Motor Vehicle Acts and Rules alone. It is based on the following facts viz., ARAI admits that they have not verified the seating capacity; Transport Commissioner says that he is not concerned with the seating capacity since the vehicle is classified in non-transport category for which no standard have been prescribed appellants; internal correspondence and efforts as reflected in para 33.7 of the order-in-original show that the appellants themselves found design of the vehicle and the seats were not as per standards, which they had set out to produce and when appellants themselves failed to produce vehicle with seating capacity of 10 persons, the claim that the Assessing Officer should have accepted that the vehicle is designed for 10 persons is not correct. Since all the decisions in favour of the appellants were rendered on the ground that Motor Vehicle Act and Rules cannot be applied without examining all these aspects, we have to and we can differentiate our present conclusion with the earlier decisions rendered in the case of the appellants themselves. While it has to be accepted that just because a vehicle is required to be classified in a particular category under Motor Vehicle Act, on that basis the classification under Central Excise tariff has to be decided is not acceptable, to decide whether a particular vehicle has been designed and fulfills the description of the tariff description, aid and assistance of the standards prescribed by the Government and statutory requirements have to be taken into consideration. The appellants have contended that the fact is that the vehicle is sold as a 10 seater and therefore, it has to be classified as designed as 10 seater is not acceptable. The test of common parlance cannot override the tariff description and statutory provisions applicable to the particular commodity.
46.9 In fact the contrary to what the appellants have stated in the impugned of the Commissioner does not rely upon the MV Act and Rules for the classification purpose. His observation in para 36.12 clearly show this and, therefore, the same is reproduced below:-
The noticee averred that the Tariff heading should be determined in terms of heading and any section or chapter notes and relied upon various authorities to support the contention viz. Fenner India Ltd., Vs. CCE 1995 77 ELT 8 (SC); Sanghvi Swiss Refills 1997 (94) ELT 644; Saurashtra Chemicals 23 ELT 283 (CEGAT); Metrowood Engg. Works 43 ELT 660; Vanguard Ins. Co. AIR 1960 SC 971. While it is necessary to consider the note 3 to chapter 87 before arriving at heading 8702 or 8703, it is equally necessary and essential to arrive at the correct seating capacity of the impugned motor vehicle before considering Note 3 of Chapter 87. E.g. the seating capacity zero or more than zero would determine whether note 3 is to be taken into consideration or otherwise. Further, if the seating capacity is more than zero then depending upon whether it is 10 (or more) the heading 8702 would be attracted in terms of Note 3 (supra) else the heading 8703 would be attracted. Therefore, the contention of the investigation to rely upon the MV Act 1988 and the rules there under to determine the correct seating capacity of the impugned vehicle is well founded.
46.10. Further, in Para 35 of his order, the Commissioner has rejected the claim of the appellants regarding classification on the ground that ARAI neither had the statutory authority nor the intention to certify the seating capacity of the impugned vehicle; the Transport Commissioners Circular depended upon the certificate of the ARAI and the report of the RTO and the Transport Commissioner had issued the certificate by creating a new category Omnibus under non-transport category on 19/08/91 itself, whereas such a category did not exist prior to 24/11/92. He has also shown that HSN explanatory notes did not provide the methodology to arrive at the seating capacity of the vehicle. What he has said is that the claim of the noticee is therefore not supported by any independent verifiable evidence as regards the seating capacity, whereas the department had clearly shown that the vehicle manufactured by the appellants did not have the seating capacity.
46.11. Further, we also have gone through the records and found that while considering the stay application of the appellants against the impugned order, the Tribunal in the order dated 30/11/2005 also took note of the fact that in the earlier adjudication the only ground taken was that the appellants had claimed the vehicle to be a public transport type passenger motor vehicle and the department had contended that the same was not used for public transport and in that case the departments appeal was dismissed on the ground that additional ground cannot be taken in the appeal.
46.12 . Further, the Tribunal had observed that prima facie they were of the view that since the chapter notes and the Tariff entry referred to vehicles design for the transport of 10 persons or more, there was nothing wrong in departmental authority taking recourse to the Maharashtra Motor Vehicle Rules, in view of the fact that vehicles were manufactured within the state of Maharashtra. This order shows that another Bench of this Tribunal also took a view independently that there would be nothing wrong in depending upon the Motor Vehicle Rules to see whether the vehicle has requisite seating capacity or not. This is in conformity with the view taken by the Commissioner in his order as discussed above.
46.13. We are conscious of the fact that this order was set aside by the Honble High Court on the ground that this order had not considered the decision of the Tribunal rendered vide order dated 19/07/2005. Even though the Tribunals order holding that the department cannot rely upon the MV Act for classification and allowing the appeal filed by the appellants upholding the classification under CETH 8702 was dated 19/07/2005 (dictated in Court) yet the same was signed by the members of the Bench on 25/10/2005 and it was issued by the registry on 24/11/2005. The stay order was heard on 19/09/2005 and the order was signed on 30/11/2005. Therefore, even though the stay order has been set aside, the same has been discussed only to show that another Bench of this Tribunal had taken a prima facie view that while deciding the seating capacity of the vehicle recourse can be had to Maharashtra Motor Vehicle Rules independently without being influenced by the decision of another coordinate Bench.
46.14. Further, the Honble Mumbai High Court also had occasion to consider this issue in the Writ Petition filed by the appellants. The Honble High Court observed that merely because earlier the Excise department had accepted a certain classification does not mean that the Excise department cannot later based on material, find that the classification ought to be under a different heading. Thus we find that the Honble High Court had also come to the conclusion that the department can proceed to change the tariff heading even though it had accepted the orders classifying the vehicle under some other heading.
46.15. The Honble Supreme Court in the case of Elson Machines Pvt Ltd., Vs. Collector of Central Excise, 1988 (38) ELT 571 (SC) held that Excise authorities are not estopped from taking a view different than in the approved classification list. There is no estoppel against the law. In the case of Plasmac Machine Mfg. Co. Pvt. Ltd., 1991 (51) ELT 161 (SC) held that the change in approved classification permissible. Similar view was taken in the case of Pefco Foundry Chemicals Ltd., Vs. Collector of Central Excise (1992 (58) ELT 565 (SC).
46.16. The detailed discussion above shows that the decision of the Tribunal was based on a limited ground viz., the department had relied upon the MV Act to approve the classification list and there was no dispute about the seating capacity of the vehicle. We have found that both these observations which were confirmed the basis of the decision and also the paragraphs which were reproduced by the Tribunal in the departments appeal did not reflect the correct facts, which should have been considered. We have already reproduced the paragraph in the departments appeal which showed that the department was contesting seating capacity of the vehicle and there was also an observation that the department cannot ignore the provisions of MV Act and Rules while deciding the seating capacity of the vehicle. We are very conscious of the fact that the decisions of the Tribunal are rendered on the basis of the facts presented and the arguments advanced and quite often if one of the parties do not represent the case properly, the result could be what has happened in this case. Therefore, we feel that the decision of the Tribunal dated 19/07/2005 could not be applied in view of the facts and legal position brought out by us above.
46.17. This settles the first preliminary objection raised by the appellants that this Tribunal cannot go into the issue of classification since the same has attained finality.
47. The second preliminary objection raised by the appellant arises from the Commissioners observations in paragraph 32.6 of his order which has already been reproduced under para 21 of this order.
The Commissioners decision on classification as discussed above shows that it is not at all based on the ARAI or Transport Commissioners certificate/opinion/correspondence. In fact Commissioners conclusion is that the Transport Commissioner made a mistake in including 10 as seating capacity and when the vehicle was presented there was no category such as non-transport. From Shri Muzavars statement what emerges is that ARAI is concerned with Rules 91 to 126 of Maharashtra Motor Vehicle Rules (MMVR) none of which relate to seating capacity. In fact both Shri Muzavar and Transport Commissioner admit that in the absence of any legal requirements of seating capacity as per standards laid down in MMVR. ARAI had put 10 passengers and tested the vehicle and RTO also had done the same. What the Commissioner says that while determining the seating capacity, Rule 79 to Rule 82 and 171 of MMVR have to be applied and after determination of seating capacity, classification under SCETA has to be done as we have observed above. Therefore, we do not find any relevance of the correspondence/consultancy and conclusion thereof with Transport Commissioner in respect of the proceedings before us. Therefore, this plea fails.
48. Now we take up the classification of the vehicles in dispute.
48.1. As we had observed in paragraph 41 relating to process of classification, which the Commissioner has also followed as per the reproduced paragraph numbers 49 of this order. In this case, in the absence of any law/legal provisions of Central Excise or provision in HSN laying down the method/procedure to determine seating capacity recourse can be taken to MV Act and MMVR as already observed by us.
48.2. Before we proceed further, it would be appropriate to reproduce the relevant rules under MMVR. Section 111 (2) (a) of the MM Act, 1988 delegated the authority to the State Governments for regulating vehicles in the State including the seating capacity. Further, Rule 127 under MMVR unless the vehicles are in conformity with the provisions for design, construction and maintenance of Motor vehicle as per the MV Act, 1988, the same cannot be sold in the Country.
Rules, 79, 80 & 81 of MMVR reproduced Rule 79 - Carriage of goods on stage carriages (1) Subject to the provisions of sub-rule (2) of this rule and of Rule 81, luggage may be carried on the roof of a stage carriage or in boot, locker or compartment set aside for the purpose, but where it is so carried on a roof, adequate protection in the form of a guard rail shall be provided.
(2) No luggage shall be carried in any stage carriage in such a way as to block any entrance or exit;
(3) No goods shall be carried on the top deck of a double decked stage carriage.
(4) Where the holder of a stage carriage permit uses a vehicle authorities by the permit for the carriage of goods to the detriment of the public convenience by falling thereby to meet the demand for passenger transport, the Regional Transport Authority may, after giving the holder an opportunity of being heard declare that a breach of the conditions of the permit has occurred and may thereafter, proceed under the provisions of Section 86 of the Act.
(5) Subject to the provisions of sub-rule (2) and Rule 81, goods may be carried in a stage carriage at any time in accordance with the conditions specified in the permit, provided that, the obligation of the holder to carry passengers in accordance with the terms of the permit is discharged.
(6) Where goods are carried in stage carriage in addition to passengers, the goods shall be of such nature and shall be so packed and secured on the vehicle that no danger, inconvenience or discomfort is caused to any passenger. Such number of seats may be specified in the permit shall be kept fee and unimpeded for the use of passengers and the access to the entrance to and exit from the vehicle, required under Chapter VII of these rules shall be unobstructed.
(7) The weight in kilograms of goods carried on a stage carriage shall not exceed (N-X) x 68 where in relation to a single decked stage carriage or to the lower deck of a double decked stage carriage. For the purpose of this sub rule N is the registered passenger seating capacity of the vehicle; and X is the number of passengers carried on the vehicle, or the number of passengers for whom seats are kept free and unimpeded by goods whichever is greater.
Rule 80 Carriage of goods on contract carriage prohibited. The Regional Transport Authority may, authorize the use of contract carriage for the carriage of goods used for
(a) special reasons on particular occasions and subject to conditions and restrictions to be specified on the permit;
(b) the carriage of the personal, office or household effects of a hirer, so authorised in the permit but not the carriage of general merchandise.
81. Carriage of certain goods in stage or contract carriage prohibited (1) No goods liable to foul the interior of the vehicle or to render it insanitary shall be carried at any time in any stage carriage or contract carriage.
(2) The Regional Transport Authority may, specify in any permit the goods which shall not be carried in a stage carriage or the conditions subject to which such classes of goods may be so carried.
48.3. Further, the definition of public service vehicle and other relevant definitions as per MV Act are given below:-
Section 2(33) private service vehicle means a motor vehicle constructed or adapted to carry more than six persons excluding the driver and ordinarily sued by or on behalf of the owner of such vehicle for the purpose of carrying persons for, or in connection with, his trade or business otherwise then for hire or reward but does not include a motor vehicle used for public purposes;
Section 2(35) public service vehicle means any motor vehicle used or adapted to be used for the carriage of passengers for hire or reward, and includes a maxi cab, motor cab, contract carriage and stage carriage.
Section 2(47) transport vehicle means a public service vehicle, a goods carriage, an educational institution bus or private service vehicle.
The reproduction of relevant definitions clearly shows that transport type vehicle designed to carry 10 persons has to fulfill the requirements of public service vehicle as defined under MV Act. If it is not transport type, it would not be classifiable under CETH 87.02 at all.
48.4. Section 41 of the MV Act 1988 provides that registration of any vehicle depends upon the parameters laid down by the Central Government. Prior to 24.11.92, the only statutory category available was Omni bus-transport category. The CE Tariff required the vehicle to be of transport type for transport of more than 10 persons and admittedly appellants do not want to call this jeep (controversy would figure later on our discussions) & hence accepted the nomenclature Omnibus. Whatever be the name vehicle had to be transport type & was required to fulfill the requirements relating to the type. If Omnibus fulfilled the requirements of transport type vehicle prior to 24.11.92, there would have been no problem whatsoever, irrespective of amendments.
48.5 Another contention of the appellants was that different have different rules and some have no rules as regards seating capacity at all. Therefore one cannot rely upon MMVR only. This has already been answered by another Bench of this Tribunal in their order dated 30-11-2005 while considering stay application against this order and the Bench observed that since vehicles were manufactured in Maharashtra, there was nothing wrong in relying upon MMVR to see whether vehicle has the seating capacity as per MMVR. It was also submitted that vehicle is in full compliance with the seating size regulations applicable in the Punjab Motor Vehicle Rules. We find from the records that this submission was rebutted by the Special Counsel for Revenue when this Tribunal was hearing the stay application and we reproduce the same.
The applicant had also raised a contention that the parameters of said seat for two persons recorded during investigation was 75 cms (i.e. 750 mm) and consequently 375 mm per person was in conformity with the 375 mm specified under the Punjab Motor Vehicle Rules. In reply, it was submitted that para 9 of the Show Cause Notice refers to the details of the said dimension. That 750 cms was recorded for part No.0070994 (i.e. finished side seat carcass, cushion and cover). Carcass for the said seat (i.e. no 0070994) was part No.0070995, which on measurement was found to be 74.4 cms i.e. 744 mm. The total width added by cushion was 6 mm. That a statement of Shri Sanjay Joshi, Section Engineer, R&D Section was recorded on 31/10/92 wherein he stated the stages that were undertaken for development of side seats and clarified that after the production was stabilized, one set of seats without cover and cushion was procured through the Material Control Department and drawings were prepared (page 212/Vol.I). That the dimension of side seat carcass, part No.0070995, was having length 28.50 and width 13 (page 213/Vol.I). That 28.50 is equivalent to 724 mm (28.50 x 2.54 = 723.0 mm). That the total length of finished seat along with cushion and cover was 730 mm (724 mm + 6 mm). That the length available per person was only 365 mm (730 mm/2 = 365 mm). That the side seat carcass of length 724 mm was used for fitting in the impugned vehicle and the seats which they were presently receiving conformed to the same length and width. That the side seat No.0070995 having length of 724 mm and 6 mm of cover and cushion, thereby providing a seating space of 365 mm per person, was not in conformity with the minimum seating space per person of 375 mm prescribed under the Punjab Motor Vehicle Rules.
We find ourselves on agreement with the Revenue and find that this submission of the appellant is not based on facts, law and records.
48.6 Another submission, which we found to be not based on facts on record was that between the periods 22/5/89 to 18/06/92, there was no categorization of vehicles as Transport and non-transport. The relevant definitions are reproduced below:
Section 2 (33) Private service vehicle means a motor vehicle constructed or adapted to carry more than six persons excluding the driver and ordinarily used by or on behalf of the owner of such vehicle for the purpose of carrying persons for, or in connection with, his trade or business otherwise then for hire or reward but does not include a motor vehicle used for public purposes;
Section 2 (35) public service vehicle means any motor vehicle used or adapted to be used for the carriage of passengers for hire used or adapted to be used for the carriage of passengers for hire or reward, and includes a maxi cab, motor cab, contract carriage and stage carriage.
Section 2 (47) transport vehicle means a public service vehicle, a goods carriage, an educational institution bus or a private service vehicle.
Central Motor Vehicles Rules 1989 Rule 2 (h) non transport vehicle means a motor vehicle which is not a transport vehicle.
48.7 The definitions in the MV Act and the Central Motor Vehicle Rules specified the parameters for transport category vehicles in respect of seating capacity and load bearing capacity. Rule 171 of MMVR stated that for each passenger, a reasonably comfortable seating space of not less than 381 mm was to be provided. The departments case is that the vehicle manufactured by the appellants does not fulfill this requirement. The Commissioner in his order has observed that the length of the seat was found to be only 723.9 mm as against 762 mm required for two persons in the case of side seats. In the case of co-driver seat also, the length was found to be less than what was required. The Commissioner has also relied upon the statement of Shri Sanjay S Joshi, Section Engineer, who in his statement admitted that he had received a note from the marketing department as rough guidelines for development of seats in June 91 and in that note it was mentioned that the length of the seats of required to be taken was 15 as minimum.
48.8 It may be seen that this note was signed by the marketing department on 08/01/91 but received by the Section Engineer, R&D unit, somewhere in June 91. The specification provided that each seat must be at least 381 mm from front to back, the distance between the two seats should be 1372 mm and for the two front facing bench seats, distance between back of the front seat and the front of the rear seat must be at least 660 mm. The top of the back rest of all seats should be 406 mm above the seat level. Shri Sanjay Joshi has explained what was done after he received note from the marketing department. Based on the note and drawings for the seats were prepared and forwarded by the R&D unit and thereafter the vendor was called to develop the seat as per the drawings. However, the vendor did not follow the design. Instead proposed that he himself would develop the seat on his own design for fitting in the vehicle as per the rough guidelines shown and told to him. Thereafter a body shell of the Commander vehicle was sent to him. In the meantime based on the rough guidelines, the R&D unit prepared a seat layout drawing 071001 and handed over to the vendor. The vendor did not follow the drawings and developed his own seats, which were tried out and an order was placed on him for supply. Thereafter when the vendor expressed his inability to provide drawings for the seats manufactured by him, the R&D Unit obtained one set of seats without covers and cushion and prepared the drawings in September 1991. Thereafter the earlier drawings were destroyed. This would show that prior to September 91, the appellants did not have any drawings or design of the seat fitted on the vehicle. The rough guidelines prepared by the appellants themselves shows that the appellants were very well aware that the seating capacity has to be as per the requirements of transport vehicles and apparently they intended to manufacture transport vehicle. In August 1991, the ARAI issued a certificate of roadworthiness and based on the certificate of roadworthiness issued by the ARAI, the Transport Commissioner issued a Circular dated 19/08/91 directed all registering authorities to accept the vehicle model for registration as Omni bus. The above discussion shows that at the time when he direction for issue of registration certificate was granted, there were no drawings, designs, etc. as regards the seating capacity in respect of the vehicle.
48.9 The statement of Shri Mujawar as well as the reply to the Transport Commissioner clearly shows that they have gone through the seating capacity declared by the appellants and both of them have not taken the statutory requirements into consideration. The ARAI was not required to do so and the Transport Commissioner also stated that he was not required to look into it since for the vehicle is of non-transport category; there were no specifications in the MMVR for seating capacity. He also relied upon the ARAI certificate and the report of the RTO both of whom tested the seating capacity by putting 10 persons in the vehicle. Interestingly, the so called drawing, which was submitted to the Motor Vehicle authorities, has the words specification subject to change without notice. It is strange that when the statute requires that every prototype of the vehicle is required to be certified by the ARAI and every vehicle is to be registered by the Transport department and no change in the design, construction, etc. can be made after such approval, the Transport Commissioner has accepted the drawings given by the appellants which provides a note as described above. It appears that so called designs and drawings is nothing but the one which is used by the appellants in their trading activity. Only in brochures and catalogues, etc. we find such terms used and not in declarations required to be submitted to the statutory authorities. The sum and substance of the process discussed above shows that while the appellants proceeded and intended to manufacture a vehicle seating capacity of 10 persons so that they can avail the benefit of the lower rate of duty available under CETH 8702, when they found that they fell short of specifications, they obtained a certificate in a category, which did not require any verifications of seating capacity by the statutory authorities like the Transport Commissioner. It has been contended on behalf of the appellants that the Commissioner was wrong in taking a stand that the Transport Commissioner did not act as per the law and he had no power to sit in appeal over the decision of the Transport Commissioner. We fully agree with the contention of the appellants. While this could be a mistake on the part of the Commissioner in the impugned order, he has not made any mistake as regards the determination of seating capacity. The very fact that the internal note sent to the design department in June 91 and note sent by marketing department in January 91 show that the appellants were also aware that there was a statutory minimum requirement of seating capacity. Otherwise, there would not have been an indication of minimum length of the seat. They would have asked the design department to prepare drawings for seats to accommodate 10 persons, which would have been sufficient and which is what was done ultimately. The fact that 15 quoted in the guidelines tallies with the statutory requirement supports this view.
48.10. We find it very strange that on the one had the appellants claim supports from the certificate of ARAI and the Transport Commissioner, in support of their claim that both of them had approved their seating capacity, which could have been done only under the provisions of MV Act, and require this Tribunal to accept their contention. On the other hand they submit that we cannot go into or depend upon the MV Act, for determination of classification. If we accept the contention of the appellants, the report of ARAI and the observations of the Transport Commissioner are to be accepted, it would mean that we are applying the provisions of MV Act. But considerable time was spent in arguing in support of the contentions that MV Act cannot be depended upon.
48.11. Another reason why we cannot accept this view is description in the tariff itself. The tariff description prior to 01/03/92 was public transport type vehicle. The contention of the appellants is that neither Central Excise tariff nor the HSN referred to, MV Act and Rules there under. Therefore, Revenue cannot rely upon the MV Act and Rules for classification. The question arises where to go to find out the meaning of public transport vehicle. How do we find whether the vehicle is for transporting 10 persons and whether it is a transport type vehicle. The HSN explanatory note is meant for the whole world. As pointed out by the Ld. Advocate, standards are available and no meaning is available and when the MV Act provides that a vehicle cannot be sold if it does not fulfill the requirements in terms of the design, construction, etc. and cannot ply on the road, whether a vehicle is for transport of 10 persons or not has to be determined in terms of the MV Act and Rules only. As observed by the Tribunal in the stay order, since the vehicles were manufactured in Maharashtra, the departmental authorities cannot be found fault for taking recourse to MMVR for specification of seating capacity. Even if the vehicle is of a non-transport category for the purpose of MV Act and Rules, for the classification of the vehicle if it is to be made under 8702, it has to be a transport type vehicle. Obviously the seating capacity has to be determined on that basis. As rightly pointed out by the appellants, the purpose of MV Act and Rules is entirely different and the purpose of classification under Central Excise tariff Act is entirely different. Therefore, even if ARAI and Transport Commissioner get satisfied by checking up whether 10 persons can be seated in the vehicle or not for checking the roadworthiness, the Central Excise Officer for classification purpose has to check whether the vehicle fits into description given in the tariff. The tariff as it existed prior to 01/03/92 classified public transport type passenger motor vehicle under heading 8702. The vehicle has to be of this type and it has to fulfill the requirements of this type of vehicle if the same is to be classified under this heading when read with chapter note. The vehicle manufactured by the appellants is admittedly not the transport type since motor vehicle authorities have classified at as a non-transport vehicle and it does not have the seating capacity in view of the fact that it does not fulfill the requirements of specifications to determine the seating capacity of public transport vehicle in terms of the length and width. Another point that supports the department contention is the contents of internal note corresponding the safeguards to be taken for ensuring the admissibility of lower excise duty benefit. Some of these requirements are certification from the ARAI should certify the vehicle to be with capacity of 10 or more persons; in the RTO certificate seating capacity should be specified; model name and seating capacity should be embossed on all vehicles; the vehicle should be registered as a 10 seater. If the vehicle was designed to carry 10 person, all these precautions and safeguards were unnecessary.
48.12. The appellants have cited several decisions in support of their contentions. In this case, the assessing authority had to determine the vehicle had seating capacity and whether the vehicle was of public transport type. Only when the vehicle had the seating capacity as a public transport type vehicle, it could have been classified under CETA 8702. For this purpose, in the absence of any methodology or procedure set out either in the tariff or in the HSN, the Central Excise Officer had no option but to rely upon the specifications given in the MV Act and the Rules, which are meant specifically for this purpose. Therefore, the decision of the Honble Supreme Court in the case of Fenner India Ltd., Vs. CCE 1995 (77) ELT 8 (SC), Sanghvi Swiss Refill 1997 (94) ELT 644 (Tri), Saurashtra Chemicals 1986 (23) ELT 283 (Tri.), and Metrowood Engineering Works 1989 (43) ELT 660 (Tri) are of no support to the appellants. Since in this case tariff heading read with Chapter note are not sufficient to determine the classification and to determine the type of vehicle and seating capacity the officer has to refer to MV Act.
48.13. We have elaborately discussed and come to the conclusion that the process adopted by the Revenue for classification in this case does not amount to reliance on MV Act and Rules. If we did not reach this conclusion, judicial discipline would have required us to follow the decision of this Tribunal by another Bench on 19/07/2005 and drop the proceedings.
However, on a study of the issue, we are unable to agree with the submissions that it is well settled principle that under Excise La, reference to terms in other Acts is not permissible. Appellants relied upon following decisions:
a) Leisureland Pvt Ltd.,Vs.CCE, Calcutta(1994 (71) ELT 489 (T)
b) Bolani Ores AIR 19757 SC 17
c) MSCO Air 1985 SC 76
d) Tata Tea Ltd., 2002 (50) RLT 126 SC
e) Brooke Bond India Ltd., UOI & others 1984 (15) ELT 32
f) Premier Automobiles Vs. CCE, Mumbai, 2007 (209) ELT 439 We found following decisions which found the same permissible and we have reproduced the relevant paragraphs below:
a) Scooter India Ltd., 2003 (156) ELT 535 (Tri-Del Para 10 - The Commissioner has relied on the warranty booklet and also the letter dated 8-10-99 addressed to ARAI for coming to the conclusion that the auto-rickshaw and the chassis manufactured by the assessee are designed to carry more than six passengers excluding the driver. We are not able to agree with the view taken by the Commissioner. It maybe that the assessee desired to manufacture a chassis for vehicle with passenger capacity of more than seven passengers including the driver. But, its application was not approved by ARAI since it was found that the design of the vehicle is not adequate to have a passenger capacity of more than seven persons excluding the driver. Therefore, approval for the design was granted only as a vehicle with passenger capacity of six persons excluding the driver. This would show that the vehicle can be taken only as one designed to carry six passengers excluding the driver.
11. The assessee has produced voluminous? documents to show that the transport authorities of different States have registered the vehicle as one having capacity of six passengers excluding driver. It is relevant to note that the assessee has given sufficient material to co-relate chassis manufactured by it with three-wheeler vehicles to which registration was granted. We will not be justified in holding that the assessment made by the ARAI and the statutory authorities are to be ignored only for the reason that in the instructions and warranty booklet dual seat has been shown in the drivers cabin. The explanation offered by the assessee that dual seat in drivers cabin was meant only in respect of three-wheeler used as load carrier or delivery van is only to be accepted.
c) CCE Vs. Parle Exports (P) Ltd., (1988 (38) ELT 741 (Para 10 & 11) - Our attention was drawn to a decision of the Government of India in Re: Asian Chemical Works [1982 (10) ELT 609A] where the Government of India opined that Food flavours and food preparations might improve taste or appearance of food products and/or food preparations, but by themselves could not be legitimately consumed directly or after processing such as cooking, dissolving, or boiling in water for human consumption independently. Mr. Singh submitted that in ordinary common and commercial parlance also the goods in question are not known as food products and/or food preparations as such, therefore, these are not to be treated as exempt under the notification. Mr. Singh submitted that when a person says I have consumed food he does not mean/or says that he has consumed non-alcoholic beverage bases. Therefore, those goods and not be understood as covered by the notification of exemption. It was submitted that how Government understood a matter at the time of the notification, is a relevant factor and that is a factor which one should bear in mind in view of the principles enunciated by this Court in K.P. Verghese v. Income Tax Officer, Ernakulam & Another [1982 1 SCR 629]. It is a well-settled principle of Interpretation that courts in construing a statute or notification will give much weight to the interpretation put up on it at the time of enactment or issue, and since by those who have to construe, execute and apply the said enactments.
12. How then should the courts proceed? The expressions in the Schedule and in the notification for exemption should be understood by the language employed therein bearing in mind the context in which the expressions occur. The words used in the provision, imposing taxes or granting exemption should be understood in the same way in which these are understood in ordinary parlance in the area in which the law is in force or by the people who ordinarily deal with them. It is, however, necessary to bear in mind certain principles. The notification in this case was issued under Rule 8 of the Central Excise Rules and should be read along with the Act. The notification must be read as a whole in the context of the other relevant provisions. When a notification is issued in accordance with power conferred by the statute, it has statutory force and validity and, therefore, the exemption under the notification is, as if it were contained in the Act itself. See in this connection the observations of this Court in Orient Weaving Mills (P) Ltd. v. The Union of India 1978 (2) ELT (J311) (S.C.) (1962 Supp. 3 SCR 481). See also Kailash Nath v. State of U.P. (AIR 1957 SC 790). The principle is well-settled that when two views of a notification are possible, it should be construed in favour of the subject as notification is part of a fiscal enactment. But in this connection, it is well to remember the observations of the Judicial Committee in Corollne M. Armytage & Others v. Frederick Wilkinson [1878 (3JA.C. 355 at 370] that it is only, however, in the event of there being a real difficulty in ascertaining the meaning of a particular enactment that the question of strictness or of liberality of construction arises. The Judicial Committee reiterated in the said decision at page 369 of the report that in a taxing Act provisions establishing an exception to the general rule of taxation are to be construed strictly against those who invoke its benefit. While interpreting an exemption clause, liberal interpretation should be imparted to the language thereof, provided no violence is done to the language employed. It must, however, be borne in mind that absurd results of construction should be avoided.
Therefore, in our view department is free to place reliance upon the provisions of MV Act and Rules and this further leads support to the case of the Revenue.
48.14. The appellants relied upon the decision of the Vanguard Ins. Co. AIR 1960 SC 971 and stated in para 6 of the order in support of their contention.
It is well settled that all statutory definitions or abbreviations must be read subject to the qualification variously expressed in the definition clause which created them and it may be that even where the definition is exhaustive inasmuch as the word defined is said to mean a certain thing, it is possible for the word to have a somewhat different meaning in different sections of the Act depending upon the subject or the context. That is why all definitions in the statues generally begin with the qualifying words namely, unless there is anything repugnant in the subject or context. In view of this qualification, the court has not only to look at the words but also to look at the context, the collocation and the object of such words relating to such matter and interpret the meaning intended to be conveyed by the use of the words under the circumstances.
The decision is not relevant in view of the fact that in this case the tariff heading, explanatory note and the Chapter note do not provide a procedure or method.
48.15. Another point which was argued by the Ld. Counsel for the revenue with which we concur is that when the law is pari materia, the same would be applicable. In this case, the terminology used viz., public transport type vehicle finds place in the MV Act also. When we consider the relevant provisions of MV Act this become clear.
According to Section 2 (47) transport vehicle means a public service vehicle, a goods carriage an educational institution bus or a private service vehicle or a private service vehicle. Public service vehicle according to Section 2 (35) of MV Act means any motor vehicle used for carriage of passengers for hire or reward, and includes a maxi cab, a motor cab, contract carriage and stage carriage. In this the tariff heading reads public transport vehicle. Therefore, for the purpose of determining public transport vehicle, there is nothing wrong in going to MV Act. Since that is the only place where public transport vehicle has been defined and public service vehicle has also been defined. A transport vehicle has to be necessarily either a public service/private service vehicle. Both are designed for carriage of passenger. In view of the above, for deciding what is a public transport type vehicle, it would be correct to say that both the Central Excise tariff and MV Act are pari materia as contended by the Revenue. This is another ground which supports to the contention of the revenue that the vehicle manufactured by the appellants classified in non-transport category by them would not be classifiable under 8702.
48.16 Since there is no statutory authority or any other organizations to certify the seating capacity the only option left with the assessing officer is to do it himself, which is what the Commissioner has proceeded to do in his order in paragraphs 33.2, 33/4, 33/5 and 34.
48.17. At this stage we cannot ignore the fact that as per the law there is a requirement of a baggage allowance of minimum of 14 Kgs for each person assuming that the appellants vehicle is not a stage carriage. This has been analysed by the Commissioner in his order. Without going into too many details, we see that the vehicle taking payload is 700 Kgs. average weight as 68 Kgs per person. If 10 persons are seated in the vehicle, the total weight would come to 680 Kgs, this means that these 10 passengers together cannot carry luggage of more than 20 Kgs. It is for the appellants to consider as to whether this would be adequate for 10 passengers or not. In any case as examined by the Commissioner, this is not sufficient. On this ground also, the appellants vehicle fails the test of classification under 8702.
48.18 It was also submitted that when common parlance test is to be applied vehicle has to be clarified as a 10 seater. Commercial/Common/Trade parlance more often than not precedes the vehicle. When a vehicle of this type was not at all on the road when clarification was to be determined, how commercial/trade/common parlance test can be applied has not been explained.
48.19. To sum up, we are not able to accept the following submissions with regard to classification of the vehicles in dispute.
a) Approval of the vehicle as a ten seater by authorities such as ARAI and various transport commissioners is relevant for classification since those authorities admitted that they were not required to verify the claim.
b) Department has established that vehicle can not be considered as ten seater.
c) Common parlance test is not relevant in view of detailed discussion about categories such as transport, non-transport, provisions of MV Act and Rules.
d) There is no dispute that vehicle has to be classified as per the CETH. But this can be done only after coming to the conclusion as to whether vehicle is designed for/for transport of ten persons. The vehicle has failed this test.
e) Ld. Counsel for Revenue also agreed that MV Act can not be relied upon for classification. This has been elaborated in our discussion and hence the fact that MV Act cannot be applied does not help the appellant.
f) We agree with the appellant that the Commissioner cannot challenge the certificates. In fact the request of appellant is to decide classification on the basis of certificates. We find that certificates of ARAI and Transport Commissioner do not help the appellants at all.
g) We also find that MV Act & Rules are relevant and can be taken recourse to.
49. The next question to be addressed is the contention of the appellants that the findings of suppression in the impugned order is not sustainable.
49.1. The appellants have contended that the Commissioner has observed that the appellants suppressed the following facts from time to time including various judicial and/or quasi-judicial proceedings.
i) That the certificate of TC dated 08/04/91 for 650 DI; 19-8-91 for 750DP and 6-11-91 for 750 DP HT was in category not existing in law;
ii) that the design parameters/dimensions for seating capacity/arrangement was not provided to the TC for verification before issuing the certificates dated 8-4891, 19.8.91 and 6.11.91;
iii) that the provisions of Rule 171 of MMVR 1989 i.e. a reasonably comfortable seating space of not less than 381 mm per person was applicable to the impugned vehicle and that the design and construction of the impugned vehicle was not in conformity of the said rule 171 of MMVR 1989; that as per the provisions of Rule 171 of MMVR 1989 which M & M knew to be applicable, the seating capacity of the impugned vehicle was less than 10 persons including the driver.
49.2. However, we find that the Commissioner has listed out the contentions of the appellants before him relating to the suppression in para 16 of his order. We intent to consider each of the ground canvassed before the Commissioner and deal with the same in the light of the facts and arguments advanced before us.
49.3. A show cause notice had been issued on 26/12/91 proposing to demand duty of Rs.8.9 crores and this was after carrying out a detailed verification of the vehicle and the Commissioner, Mumbai-II passed an order, which was issued on 16/06/92 dropping the proceedings.
We find that the Commissioner in his order had dropped the proceedings after his finding that the department itself had accepted that the Commander type vehicle were vehicles designed for the transportation of 10 persons including the driver. He also observed that this was based on the Circular dated 19/08/91 of the Transport Commissioner. This is precisely the reason why we had rejected the contentions of the appellants regarding the classification of the vehicle. All the earlier orders went on the presumption that the vehicle manufactured by the appellants had the seating capacity of 10 persons and the dispute was whether the vehicle was a transport type or a non-transport type, etc. We had also observed that the adjudicating authority and the Tribunal had come to the conclusion based on the facts and law as presented before them. In the absence of detailed investigation which had been conducted subsequently, none of the authorities including the Tribunal had dealt with the classification procedure on the assumption that the provisions of MV Act cannot be applied and the vehicle had the seating capacity. Whether the seating capacity was determined properly or not has come out only after the detailed investigation conducted by the department.
49.4. The appellants have submitted that there was no mis-declaration at all since they had not suppressed or mis-declared any facts; all documents required to be filed under Excise law were filed; the vehicle on the MV Act was available at all times; for invoking extended period, mis-declaration to other department is irrelevant; the department could have raised all these issues when the first classification list was filed; all the information including the statutory requirement of seating space with permissible limits for luggage were available to the department; entire activity of manufacture was done with the full knowledge of excise department.
The Commissioner has elaborately dealt with the amendments in the notification issued in MV Act, which ultimately culminated in creation of a new category Omnibus under non-transport category. As rightly submitted by the appellants, it is not for the Central Excise department to examine the correctness of action taken by the Transport Commissioner. In any case, we have already observed elsewhere that the fact that the Transport Commissioner has certified the seating capacity is of no help to the appellants in view of the clear admission by ARAI and Transport Commissioner that they did not verify whether seating capacity of the vehicles is as per the specifications under Rule 171 as regards the space and other rules as regards other parameters. In fact ARAI clearly stated that they were not even required to look into it. But this does not mean that company did not declare the seating capacity of the vehicle wrongly. The marketing department was aware about the seating specifications as early as January and in June 1991, the note was transferred to Shri Sanjay Joshi of R&D unit. We have already reproduced the relevant portions of the statement and the contents of the note. What the notes and the ultimate results revealed is that there were no drawings for the seats of the vehicle as on 25/07/91, the date on which the classification list was filed by the appellants. At that time they had only one sample set of seats made by the vendor and the trial fitment had been carried out and note dated 26/07/91 was forwarded to vendor. This statement of Shri Sanjay Joshi, Sector Engineer, R & D unit clearly shows that leave alone the drawings, design etc. in respect of the seats even the seats manufactured by the vendor had been returned to him requesting him to make some modifications based on the observations. Only subsequent to this vendor supplied the seats, which were found to be satisfactory and thereafter prototype was sent to ARAI for certification and the circular was issued by the Transport Commissioner for registration of the vehicle. At the time when the ARAI has issued the certificate and at the time the Transport Commissioner issued circular giving guidelines for registration, there was no design, drawings, etc. The drawings as admitted by Shri Sanjay Joshi were prepared only in September 91.
We have already observed elsewhere that what is claimed as drawing/blue print/design (there is no clarity) submitted to the Transport Commissioner had a note stating that specifications are subject to change without any notice. Such papers cannot be filed with statutory authorities. This shows very clearly that when the classification list was filed and when certificates were obtained, the appellant could not have claimed that the vehicle is designed for transportation of 10 persons. During the 1991-92, the tariff description under 8702 meant vehicle designed for the transport of 10 persons or more including the driver. We have already discussed the meaning of public transport type vehicle in terms of the MV Act and Rules and the requirement for having seating capacity as per the law. Such seating capacity can be proved only by the means of complete designs and drawings which is what a professional motor vehicle manufacturer would do and which is what the appellants also set out to do and unfortunately by the time they found that the seat manufactured as per the specifications under MV Act and MMVR could not be fitted into the vehicle manufactured by them apparently they intended to get the vehicle some how cleared without foregoing the lower rate of Central Excise duty. If the vehicle was manufactured as per the specifications, the internal note issued by the appellants corresponding requirements of Excise law would not have been required. All these factors clearly show that when they filed classification list on 26/7/91 the appellants were clearly knew that they had failed to produce a vehicle meant for transport type vehicle design to carry 10 persons. But for pain taking investigation, these facts would never have come out. Appellants clearly and put in great efforts to suppress the fact that vehicle did not pass the test of seating capacity as per law and vehicle could not have been put on the road if it were to under 8702.
No doubt the manufacturer was in full knowledge of the department but not the other viral facts discussed above.
49.5. The next claim made by the appellants is that the Transport Commissioner did not have any objection with regard to the blue prints submitted by them. They also submitted that they had not relied upon the circular of the Transport Commissioner and the same was submitted as requested by the Assistant Collector. The classification was not in any way depending on the determination of the type of the vehicle under the MV Act. They had not declared the vehicle as Omni bus in non-transport category in any application to any authority. The excise department had not produced any evidence to controvert the fact that the vehicle was capable of carrying 10 persons.
In fact the internal note issued by Shri Pavithran wherein safeguards to be taken for ensuring the admissibility of lower excise duty benefits have been mentioned itself would be sufficient to show that the appellants were aware that their vehicle did not fulfill the requirement of the transport type vehicles. If it fulfilled the requirement as per Act and Rules applicable to Transport type vehicles, there was no need to issue any letter. In fact, the vehicle was registered by the Transport Commissioner of Maharashtra pending classification of the vehicle by issue of a notification by Surface Transport Ministry. Since the vehicles manufactured by the appellants did not fit into any category. It was not that no category was available. If it was a transport type vehicle, as mentioned by the Commissioner, the category jeep which was also a type under 4 wheeler passenger vehicle category was very much available.
49.6. In para 4 of the written submission under the head computation, appellants submitted as under:-
Without prejudice to the above, and in any event assuming (without admitting) merely for the sake of argument that the Commander was a Transport Vehicle and hence should meet the parameters of MMVR, it is submitted that there was no categorization of Omnibus under Transport or non-transport under the Motor Vehicles Act till 18/06/92. For the first time, Omnibus was categorized under Omnibus under Transport category on 19/6/92 (refer to page 190 Vol.I). The same was also brought under non-transport category on 24/11/92. Thus, even assuming that the parameters specified in MMVR could be applied to these vehicles (as they were to be considered as Transport vehicles), the demands would be restricted to the period 19/6/92 to 23/11/92).
We find this to be another wrong submission on the part of appellants. The MV Act 1988 defines light motor vehicle as - light motor vehicle means a transport vehicle or omnibus the gross vehicle weight of either of which or a motor car or tractor or road roller the unladen weight of any of which, does not exceed 7,500 Kgs. Omnibus is defined as - omnibus means any motor vehicle constructed or adapted to carry more than six persons excluding the driver.
We do not want to enter into a detailed discussion as to whether this would mean Omnibus was a transport vehicle or not since it is not really relevant. Appellants were required to fulfill the requirements of transport vehicle, the name is not relevant.
49.7. The fact that the appellants were aware that their vehicles could be called as Jeep and this could create problems for them has also been brought out during the investigation.
The internal guidelines were issued vide internal Memo dated 6/08/91 and 08/08/91 stating that the Commander range of vehicle should not have any jeep plate fitted on the vehicle.
50. During the hearing we specifically enquired with the Ld. Advocate as to why this note was issued. The Ld. Advocate informed us that the appellants company had an agreement for using the brand name Jeep with Chrysler (owner name of the brand name) and this agreement expired somewhere in 1989 or subsequently and, therefore, this internal note was issued. It was also submitted that the Jeep logo was not put on any vehicles and not Commander alone. While going through the records, we found the appellants had filed a classification list on 01/03/92 after the tariff heading was amended. In this classification list there are about 10 models of vehicles, which are described by the appellants as jeep. This clearly shows that the internal note was issued to ensure that if the vehicle is shown as jeep, the requirements of transport type vehicle would be attracted and vehicle will fail the seating capacity test. The claim of the appellants is that they were not responsible for getting the registration as Omnibus in non-transport category design does not carry convention. In fact the Omni bus under non-transport category was notified because of the initiative taken by the appellants by making a representation on 22/07/92 and held meetings between 4 & 7th August 1992. It has to be noted that the notification issued in June 92 added omni bus only to the transport category. These are all activities which a person who is trying to rectify his mistake and who would like to make his action perfectly legal would undertake and not a company who has designed a vehicle as per law and as per the requirements of the Central Excise Tariff. We are sorry to say this but we find that the even before us a written submission was made. Not only this was a wrong submission but the appellants also made two more wrong submissions before us, which have been discussed earlier.
51. It is to be noted that the appellants have stated wrong facts and have not submitted all the facts correctly not only before this Tribunal or before the lower authorities. As pointed out by the Ld. Advocate for the revenue they had done this before the Honble Bombay High Court also. The Honble High Court in their order observed as far as suppression of facts are concerned, even before us the relevant blue prints, design sheets, etc. with regard to the actual size of seats and the manner of placing them in the vehicles were not produced. Therefore, we cannot fault the respondents in their contention of suppression of facts. These observations cannot be taken lightly in view of the fact that the main ground the Revenue had taken in that case was that when the show cause notice was pending, the High Court was not supposed to interfere or entertain writ petition and in support of this contention several Supreme Courts decisions were cited. But the Honble Bombay High Court who could have easily disposed of writ petition on the basis of Supreme Courts decision cited before them chose to state this fact in itself supports the Revenues case. It has to be noted that the Honble High Court order was passed in 2004 i.e., after 10 years of issue of show cause notice.
52. Another submission made was that the Commissioner observed that the design parameters/dimensions for seating capacity/arrangement was not provided to the Transport Commissioner for verification before issuing the certificate dated 8.4.91, 19.8.91 and 6.11.91 is not correct. They submitted that the Transport Commissioner himself stated in his letter dated 26/11/92 that the blue prints were available with application. He must be referring to the blue prints which we had discussed earlier and which says that the specifications are subject to change and we also found the initials of an officer of transport department. For the purpose of Transport Commissioner may be he considered this sufficient and, therefore, we cannot take any objection to the same. But for the purpose of classification under Central Excise tariff, the department has shown that the vehicle did not have seating capacity. Even the Honble High Court was not fortunate to see the blue prints or designs.
53. The appellants have cited several decisions of the Honble Supreme Court in support of their contention that extended period cannot be invoked where the goods are cleared on the basis of approved classification list. These decisions are not applicable in view of the fact that in this case the departments case is that approval of classification list was obtained by the suppression of facts and misdeclaration.
54. Further, the appellants have contended that if earlier show cause notices have been issued on the same issue, there cannot be another proceedings. We have already discussed this aspect and there are several decisions of the Supreme Court, which we have stated earlier to show that the department is not estopped from changing the classification list. More so, when such classification list was approved on the basis of incomplete facts and vital facts were suppressed. We have already elaborately discussed the efforts made by the appellants to ensure that Excise department would allow the classification under CETH 8702.
55. Since we have already held that the Excise department or this Tribunal is not concerned with the declaration made before Transport Commissioner, we are not considering the relevant cases cited by the appellants. Both the ARAI and Transport Commissioner had never stated that the seating capacity was as per the requirements of the seating capacity for transport type vehicle.
56. Another submission made was that the show cause notice does not set out what fact was suppressed or misdeclared to the Excise department. We find that all the facts have been set out and all the relied upon documents have been provided. The conclusions have to be drawn based on the analysis of facts and circumstances and the adjudicating order cannot go beyond the facts and details set out in the show cause notice. The only objection the appellants had taken was that the Commissioners correspondence with the Transport Commissioner was not provided to them. Since the Commissioner has not relied upon the Transport Commissioners certificate, this becomes irrelevant. Therefore, we do not find in substance in the submission and we also find that the decisions cited by them are not relevant.
57. In view of the above discussion, we uphold the Commissioners conclusion as regards the classification, invocation of extended period to confirm the demand.
58. The Commissioner had discussed all the show cause notices and their relevance and reasons for confirmation in depth and we have considered the same and therefore, we agree with him in this regard.
59. We also find ourselves in agreement in respect of his observation that the decision in respect of the Commander 750 DP HT vehicle would also apply to other model manufactured by the appellants and covered by the another model 650 DI covered by the adjudicating order. In fact he has also observed that in respect of the Commander 650 DI Rule 171 of MMVR had not been relied upon to demand duty. We also find that the Commissioner has taken a very fair view that in respect of the 20 show cause notices issued by the Superintendent within the stipulated period of six months, in respect of the subsequent period, provisions of Section 11A(1) could not have been invoked. Therefore, he has rightly held the proviso could not have been invoked in respect of these show cause notices.
60. We also take note of the fact that penalty equal to duty demand has been imposed by the Commissioner under Rule 173Q of the Central Excise Rules, 1944 in respect of Nasik factory and penalty of Rs.31,37,57,745/- has been imposed on Kandivli factory. Therefore, we find that the penalty imposed in this case is not excessive taking into account the gravity of the omissions and commissions on the part of the company reasonable.
61. Before, we part, we have to observe that even though the two appeals viz., appeal No.E/2053/05 and E/2351/06 were listed for hearing. After the hearing was completed, the Ld. Advocate for the appellants submitted that there are differences in issues involved between the two cases and he would like to present arguments in that case separately. However, initially we had been informed that the Ld. Jt. CDR would be arguing the case on behalf of the Revenue in respect of the appeal No.E/2351/06 whereas subsequently the Ld. Counsel for the Revenue informed that he has been asked to argue the case in respect of both the cases even though the Ld. Counsel for the Revenue submitted that his arguments covered in both the cases. In view of the facts that at that stage the Ld. Counsel for the appellants submitted that he would like to argue the case afresh, this request was allowed and the registry is directed to list appeal No.E/2351/06 separately in its turn. In view of the above discussion, the appeal filed by the appellants is rejected.
(Pronounced in Court on ..) (Ashok Jindal) Member (Judicial) (B.S.V. Murthy) Member (Technical) pj