Custom, Excise & Service Tax Tribunal
Maheshwari Mining Pvt. Ltd. vs Kolkata-Port on 26 November, 2024
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EASTERN ZONAL BENCH : KOLKATA
REGIONAL BENCH - COURT NO. 1
Customs Appeal No. 76088 of 2024
(Arising out of Order-in-Original No. KOL/CUS/COMMISSIONER/PORT/GR.V/12/2024
dated 22.05.2024 passed by the Principal Commissioner of Customs (Port), Custom
House, 15/1, Strand Road, Kolkata - 700 001)
M/s. Maheshwari Mining Private Limited : Appellant
Shilpangan, Block LB, Plot - 1, Sector III,
Module 1, 4th Floor, CF Building, Salt Lake,
Kolkata, 24 Parganas North, West Bengal - 700 106
VERSUS
Commissioner of Customs (Port) : Respondent
Custom House, 15/1, Strand Road,
Kolkata - 700 001
APPEARANCE:
Shri Bhaskar Thakkar, Chartered Accountant for the Appellant
Shri A.K. Choudhary, Authorized Representative for the Respondent
CORAM:
HON'BLE SHRI R. MURALIDHAR, MEMBER (JUDICIAL)
HON'BLE SHRI K. ANPAZHAKAN, MEMBER (TECHNICAL)
FINAL ORDER NO. 77653 / 2024
DATE OF HEARING: 20.11.2024
DATE OF DECISION: 26.11.2024
ORDER:[PER SHRI K. ANPAZHAKAN] M/s. Maheshwari Mining Private Limited, Shilpangan, Salt Lake, Kolkata, (hereinafter referred to as the "Appellant") is engaged in the business of metal mines development, exploration, excavation works etc.
2. During the Financial Year 2021-22, the Appellant had imported Personnel Carrier (Including Rim) Mining Service Vehicle for Personnel Page 2 of 27 Appeal No.: C/76088/2024-DB Transportation for their underground Mines having Model No. ATYR322 and classified it under Customs Tariff Heading 84295100 vide Bill of Entry No.6784194 dated 22.12.2021. The Appellant had also imported Dump Truck (Underground mining) having Model No. AJK-320K vide Bill-of-Entry No. 6784194 dated 22.12.2021 and UG Dump Truck (Underground mining) having Model No. Sinome AJK430 vide Bill of Entry No. 7773403 dated 08.03.2022 classifying the same under 84295900. On these impugned goods, Basic Custom Duty @7.5% was paid at the time of assessment of Bills of Entry. The details of the imported goods are as under: -
▪ Personnel Carrier Mining Service Vehicle B/E No. / Declared description Differential duty Date demanded (INR) 6784194 / 'ATYR322 Personnel Carrier 77,70,159/-
22.12.2021 (including RIM) Mining Service Vehicle for personal transportation at underground mines' ▪ Dump Truck(s) B/E No. / Declared description Differential duty Date demanded (INR) 6784194 / 'AJK-320K UG Dump Truck 1,14,81,341/- 22.12.2021 (underground mining)' 7773404 / 'Sinome AJK430 UG Dump Truck 1,67,49,921/- 08.03.2022 (underground mining machine)'
3. During the test check of the import database 2021-22, these Bills of Entry were scrutinized by the Audit department and it was alleged vide letter dated 04.05.2023 that the Personnel Carrier Mining Service Page 3 of 27 Appeal No.: C/76088/2024-DB Vehicle imported by the appellant should be classified under Customs Tariff Heading 87021029 as "Motor Vehicles for the Transport of Ten Or More Persons, Including the Driver (Other, non-air-conditioned)" and the UG Dump Truck (Underground mining) should be classified under the Customs Tariff Heading 87041010 as "Motor vehicles for the transport of Goods with net weight (excluding pay-load) exceeding 8 tonnes and maximum pay load capacity not less than 10 tones". Accordingly, it was contended by the Audit that the applicable rate of Basic Custom Duty would be @40% and the appellant is liable to pay the differential Basic Custom Duty amounts to Rs. 3,38,54,776/-.
4. Thereafter, a Show Cause Notice bearing reference No. KOL/CUS/Comm/PORT/GR. V/12/2023 dated 13.12.2023 was issued alleging that the Appellant has misclassified the items imported under the above said Bills of Entry and hence they are liable to pay a differential duty amounting to Rs. 3,60,01,421/- (including GST compensation Cess of Rs. 21,46,645/-), along with applicable interest under Section 28(1) of The Customs Act, 1962.
5. The Commissioner of Customs (Port), Kolkata adjudicated the case and issued Order-in-original Order vide No. KOL/CUS/COMMISSIONER/PORT/GR.V/12/2024 dated 22.05.2024, confirming the demand of differential duty amounting to Rs.3,60,01,421/-, along with applicable interest.
5.1. Aggrieved from the said order, the Appellant has filed this appeal.
Page 4 of 27Appeal No.: C/76088/2024-DB
6. The contentions raised by the Appellant against the re-classification of the goods imported, are summarized below: -
(i) The impugned goods are specifically designed to be used in the mining premises only. The mining premises are enclosed premises with very low profile and compact space and height. The term Motor Vehicle has been defined in Section 2(28) of the Motor Vehicle Act, 1988, which excludes the type of vehicle of a special type adapted for use only in a factory or in any other enclosed premises. Hence, the impugned goods cannot to be considered as 'motor vehicle'. In support of this claim, the appellant relied on the Clarification Notice issued by Ministry of Road Transport and Highways under Government of India under file no. RT-11036/79/2016- MVL dated 13.07.2020.
(ii) The impugned goods are not to be considered as Motor Vehicles based on the Central Motor Vehicles Rules (CMVR), 1989 issued by Ministry of Road Transport and Highways. The impugned goods are categorized as "Off the Road"
machineries and cannot be put to use upon the road under normal circumstances. The impugned goods fall under the purview of Heavy Earth Moving Machineries (HEMM) on the basis of its structure and usage. HEMM equipment such as dumpers, pay loaders, shovels etc. are meant to be operated and maintained within mine premises under the supervision of the Mines manager and never used outside the mine boundary. In the clarification, it has been Page 5 of 27 Appeal No.: C/76088/2024-DB mentioned that HEMM are not covered in the definition of the Motor Vehicle in Motor Vehicle Act, 1988.
(iii) The appellant relied upon the order passed by the Directorate General of Mines Safety under Ministry of Labour & Employment in relevance to the permissions issued under Regulation 171(1) of Metalliferous Mines Regulation, 1961 regarding use of certain machinery belowground, the impugned goods has been permitted under such order and it is mentioned that the impugned goods has to be specially used in the belowground services.
Further, the order also specifies the various additional conditions including the requirements of approval of Chief Inspector of Mines for using the specific diesel engine and complying the circulars/general approvals issued by DGFT from time to time.
(iv) The impugned items have been certified from the "Vehicle Testing Engineering Research Institute of China", which specifically stated that the type of the machine is "underground Mining Equipment".
(v)The impugned goods are specifically designed to be used in the underground mining premises and are complied with all the safety standards relevant to be classified as Off Road Vehicles, as prescribed by the Directorate General of Mines Safety (DGMS) such as automatic fire suppression and detection system which mandatorily applies in mining equipment and also complying the maximum noise level as per DGMS circular.
Page 6 of 27Appeal No.: C/76088/2024-DB
(vi) For Personnel Carrier (Including Rim) Mining Service Vehicle: The impugned item is having some specific features such as high turning radius, very low profile & compact height, special breaking system which are mandatorily required in the equipments designed for the purpose of being used in the underground mines. The turning angle of the impugned item is more than 40° and the speed of the vehicle is 24.5 km/hr differentiating it from on road vehicles. The impugned item is equipped with High Turning Radius articulation type steering which is required because of steep angle of underground Mines. This specialized feature is unavoidable in the case of underground mining equipment however the same is not required for the regular vehicles. The impugned item is specially designed with planetary gear system incorporated to apply high torque in wheel hub. These features are unavoidable in underground mining equipments due to their extreme fritted soil and degraded land surface.
(vii) For UG Dump Truck: The impugned item is having some specific features such as high turning radius, very low profile & compact height, special breaking system which are mandatorily required in the equipments designed for the purpose of being used in the underground mines. The turning angle of the dump truck is 42° (AJK320) and 43° (AJK430) the speed of the vehicle is 33.8 km/hr (AJK320) and 30.6 km/hr (AJK430), thus differentiating it from on road vehicles. This is mainly due to the specification of underground roadways, the Page 7 of 27 Appeal No.: C/76088/2024-DB uneven road surface with muddy water, poor lighting, sharp curves and poor driver's field of vision has strict constraints on the speed of underground mining trucks. The impugned item is specially designed with planetary gear system incorporated to apply high torque in wheel hub. This features are unavoidable in underground mining equipment due to their extreme fritted soil and degraded land surface. The impugned goods are equipped with special braking system consisting of Oil-cooled multi-disks brakes on all four wheels incorporated with fail safe build efficacy which is solely required in the underground mining equipment. The impugned item has been incorporated with special bias ply tyres designed for haul trucks in mining service and quarry operations. These tyres are both heat resistance and cut protection tyres which are necessary in such mining conditions. These tyres are has current standard configuration:
26.5R25, Radial tires. Hence, these tyres are specifically required in such underground mining equipment only, the tyres used are "ROCK GRIP(E-4)" and "EARTHMAX SR 55".
(viii) In support of their claim, the appellant relied upon the decision of the Hon'ble Supreme Court Judgment in the case of Goodyear India Ltd. v. Union of India & ors. [Judgement dated 24.02.1997 with SLP (C) No. 6236/79 and TC(C) No. 30/89]. The Hon'ble court had expressed its view on the word "use upon road" and also the definition of "Motor Vehicle" as per item no. 34 of Central Tariff under Central Excise and Salt Act 1944. It has been specifically stated that the use of heavy mover on road may only be Page 8 of 27 Appeal No.: C/76088/2024-DB ancillary or incidental to the main use. Emphasis should be on the word "use upon road' as those words would denote the principal or dominant use and not where it may move incidentally. Accordingly, the emphasis should be taken on the fact for which the equipments are principally meant for being operated.
(ix) The appellant also relied upon the decision of the Hon'ble Supreme Court Judgment in the case of Atul Glass Industries v. Collector of Central Excise [1986 (25) E.L.T. 473 (S.C.)]. The Hon'ble Court held that a product is generally classified by its functional character.
"When a consumer buys an article, he buys it because it performs a specific function for him. There is a mental association in the mind of the consumer between the article and the need it supplies in his life. It is the functional character of the article which identified it in his mind."
(x) The appellant also relied on the decision of CESTAT (Bangalore) in the case of The Tyre Mark v. Commissioner of Cus., Bangalore [Appeal No. 20517 of 2021 - CESTAT, Bangalore] since that the equipments/vehicle are primarily designated for off the road used also travel some distances on the road till they reach the place of their use. By no stretch of imagination such vehicles and the tyres thereof can be regarded to be for on-road purposes.
(xi) The appellant relied on the decision of CESTAT (Mumbai) in the case of Chief Engineer, Ground Water Development, Govt. of Rajasthan v.Commissioner of Cus., Mumbai [Appeal No. C/355/2023 - CESTAT, Mumbai], wherein it has been held that the officers of the Page 9 of 27 Appeal No.: C/76088/2024-DB department are not experts themselves and has left to the wisdom of technical experts, who are competent to make certification.
6.1. In view of the above contentions, the appellant submits that the imported Personnel Carrier (Including Rim) Mining Service Vehicle for Personnel Transportation for their underground Mines having Model No. ATYR322 deserves to be classified under CTH 84295100 and the imported UG Dump Trucks (for underground mining) having Model Nos. AJK320K and Sinome AJK430 deserve to be classified under CTH 84295900. Accordingly, they prayed for rejecting the reclassification of the goods done by the adjudicating authority in the impugned order and set aside the demands confirmed in the impugned order.
7. The Ld. Authorized Representative of the Revenue submitted that Chapter Heading 8704.10 covers "Dumpers designed for off-highway use". He relied on the Explanatory Notes to Sub-heading 8704.10 to contend that certain dumpers specifically designed for working in mines or tunnels are also covered under this sub-heading. The "Personnel Carrier Mining Service Vehicle is meant for transportation of personnel and the CTH 87021029 covers vehicle carrying 20 or more passengers. Accordingly, it is his submission that the ld. adjudicating authority has rightly classified the impugned goods under 87041010 and 87021029. In view of the above, he supported the impugned order confirming the demand of differential duty.
8. Heard both sides and perused the appeal documents.
Page 10 of 27Appeal No.: C/76088/2024-DB
9. We find that the issue involved in the present appeal is regarding classification of the "Personnel Carrier (Including Rim) Mining Service Vehicle for Personnel Transportation for their underground Mines having Model No. ATYR322" and "UG Dump Truck (for underground mining) having Model No. AJK-320K/UG Dump Truck (for underground mining) having Model No. Sinome AJK430", which the Appellant has classified under CTH 84295100 and 84295900 respectively.
9.1. However, the Department is of the view that the Personnel Carrier (Including Rim) Mining Service Vehicle for Personnel Transportation for their underground Mines having Model No. ATYR322" and "UG Dump Truck (for underground mining) having Model Nos. AJK320K/Sinome AJK 430" are correctly classifiable under are correctly classifiable under CTH 87021029 and CTH 87041010 respectively.
9.2. For the sake of ready reference, the said sub- headings are reproduced below: -
▪ As claimed by the Appellant:
8429 SELF-PROPELLED BULLDOZERS, ANGLEDOZERS, GRADERS, LEVELLERS, SCRAPERS, MECHANICAL SHOVELS, EXCAVATORS, SHOVEL LOADERS, TAMPING MACHINES AND ROAD ROLLERS
- Bulldozers and angledozers:
.
.
.
8429 51 00 -- Front-end shovel loaders u 7.5% -
8429 59 00 -- Other u 7.5% -Page 11 of 27
Appeal No.: C/76088/2024-DB ▪ As claimed by the Revenue (Respondent):
8702 MOTOR VEHICLES FOR THE TRANSPORT OF TEN OR MORE PERSONS, INCLUDING THE DRIVER .
.
.
8702 10 29 ---- Other, non air-conditioned u 40% -
8702 MOTOR VEHICLES FOR THE TRANSPORT OF GOODS 8704 10 - Dumpers designed for off-highway use: 8704 10 10 --- With net weight (excluding pay-load) u 40% -
exceeding 8 tonnes and maximum pay-load capacity not less than 10 tonnes 9.3. We also observe that Chapter 87 of the Customs Tariff Act covers:
"Vehicles other than railway or tramway rolling- stock and parts and accessories thereof"
We also find that Chapter 8704 covers the following:
"Motor Vehicles For the Transport of Goods"
and 8704 10 covers:
"Dumpers designed for off-highway use"
They are all designed to operated in open areas. However, the vehicles imported by the Appellant are specifically designed for usage/operation in underground mines alone. Hence, prima facie, we find that the same are not classifiable under Chapter 87.
Page 12 of 27Appeal No.: C/76088/2024-DB
10. We find that the Appellant has made the submission that the Ministry of Road Transport and Highways, Government of India has issued a clarification regarding registration of Heavy Earth Moving Machineries (HEMM) under the Central Motor Vehicle Rules (CMVR), 1989 vide Circular No/ RT- 11036/79/2016-MVL dated 13.07.2010. For the sake of ready reference, the said Circular is reproduced below: -
" No. RT-11036/79/2016-MVL
Dated the 13th July, 2020
.....
I am directed to refer to this Ministry's letter of even number dated 09 October 2019 and to write that the Ministry has received following representations:
A. Representation regarding Road Building and Rehabilitation Equipment-wherein concern regarding registration of cold recycling machines and soil stabilization machine (road building and rehabilitation equipment) under Central Motor Vehicle Rules (CMVR), 1989 has been raised. Following reasons have been mentioned for the usage of the Equipment:-
i. Cold milling machines are used to salvage the crust of the existing bituminous pavement to recover the asphalt material and re-use them to conserve aggregate and bitumen and save the associates costs of mining and crushing. Also the extracted bitumen leads to saving of bituminous thus saving of forex.
ii. The work is awarded to the concessionaire by the employer is within a given range of chainage. Therefore, these equipment work in a defined region.
iii. The operating speed of the above mentioned equipment is 5-10 kmph and these equipment are deployed at the work site through trailers.
B. Representation regarding of Heavy Earth Moving Machineries (HEMM) wherein concern regarding registration of HEMM equipment Page 13 of 27 Appeal No.: C/76088/2024-DB and their operation has been ralsed. HEMM such as Dumpers, Payloaders, Shovels,Drill Master, Bulldozers, Motor Grader and Rock breakers are also categorised as "OFF THE ROAD" operated and maintained with in mine boundary under sole management, supervision and control of Mines Manager and never used outside mine boundary;
2. Your attention is drawn to a. Section 2 (28) of the Motor Vehicles Act, 1988 for the definition of a Motor Vehicle-
"Motor Vehicle" or Vehicle" means any mechanically propelled vehicle adapted for use upon roads whether the power of propulsion is transmitted thereto from an external or Internal source and includes a chasis to which a body has not been attached and a trailed; but does not include a vehicle running upon fixed rails or a vehicle of a special type adapted for use only in a factory or in any other enclosed premises or a vehicle having less than four wheels fitted with engine capacity of not exceeding twenty-five cubic centimeters.
b. Section 3(1) of the Motor Vehicles Act, 1988 for necessity for driving Licence-
"No person shall drive a motor vehicle in any public place unless he holds an effective driving licence issued to him authorising him to drive the vehicle; and no person shall so drive a transport vehicle [other than [a motor cab or motor cycle) hired for his own use or rented under any scheme made under sub- section (2) of section 75] unless his driving licence specifically entitles him so to do."
3. The issue had been discussed in the 56th meeting of the CMVR-TSC wherein it was opined that cold milling machine, cold recycler and soil stabilizers are not covered under the definition of the Motor Vehicles Act, 1988 and that the type approval of the machine is also not made.
4. On the similar lines HEMM such as Dumpers, Payloaders, Shovels, Drill Master, Bulldozers, Motor Grader and Rock breakers are not covered under the definition of the Motor Vehicles Act, 1988 and may not be Page 14 of 27 Appeal No.: C/76088/2024-DB insisted for registration under the Motor Vehicles Act, 1988.
5. It is requested not to seek the registration of Road building and Rehabilitation equipment (wheeled cold milling machine, wheeled soil stabilizers machine, wheeled cold recycler equipment machine etc.) as these special purpose construction equipment and HEMM such as Dumpers, Payloaders, Shovels Drill Master, Bulldozers, Motor Grader and Rock breakers as special purpose mining equipment and further, that they are transported from one location to another through carriage on another vehicles, and do not ply on road themselves.
6. Further, equipment used with-in the mining premises are operated by the specialists and not to Insisted on driving with a Driving Licence till the time these equipment come to the public place."
10.1. From the above Circular, we find that the vehicles which are adopted for use in an enclosed premises are not considered as motor vehicles under the Motor Vehicles Act and there is no need for registration of such vehicles. The vehicles imported by the Appellant viz. "Personnel Carrier (Including Rim) Mining Service Vehicle for Personnel Transportation"
ATYR322" and "UG Dump Truck (for underground mining)" are specifically excluded from registration.
11. We also find that the Appellant has submitted that the Directorate General of Mines Safety, Ministry of Labour & Employment, Government of India has issued specific guidelines regarding the machineries and equipment which are to be used in the mines. In respect of the Personal Carrier Vehicles and UG Dump Trucks in question, permission is required under Regulation 171(1) of the Metalliferous Mines Regulations, 1961. The Appellant have submitted the Permission Certificates in respect of the vehicles in Page 15 of 27 Appeal No.: C/76088/2024-DB question passed by the General of Mines Safety, which are as under: -
Page 16 of 27Appeal No.: C/76088/2024-DB Page 17 of 27 Appeal No.: C/76088/2024-DB UG Dump Truck:
12. We observe that the "Dump Truck (for underground mining) having Model No. AJK-320K"
and "UG Dump Truck (for underground mining) having Model No. Sinome AJK430" imported by the Appellant have been classified by the adjudicating authority under CTH 87041010. A perusal of CTH 8704 shows that the said sub-heading covers 'Motor Vehicles for the transportation of goods'. Sub-heading 8704.10 covers 'Dumpers designed for off-highway use'. As per the Explanatory Notes to Sub-Heading 8704, it covers certain dumpers are specially designed for working in mines or tunnels for example, those with a bottom- opening body. These have some of the characteristics mentioned above, but do not have a cab or extended protective front part of the body. Thus, we observe that the CTH 8704 does not cover the vehicles specially designed for underground mining, which requires a protective front part.
12.1 We observe that the impugned goods are specifically designed to be used in the mining premises only. The mining premises are enclosed premises with very low profile and compact space and height. The term Motor Vehicle has been defined in Section 2(28) of the Motor Vehicle Act, 1988, which excludes the type of vehicle of a special type adapted for use only in a factory or in any other enclosed premises. Hence, we observe that the impugned goods cannot to be considered as 'motor vehicle'. We also observe that the impugned goods are not to be considered as Motor Vehicles based on the Central Motor Vehicles Rules (CMVR), 1989 issued by Ministry of Road Transport and Highways. The impugned goods are categorised as "Off the Road" machineries Page 18 of 27 Appeal No.: C/76088/2024-DB and are unable to use upon the road under normal circumstances. We observe that the impugned goods fall under the purview of Heavy Earth Moving Machineries (HEMM) on the basis of its structure and usage. HEMM equipments such as dumpers, pay loaders, shovels etc. are meant to be operated and maintained within mine premises under the supervision of the Mines manager and never used outside the mine boundary. We observe that HEMM are not covered in the definition of the Motor Vehicle in Motor Vehicle Act, 1988.
12.2. With regard to the classification of the UG Dump Truck, it is observed that the impugned item is having some specific features such as high turning radius, very low profile & compact height, special breaking system which are mandatorily required in the equipments designed for the purpose of being used in the underground mines. The turning angle of the dump truck is 42° (AJK320) and 43° (AJK430) the speed of the vehicle is 33.8 km/hr (AJK320) and 30.6 km/hr (AJK430), thus differentiating it from on road vehicles. This is mainly due to the specification of underground roadways, the uneven road surface with muddy water, poor lighting, sharp curves and poor driver's field of vision has strict constraints on the speed of underground mining trucks. Thus, we find that the impugned item is specially designed with planetary gear system incorporated to apply high torque in wheel hub. This features are unavoidable in underground mining equipments due to their extreme fritted soil and degraded land surface. We also observe that the impugned goods are equipped with special braking system consisting of Oil-cooled multi- disks brakes on all four wheels incorporated with fail Page 19 of 27 Appeal No.: C/76088/2024-DB safe build efficacy which is solely required in the underground mining equipment. The impugned item has been incorporated with special bias ply tyres designed for haul trucks in mining service and quarry operations. These tyres are both heat resistance and cut protection tyres which are necessary in such mining conditions. These tyres are has current standard configuration: 26.5R25, Radial tires. Hence, these tyres are specifically required in such underground mining equipment only, the tyres used are "ROCK GRIP(E-4)" and "EARTHMAX SR 55".
12.3. We observe that the permission letter issued by the Director General of Mines Safety No.270010/NWZ/Perm/2020/5383 dated 28.08.2020, referred to by the Appellant, is for grant of permission to operate diesel powered one number of "Low Profile Dump Truck Make- SINOME, Model - AJK 320K Serial Number 18857 and having Engine Model CUMMINS QSL9" under Regulation 171(1) of the Metalliferous Mines Regulations, 1961. The Annexure-A of the permission gives the conditions governing use of the vehicle. Some of the conditions stipulated therein are reproduced below:
"1.1. Ergonomic and Anthropometric requirements for operator and passenger compartments in the diesel equipment ...
1.1.4. Safe access to operator and passenger compartments shall be provided.
1.1.5. All diesel operated equipment with closed cabin shall be provided with an emergency exit.
...
1.1.7. The design of the operator's space must allow for free movement and comfortable operating postures for the operator.Page 20 of 27
Appeal No.: C/76088/2024-DB ....
1.5. Controls and display system at operator cabin ....
1.5.4. The controls shall be of suitable design and construction and arranged so that they are able to be operated with ease from the operator's seat and within the operator's force limits.
1.6. Guards and Shields 1.6.1. Shields shall be fitted to all vital components of the equipment to prevent its damage.
1.6.2. Guards or shields shall be provided in the vicinity of exhaust and turbochanger to prevent fuel or oil spraying on hot surfaces.
...
2.2. Warning Devices ....
2.2.3. All equipments shall be fitted with audio visual alarm (AVA). In case of coal mines, the AVA shall conform to DGMS Tech. Circular (Electrical) Approval No.21, dated 05.10.2015 or its revised version.
....
2.4. Fire Suppression System 2.4.1. All Diesel operated equipment shall be provided with suitable type of Automatic Fire Detection and Suppression System conforming to DGMS (Approval) circular. No.2 of 2013 or its revised version.
2.4.2. The fire suppression system shall provide automatic fire detection and suppression for all the parts of the equipment:
.....
2.5. Control devices and instruments Every equipment shall be provided with the following control devices and instruments including gauges for safe operation. The controls shall be arranged in the Page 21 of 27 Appeal No.: C/76088/2024-DB operators cabin so as to be within easy reach of the operator from his operating position.
2.5.1. Controls
a) Engine throttle control
b) Engine start-stop control
c) Forward-reverse control
d) Brake controls including emergency brake
e)Emergency stop function ....
2.6. Electrical Safety Provisions The following safety provisions shall be provided in all Diesel equipment:
2.6.1. All electrical components and accessories shall be Flame proof/Intrinsically safe or both conforming to relevant IS/IEC standards for use in below ground coal mines.
....
2.7. Additional safety provisions for all tyre mounted equipments 2.7.1. Articulation safety lock shall be provided in articulated steering equipment. All articulated equipment shall be equipped with a safety bar or a device, which can be readily fitted without special tools, to prevent movement of the articulation joint during maintenance work in the vicinity of this joint.
...
3.0 Construction and safety provisions of diesel engine to use in belowground mines 3.1. Design of the engine The engine shall have following requirements-
3.1.1. good intake air cleaning system 3.1.2. fuel filtration system and water separators 3.1.3. well maintained engine cooling system 3.1.4. turbochargers and after coolers, if required 3.1.5. efficient high pressure fuel Injection system Page 22 of 27 Appeal No.: C/76088/2024-DB 3.1.6. minimum engine emissions and Diesel Particulate Matter (DPM).
...
4.0 Additional construction and safety provisions for diesel engines used in underground coal mines and metalliferous mines in which Regulation 142 of Metalliferous Mines Regulations, 1961(or as amended from time to time) is applicable.
4.1 Every diesel engine system used in underground coal mines shall be designed conforming to National standard (when formulated) or any Internationally accepted standard for Explosion-protected diesel engine and shall be approved by Chief Inspector of Mines under Regulation 208(3) of Coal Mines Regulations, 2017 or as amended from time to time.
5.1. Quality of diesel fuel 5.1.1 Specifications of diesel fuel used in the diesel equipments shall conform to Bharat Stage III- Construction Equipment Vehicular Emissions Norms or its revised versions issued by the Government of India from time to time.
5.1.2 The supplier of the fuel oil shall certify in writing that the diesel fuel supplied by him meets the requirements mentioned under para 5.1.1 above and shall provide a copy of the certificate to the user with every consignment."
We find that both Dump Truck(s) in question viz. AJK- 320K and Sinome AJK 430 are covered by the above norms.
12.4. A perusal of the safety norms prescribed above reveals that the said vehicle is a specially designed vehicle for the purpose of underground mining. It cannot be compared with a vehicle which operates at the ground level and is not a normal motor vehicle to be used on the road as such for carrying passengers. Thus, we hold that the vehicle cannot be classified under Chapter 8704.
Page 23 of 27Appeal No.: C/76088/2024-DB 12.3. Further, for the above goods imported by the Appellant vide Bill-of-Entry No. 6784194 dated 22.12.2021/Bill of Entry No. 7773404 dated 08.03.2022 classifying the same under the CTH 84295900, it has been informed by the Appellant that subsequently, the Appellant has classified these goods under CTH 8430 5010 as "mining machinery" for the subsequent period and assessed the goods. The Assessment, as claimed under Chapter 84, as claimed by the Appellant, has also not been challenged by the Department and no questions were raised. Thus, we observe that the Department has also accepted the classification of the goods under the Chapter 84, for the subsequent period. As per the detailed observations made by us in the earlier paragraphs, we hold that the re-classification of the goods under the Customs Tariff Item No. 8704 1000 is not sustainable and thus, we hold that the demand confirmed in the impugned order on account of reclassification of the said goods is not sustainable.
Personnel Carrier Mining Service Vehicle
13. Regarding the Personnel Carrier (Including Rim) Mining Service Vehicle, we observe that the impugned item is having some specific features such as high turning radius, very low profile & compact height, special breaking system which are mandatorily required in the equipments designed for the purpose of being used in the underground mines. The turning angle of the impugned item is more than 40° and the speed of the vehicle is 24.5 km/hr differentiating it from on road vehicles. The impugned item is equipped with High Turning Radius articulation type steering Page 24 of 27 Appeal No.: C/76088/2024-DB which is required because of steep angle of underground Mines. We observe that this specialized feature is unavoidable in the case of underground mining equipment however the same is not required for the regular vehicles. The impugned item is specially designed with planetary gear system incorporated to apply high torque in wheel hub. These features are unavoidable in underground mining equipment due to their extreme fritted soil and degraded land surface.
13.1. We observe that the Appellant relied upon the order passed by the Directorate General of Mines Safety under Ministry of Labour & Employment in relevance to the permissions issued under Regulation 171(1) of Metalliferous Mines Regulation, 1961 regarding use of certain machinery belowground. The impugned goods have been permitted under such order and it is mentioned that the impugned goods has to be specially used in the belowground services. Further, the order also specifies the various additional conditions including the requirements of approval of Chief Inspector of Mines for using the specific diesel engine and complying the circulars/general approvals issued by DGFT from time to time.
13.2. The impugned items have been certified from the "Vehicle Testing Engineering Research Institute of China", which specifically stated that the type of the machine is "underground Mining Equipment". The impugned goods are specifically designed to be used in the underground mining premises and are complied with all the safety standards relevant to be classified as Off Road Vehicles, as prescribed by the Directorate General of Mines Safety (DGMS) such as automatic fire suppression and detection system which Page 25 of 27 Appeal No.: C/76088/2024-DB mandatorily applies in mining equipment and also complying the maximum noise level as per DGMS circular.
13.3. Regarding the classification of the goods viz. Personnel Carrier Mining Service Vehicle, we observe that the Department classified the goods under the CTH 87021029. We find that Chapter Heading 8702 covers 'Motor Vehicles for the Transport of Ten or More persons including the driver'. We observe this is not a vehicle for mere transportation of persons.
13.4. We have perused the Permission Letter issued by Director General of Mines Safety Vide Letter No. 180037/SEZ/Mechanical/Perm/2013/255253 dated 30/06/2023, under Reg 171(1) of Metalliferous Mines Regulation, 1961 in respect of 'Diesel Engine Powered Equipment - Passenger Carrier (Make - Anchises Technology Co. Ltd., China; Model-ATYR322)", which prescribes similar conditions as mentioned in paragraph 12.3. supra. The Personnel Carrier Mining Service Vehicle for Personnel Transportation for underground Mines having Model No. ATYR322, imported vide Bill of Entry No.6784194 dated 22.12.2021, requires a high standard of safety norms as prescribed by the Director of Mines Safety, for transportation of persons for underground mining work. The same cannot be compared with a vehicle carrying passengers above the ground.
13.5. In view of the above, we observe that impugned vehicle viz. Personnel Carrier Service Vehicle imported by the Appellant, cannot be classified CTH 87021029, as 'Motor Vehicles for the Transport of Ten or More persons including the driver'.
Page 26 of 27Appeal No.: C/76088/2024-DB 13.6. It is also observed that the UG Dump Trucks (Underground mining) have been classified by the adjudicating authority under the Customs Tariff Heading 87041010 as "Motor vehicles for the transport of Goods with net weight (excluding pay- load) exceeding 8 tonnes and maximum pay load capacity not less than 10 tones" and the appellant has classified the same vehicle under the CTH 84295900, but the same goods subsequently under the CTH 84305010 as 'Mining Machinery', as has been informed by the appellant, which has been accepted by the Department and no questions raised.
14. Considering all the details discussed above, we hold that the re-classification of the goods done by the adjudicating authority under the heading 87021029 and 87041010 is not sustainable and accordingly, we hold that the demand confirmed in the impugned order on account of reclassification of the said goods is not sustainable. Consequently, we hold that the Personnel Carrier Mining Service Vehicle imported by the Appellant cannot be classified under Customs Tariff Heading 87021029 as "Motor Vehicles for the Transport of Ten Or More Persons, Including the Driver (Other, non-air-conditioned)" and the UG Dump Truck (Underground mining) imported by the Appellant cannot be classified under the Customs Tariff Heading 87041010 as "Motor vehicles for the transport of Goods with net weight (excluding pay- load) exceeding 8 tonnes and maximum pay load capacity not less than 10 tones".
14.1. Since the duty itself is not sustainable, the question of demanding interest or imposing penalties on the appellant does not arise.
Page 27 of 27Appeal No.: C/76088/2024-DB
15. Thus, we hold that the demand of differential duty amounting to Rs.3,60,01,421/-, confirmed in the impugned order along with applicable interest, is not legally sustainable and accordingly, we set aside the same.
16. To summarize :
(i) The Personnel Carrier Mining Service Vehicle will not fall under the CTH 87021029 as held by the Adjudicating Authority.
(ii) The UG Dump Trucks (Underground Mining, will not fall under CTH 87041010 as held by the Adjudicating Authority.
17. Accordingly, we set aside the demands confirmed in the impugned order and allow the appeal filed by the appellant, with consequential relief, if any, as per law.
(Order pronounced in the open court on 26.11.2024) Sd/-
(R. MURALIDHAR) MEMBER (JUDICIAL) Sd/-
(K. ANPAZHAKAN) MEMBER (TECHNICAL) Sdd