, Member (T)]. - The present reference to the Larger Bench has arisen from the decision of the Hon’ble Apex court dated 27-8-2014 in Civil Appeal Nos. 2542 of 2006 and 957 of 2010 [ (S.C.)]. In the said order, the Hon’ble Apex Court observed as follows :-

“There is a conflict of opinion between two Benches of the Customs, Excise and Service Tax Appellate Tribunal (hereinafter referred to as “the Tribunal”).

In appeal No. E/394/01, the Tribunal passed an order on 19th July 2005 holding that the vehicles manufactured by the assessee falls under Entry 87.02.00 of the Central Excise Tariff Act, 1985 (hereinafter referred to as “the Act”).

However, in Appeal No. E/2053/05, decided on 7th December 2009, the Tribunal has taken the view that the vehicles manufactured by the assessee falls under Entry 87.03.00 of the Act.

Since two Benches of the same strength of Members have taken two conflicting views, we are of the opinion, that judicial discipline requires that instead of disagreeing with the view taken by the first Bench, the appropriate course for the second Bench would have been to refer the matter to a larger Bench. This is the basic requirement of judicial discipline. Since this has not been done, we set aside both orders and remand both the appeals back to the Tribunal and request its President to constitute a larger Bench of three Members to decide the issue whether the vehicles manufactured by the assessee falls under Entry 87.02.00 or 87.03.00 of the Act”.

2. The issue involved in these appeals relates to classification of motor vehicle model Nos. Commander 750 DP (10 Seater), Commander 650 DI (10 Seater) and Commander 750 DP (ST) manufactured by the assessee, M/s. Mahindra and Mahindra Ltd., in their Kandivli and Nasik factories during the period from 1-4-1991 to 22-7-1996. The department’s contention is that these vehicles merit classification under Tariff Heading 87.03 of the Central Excise tariff, whereas, the appellant claims classification under Tariff Heading 87.02.

2.1 Appeal No. E/394/01 filed by the Revenue is against Order-in-Appeal No. ZBN/354/MV/2000, dated 1-11-2000 passed by the Commissioner of Central Excise (Appeals), Mumbai-V. Revenue had filed an appeal before the lower appellate authority against the classification of motor vehicles manufactured by the appellant’s unit at Kandivli vide Classification List No. 1/92-93 under Tariff heading 87.02. The grounds urged in the said appeal filed was that the 10 seater vehicle manufactured by the appellant did not meet with the seat dimensions specified in Rule 171 of the Maharashtra Motor Vehicle Rules, 1989 nor did the vehicles comply with the weight norms specified under Rules 82 and 84 of the said Rules. The lower appellate authority rejected the Revenue’s appeal only on the ground that the provisions of the Motor Vehicles Act or the rules made thereunder cannot be made applicable in the matter of central excise classification. On challenge “before this Tribunal, the order of the lower appellate authority was upheld vide order dated 24-11-2005, which has now been remanded back to the Tribunal by the Hon’ble Apex Court.

2.2 Appeal No. E/2053/05 arises from Order-in-original No. 50 to 87/Commr(AH)/05, dated 30-3-2005 passed by the Commissioner of Central Excise (Adjudication), Mumbai, wherein 10/11 seater vehicles manufactured by the appellant at their Kandivli and Nashik units were held classifiable under Tariff Heading 87.03 of the Central Excise Tariff and differential duty liabilities were confirmed apart from imposing penalties. The aggregate differential duty liability confirmed works out to Rs. 216.02 Crore (approx.) for the period 1-4-1991 to 22-7-1996. Hence the appeals before us.

3. The submissions made by the learned Counsel for the appellant can be broadly summarized as follows :-

(1) The classification of the vehicles manufactured by the appellant under tariff heading No. 87.03 is clearly incorrect. Heading No. 8703 clearly excluded from its scope vehicles falling under heading No. 8702 (which covered motor vehicles for transport of 10 or more persons including the driver). Since the vehicles manufactured by the appellant were designed to transport 10 or more persons including the driver, the question of their classification under tariff heading No. 8703 does not arise at all.

(2) As envisaged under Rule 126 Motor Vehicles Rules, 1989, the appellants had offered a prototype of the vehicles for certification to Automotive Research Association of India (ARAI) which has certified the vehicle as a 10 seater. The vehicles were also examined by various State Transport Commissioners for certification for registration in their states and these authorities, especially those in Gujarat and Maharashtra, have classified the vehicle as an “omni-bus” in the non-transport category capable of carrying 10 persons. The Transport Commissioners in Karnataka and Pondicherry have registered the vehicles as a ten-seater without any categorization. Therefore, there is no doubt that the vehicles manufactured by the appellant are capable of carrying 10 persons or more.

(3) The adjudicating authority in his order dated 30-3-2005 has sought to classify the vehicle under 8703 mainly on two counts, (a) length/width of the seats (when taken as the dimensions of carcass/frame) falls short of the requirement for seating 10 persons by a few millimeters, in respect of the vehicles manufactured in Kandivli factory; (b) the payload of the vehicles fall short of the requirements when weights of both the passenger and the cargo are taken into account. These findings of the adjudicating are clearly wrong.

(4) The tariff descriptions of the relevant headings speak of ‘vehicles for the transport of persons’ only and does not mention anything about the cargo. Therefore, the question of taking weight of cargo would not arise at all. If the weight of the passengers are taken into account, the payload requirements would satisfy the criterion specified in this regard.

(5) As regards the dimensions of the seats, it is the contention of the learned Counsel that the dimensions have to be measured of the finished seats (including the upholstery) and if this is done, the same would satisfy the dimensional requirements specified for a 10 seater. The dimensions of the carcass/frame is not relevant for determination of the seat criterion. He also seeks support from the Automotive Industry Standards 2005 in support of the above contention.

(6) The invocation of extended period of time for confirmation of duty demand and imposition of penalty is clearly unwarranted as the classification list filed earlier by the appellant classifying the vehicle under tariff heading 8702 has been approved and accepted by the department. In the product literature for the vehicles, the vehicles are described as 10 seater or 11 seater as the case may be. So also in the invoices issued for the sale of the vehicles and therefore, there is no suppression of any facts on the part of the appellant before the department. The classification of the vehicle under Tariff Heading 87.02 have also been upheld by the appellate authorities including the Tribunal earlier and these decisions have not been challenged. The vehicles manufactured by the appellant have been examined by ARAI and various States Transport Authorities and therefore, there cannot be any withholding/suppression of facts from the respondent Revenue. Accordingly, he pleads for setting aside the demands on account of time bar. As regards the penalties, since the matter involves a classification dispute and the appellant entertained a bona fide belief that the vehicle is correctly classifiable under Tariff Heading 87.02, no penalty is imposable.

4. The learned Special Consultant appearing for the Revenue, on the other hand, would strongly support the findings of the adjudicating authority. His submissions can be summarized as under :-

(a) The vehicles under dispute are only an extended version of Model MM540 of the appellant which was a jeep with carrying capacity of 6 persons. Though the appellant has claimed that the vehicles were manufactured from the chassis frame of MM540 ambulance, no evidence has been submitted by the assessee in this regard.

(b) Though the Dy. Director ARAI has stated that the carrying capacity of 10 persons mentioned in their certificate has been verified by loading the vehicle with that number of persons, neither the seating layout drawing nor dimensions of the seat were provided and ARAI did not have the statutory authority to verify the seating capacity of the vehicle.

(c) The Transport Commissioner has wrongly categorized the vehicle as “omnibus under non-transport category” as no such category existed prior to 24-11-92. The Transport authority has certified the seating capacity based on the certificate issued by ARAI and the appellant had not submitted any copy of the blue prints having seating details. Therefore, the certificate issued by the said authority is on wrong premises.

(d) As per Rule 171 of the Maharashtra Motor Vehicle Rules, 1989, a reasonably comfortable seating space of not less than 381 mm was to be provided. Therefore for a two seater, minimum seating space required is 762 mm. As per the panchnama drawn in this regard, the dimensions, were found to be 744 mm in length and 352 mm in width. Thus the two seats placed in the rear-side of the vehicle could accommodate only one person and not designed to carry two persons as claimed by the appellant. Thus the vehicle could carry only 8 persons. The reliance placed by the appellant on the AIS 023 standards, the said standard does not apply to side seats. Rule 171 of Maharashtra Motor Vehicle Rules prescribes a minimum requirement of 381 mm for length as well as width of the seat which has not been satisfied.

(e) As per Rule 79(1) of Maharashtra Motor Vehicle Rules, 1989, a transport vehicle should have the capacity to carry 68 kg of weight per passenger excluding the weight of his personal belongings. According to Rules 82 and 84 of the said Rules, a load of 14 kgs or 30 kgs of personal belongings were permitted to be carried depending upon whether the vehicle is a public service or private service vehicle. Consequently a transport vehicle should be capable of carrying either 82 kgs. or 98 kgs. of load per person including personal belongings. The Transport Commissioner had specified 2080 kgs as Gross Carriage Weight and 1380 kgs as Curb Weight and the payload works out to 700 kgs. If the total weight of 82 kgs., per passenger (including his belongings) is taken, then with a payload of 700 kgs., the vehicle could carry only 8 persons and not 10 persons as claimed by the appellant. These norms laid down in MMVR, 1989 is for a public service vehicle and a vehicle used for hire and reward comes within the scope of public service vehicle. The vehicle being the same its use as a public service vehicle or non-transport vehicle will not decide its seating capacity. If the vehicle as a public service vehicle cannot carry more than 8 persons, its design being the same, it cannot carry 10 persons as omnibus-non transport also.

(f) The appellants were well aware of the minimum seating requirement and yet they mis-declared the seating capacity to avail undue duty benefit and this is evident from the statements of Section Engineer Sri. Sanjay Joshi dated 31-10-1992 and the note dated 8-1-1991 of Sri. O.B. Fernandez, G.M. Operations. Thus suppression on the part of the appellant is clearly established justifying invocation of extended period of time and imposition of penalties.

5. We have carefully, considered the submissions made by both the sides. Our findings and conclusions are discussed in the ensuing paragraphs.

5.1 It would be useful at this juncture to refer to the description of the competing entries in the Central Excise Tariff. The refevant Chapter Notes and heading description are as below :-

During the period 1-4-91 to 28-2-92

Chapter 87 - Vehicles other than Railway or tramway rolling, stock and parts and accessories thereof

Notes:

1. ………………

2. ………………

3. For the purposes of heading No. 87.02, the expression ‘public-transport type passenger motor vehicle’ means vehicles designed for the transport of ten persons or more (including the driver).

From 1-3-92 to 22-7-1996

Chapter 87 - Vehicles other than Railway or tramway rolling stock and parts and accessories thereof

Notes :

1. ……………….

2. ……………….

………………

The only change effected in the tariff description is that with effect from 1-3-1992 onwards, the earlier Chapter Note 3 was incorporated in the tariff description of Heading 87.02 itself. Otherwise the scope of the entries remained the same, during the period in dispute. A perusal of the tariff entries in Chapter 87 make it abundantly clear that the tariff seeks to classify vehicles into different categories based on their use and within a category based on their seating capacity.

5.2 The Motor Vehicles Act, 1939 (4 of 1939), was enacted to consolidate the law relating to motor vehicles, to take into account the changes in the road transport technology, pattern of passenger and freight movements, developments, of the road network in the country and particularly the improved techniques in the motor vehicles management. The said Act was replaced by The Motor Vehicles Act, 1988 to provide for :- (a) rationalization of certain definitions with additions of certain new definitions of new types of vehicles; (b) stricter procedures relating to grant of driving licences and the period of validity thereof; (c) laying down of standards for the components and parts of motor vehicles; (d) standards for anti-pollution control devices; (e) provision for issuing fitness certificates of vehicles also by the authorised testing stations; (f) enabling provision for updating the system of registration marks; (g) liberalised schemes for grant of stage carriage permits on non-nationalised routes, all-India Tourist permits and also national permits for goods carriages; (h) administration, of the Solatium Scheme by the General Insurance Corporation; (i) provision for enhanced compensation in cases of “no fault liability” and in hit and run motor accidents; (j) provision for payment of compensation by the insurer to the extent of actual liability to the victims of motor accidents irrespective of the class of vehicles; (k) maintenance of State registers for driving licences and vehicle registration; (l) constitution of Road Safety Councils. The Act also seeks to provide for more deterrent punishment in the cases of certain offences. For this purpose, the said Act provides for classification of vehicles into various categories such as - contract carriages, stage carriages, goods carriages, heavy goods vehicles, medium goods vehicle, heavy passenger motor vehicle, invalid carriages, light motor vehicle, maxi cabs, medium passenger motor vehicles, motor cabs, motor cars, omni bus, private service vehicle, public service vehicle and so on.

5.3 Both Chapter 87 of the Central Excise Tariff Act, 1985 and the Motor Vehicles Act, 1988, deal with the same subject matter of classification of motor vehicles, one for the purpose of taxation and the other for the purpose of road transport management. In other words they can be considered as pari materia, that is, statutes dealing with the same subject matter or forming part of the same system. Statutes are in pari materia which relate to the same person or thing, or to the same class of persons or things. To quote from the Principles of Statutory Interpretation by Justice G.P. Singh, 12th Edition, 2010, page 298, -

“It has already been seen that a statute must be read as a whole as words are to be understood in their context. Extension of this rule of context permits reference to other statutes in pari materia, i.e., statutes dealing with the same subject matter or forming part of the same system. VISCOUNT SIMONDS in a passage, already noticed conceived it to be a right and duty to construe every word of a statute in its context and he used the word context in its widest sense including “other statutes in pari materia”. As stated by Lord Mansfield, where there are different statutes in pari materia though made at different times, or even expired, and not referring to each other, they should be taken and construed together, as one system and as explanatory to each other.”

5.4 Applying the above principle of statutory construction, it is obvious that if any norms and standards are laid down for classification of a vehicle under the Motor Vehicles Act, 1988, the same can be gainfully used in interpreting the terminology used in the Central Excise Tariff, as both these statutes are in pari materia. In the case in hand, the Central Excise Tariff does not lay down any specifications or norms as to what constitutes a passenger vehicle which can carry 10 or more persons. If the Motor Vehicle Act and the Rules made there-under, prescribe any norms or standards in this regard, the same can be used for the purpose of classification under the Central Excise Act also. The contrary view taken in Order-in-Appeal No. ZBN/354/MV/2000, dated 1-11-2000 passed by the Commissioner of Central Excise (Appeals), Mumbai-V has to be rejected as unsustainable in law.

5.5 The next issue for consideration is whether the classification sought to be made under Tariff Heading 87.03 in Order-in-original No. 50 to 87/Commr(AH)/05, dated 30-3-2005 passed by the Commissioner of Central Excise (Adjudication), Mumbai, can be sustained or not. In the case at hand, it is an admitted position that the vehicles manufactured by the appellant has been registered as “omnibus’’. As per Section 2(29) of the Motor Vehicles Act, ‘omnibus’ means any motor vehicle constructed or adapted to carry more than six persons excluding the driver. As per 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 than for hire or reward but does not include a motor vehicle used for pubic purposes. Section 2(35) defines public service vehicle as any motor vehicle used or adapted to be used for the carriage of passengers for hire or reward and includes a maxi-cab, a motor-cab, contract carriage and stage carriage. Section 2(21) of the Act defines a “light motor vehicle” as 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 7500 kilograms. Section 2(22) defines a maxi-cab as any motor vehicle constructed or adapted to carry more than six passengers, but not more than 12 passengers, excluding the driver, for hire or reward. Section 2(47) defines the transport vehicle to mean a public service vehicle, a goods carriage, an educational institution bus or a private service vehicle. Thus from the statutory definitions given in the Motor Vehicles Act, the vehicle under consideration can be categorized as a private service transport vehicle or public service transport vehicle and it is for the owner as defined in Section 2(30) to decide under which category he wants to register the vehicle. In other words, the design of the vehicle does not determine its registration and vehicles with the same design can be registered for various purposes depending upon its usage. Further vide notification of the Ministry of Surface Transport, Govt. of India, S.O. 451(E), dated 19-6-1992, Omnibus was included in the category of “Transport Vehicle”.

5.6 In terms of Section 58 of the Motor Vehicle Act, 1988, the Central Govt. may, having regard to the number, nature and size of the tyres attached to the wheels of the transport vehicle, and its make and model and other relevant considerations, by notification in the Official Gazette, specify in relation to each make and model of transport vehicle, the maximum gross vehicle, weight of such vehicle and the maximum safe axle weight of each such vehicle. Under Section 111 of the said Act, the State Governments were also empowered to make rules regulating the construction, equipment and maintenance of motor vehicles and trailers except in certain situations. Further the Maharashtra Motor Vehicle Rules, 1989 (MMVR in short), vide rules 82 and 84 provided for carriage of baggage of not more than 14 kgs. of luggage or personal effects in the case of a stage carriage and 40 kgs. of luggage or personal effects per occupant in the case of a private service vehicle.

5.6 Further Rule 171 of the MMVR provided for a seating space of not less than 381 mm measured on straight lines along and at right angles with front of each seat and for specified distances between the seats when they are facing each other or facing in the same direction and so on.

5.7 It can thus be seen that there were specifications stipulated in the Statute as to the dimensions of the seating space as also the gross vehicle weight and gross axle weight. These specifications have been provided in the statute not only for the sake of passenger comfort but also for the safety of the passengers travelling in the vehicle. Therefore, when the classification of vehicle is made based on the seating capacity of passengers, the statutorily stipulated specifications and norms have to be complied with. Viewed from this perspective, there is merit in the argument that these specifications should be tested/examined by the competent authorities before a vehicle can be categorised as a 10 seater or 11 seater, etc.

5.8 As regards the contention of the appellant that the various State Road Transport Authorities have registered their vehicle as 10/11 seater, we find that this issue has not at all been examined by these authorities in terms of the standards stipulated in the Statute. The Transport Commissioner, Mumbai in his letter dated 26-11-1992 to the Investigating Agency, has stated that the Motor Vehicle Rules, 1989 is silent on the dimensions of seats for determining the seating capacity and the words, “reasonable comfortable seating space” are construed to mean that the outer limit of the seat which is capable of affording firm support to the weight of a person is considered while measuring the dimensions. This is contrary to the provisions of Rule 171 of MMVR. Further in the said letter, it has been admitted that the compliance with the norms of seating capacity has not been rigorously verified and it is possible that the seating capacity would fall slightly short of the one assigned presently, if the vehicles were to be approved as a transport vehicle. The Transport Commissioner has also clarified that the vehicle has been classified as an omnibus (non-transport vehicle) which is contrary to the statutory notification issued by the Central Motor Vehicle Authorities, in 1992. From the documents available on record, it is seen that the various certificates given by the road transport authorities or by ARAI, are merely based on the declarations made by the appellant and not on the basis of any objective data specified in any industry standards or statutory provisions governing motor vehicles and therefore, these certificates do not inspire any confidence as regards their acceptance and not much reliance can be placed on them. From the various statements recorded from the officials of the appellant firm, it prima facie appeals that attempts have been made by the appellant to project their vehicle as belonging to a particular type so that their excise duty liability can be minimized. We also reject the contention that once classification list has been approved, the excise authorities cannot take a different view. The Hon’ble Apex Court in Elson Machines Pvt. Ltd. [ (S.C.)] and Pefco Foundry Chemicals Ltd. [ (S.C.)] has held that excise authorities cannot be stopped from taking a view different than in the approved classification list as there can be no estoppels against the law.

5.9 Automobile industry is an industry driven by standards all over the world and these standards get revised/updated at regular intervals. Therefore, it is difficult to comprehend that there are no standards to determine the sealing capacity of a motor vehicle. MMVR, 1989, itself has laid down certain norms with regard to seat dimensions, gross vehicle weight and gross axle weight for both private service vehicles and stage carriages taking into account not only the passenger weight but also permissible luggage per passenger. According to technical literature, the gross vehicular weight (GVW) is defined as “the maximum operating weight/mass of the vehicle as specified by the manufacturer including the chassis, body, engine, engine fluids, accessories, driver, passengers and cargo but excluding that of any trailers”. Thus it is not merely the weight of the passenger but also that of the cargo permitted to be carried that is relevant in determination of the gross vehicular weight. Hence, the argument that only the weight of the persons needs to be taken into account for determining payload and not that of the personal belonging/cargo, is not prima facie convincing. As per the technical literature published in various web-sites, another important feature in vehicle design is the wheel base (the difference between the front and rear wheels) as it impacts weight distribution and aerodynamics of the vehicle. The components that decide the wheelbase are also the major masses in the car (driver, engine, gearbox, etc.) and by placing these strategically along the

5.10 From the various arguments made by both the sides, it appears to us that the matter needs careful and detailed examination with the assistance of a technical expert such as ARAI, Pune or Vehicle Research and Development Establishment, Ahmednagar, or some other recognized testing agency to confirm whether the motor vehicles manufactured by the appellant satisfy the specifications/criteria laid for transport vehicles for the carriage of passengers under the Motor Vehicle laws of the country. In the absence of such an expert opinion or advice, we are handicapped in taking a final view on the classification issue before us. Therefore, in our considered opinion, the matter needs to go back to the adjudicating authority for re-examination of the issues afresh, preferably with the assistance of an expert body, as to what constitutes the seating capacity of a vehicle, also to consider the standards of automobile industry and what are the relevant specifications thereof which needs to be complied with by a manufacturer of motor vehicles. Accordingly, we remand the matter back to the adjudicating authority for fresh consideration, keeping all issues open. Since the issue involved pertains to the classification of the motor vehicles manufactured by the units of the appellant at Kandivli and Nashik, falling in different Central excise jurisdictions, it is desirable to appoint a common adjudicating authority to decide the matter as has been done earlier. The learned Counsel for the appellant had also raised a point that the department had obtained certain additional information from the Transport Commissioner, copies of which were not given to them. If this is true, then it is necessary that the appellant be given copies of the reports/information received from the Transport Commissioner so that there is complete transparency while adjudicating the matter. The appellant is also directed to co-operate with the adjudicating authority in getting the expert opinion by providing all drawings and technical specifications adopted by them while manufacturing the vehicle and if the said models are still in manufacture, to make the vehicle available for inspection/testing. Since the matter is very old, we direct the adjudicating authority to complete the adjudication process as expeditiously as possible. Authorities shall also give relied and non-relied documents as referred to in paragraph 32.6 of order-in-original dated 30-3-2005.

6. Thus, the appeals are allowed by way of remand keeping all issues open.

(Operative part of the order pronounced in Court)