MR. ZIAULLAH KAYANI, MEMBER (JUDICIAL)/CHAIRMAN,-(1). This appeal is directed against Order- in-Appeal No. 43-45/2008, dated 24.10.2008 through which the Learned Collector (Appeals) has upheld the Order-in-Original No. 03/2008 dated 19.08.2008 passed by the Learned Additional Collector, Customs, Faisalabad.
2, That briefly stated, the relevant facts of the case, giving rise to the appellant are that M/s. Azhar Brothers, imported a consignment of used Hino Trucks mounted with mobile cranes and sought clearance thereof vide GD No. 1144 dated 06.06.2008 in terms of para. 6 of the Import Policy Order, 2007-2008 issued under Notification No. SRO 1020(I)/2007, dated 08.10.2007. As per physical examination carried out by the Customs Staff, it was observed that six Hino Trucks alongwith six cranes were found loaded in two containers being in separate condition. It was further observed that the vehicle has only one cabin for driver, whereas the operating levers have been attached with the crane for manual operation by an operator standing on the ground or on the bed of the Hino Truck. No separate cabin for operation of the crane by the operator exists. The crane itself is of crude type having brand names "UNIC" and "Quick Hock". The said cranes can be mounted/fixed and dismounted from the vehicles as and when required. The importer claimed assessment of the above said vehicle under H.S. Code 8705.1000 "Crane Lories" which covers "special purpose motor vehicles, other than those principally designed for the transport of person or goods (for example, breakdown lorries, crane lorries, fire fighting vehicles, concretemixer lorries, road sweeper lorries, spraying lorries, mobile workshops, mobile radiological units). The customs staff did not agree with the appellant on physical examination and found the said vehicles are classifiable under H.S. Code 87.04. Based on these facts the appellants were called upon to show cause as to why the vehicles as imported by them should not be confiscated and as to why penal action be not taken against them. As a consequence of adjudication proceedings, the six vehicles were confiscated being classified under H.S. Code 87.04 and further being hit by restriction for import as stipulated under serial No. 10 of Appendix 'C' of the Import Policy Order, 2007-2008. Six cranes were released on payment of leviable duty and taxes.
3. That the appellant filed an appeal before the Learned Collector (Appeals), who vide impugned Order-in-Appeal dismissed the appeal and upheld the Order-in-Original and also confirmed dismissal of two other appeals of the appellant being identical in nature on law and facts.
4. That the main grounds as urged by the appellant in the memo, of appeal are:-
(a) That it is submitted that in the subject case, 3 crane lorries classifiable under heading 8705.1000 have been imported. The said heading covers special purpose motor vehicle, other than those principally designed for the transport of persons or goods (for example, breakdown lorries, crane lorries, fire fighting vehicles, radiological units etc.). It will be more appropriate at this stage to emphasize on Explanatory Notes to heading 8705. The heading covers wide range of motor vehicles, specially constructed or adapted equipped with various devices that enable them to perform certain non transport functions. The heading, therefore, includes motor breakdown lorries (trucks) motor pump vehicles, lorries (trucks) fitted with ladders or elevator platforms for the maintenance of overhead cables, street lights etc. Lorries (trucks) used for cleansing street/gutters, spraying lorries (tracks), crane lorries consisting of a motor vehicle chassis on which a cab and a rotating crane are permanently mounted and host of other range of special purpose vehicles. For example, breakdown lorries are only equipped with hooks capable of lifting the broken down vehicles, street cleansing lorries only have a brush which rotates on the road surface through a PT shaft being run by the engine of vehicle. These vehicles perform the specific function due to certain adaptations which differentiate them from the vehicles meant for transportation of cargo or passengers.
(b) That there is hardly any manufacturer who manufactures crane lorries, therefore, cranes of brand other than the vehicle are used while adapting the vehicle for performing non-transport functions.
(c) That it is not possible to load the truck in container without dismantling the crane. Crane lorries whenever imported are separately loaded for ease of transportation only but they remain classifiable under heading 8705.1000.
(d) That the imported goods are motor vehicle chassis on which a cab and rotating crane are permanently mounted. The cranes were dismantled/dismounted only for ease of transport. The fitting which render it to perform non-transport functions were duly installed on the vehicles and the same was physically demonstrated at the time of physical examination.
(e) That the cranes do not require a separate and independent cabin for rotating the cranes. The requirement is that such a cab and a rotating crane should permanently mounted on motor vehicle chassis and the said condition is fully met in case of the imported goods.
(f) That the vehicles have been imported in terms of paragraph 6(1) of Import Policy Order, 2007- 2008 read with Appendix-I and is not hit by serial No. 10 of appendix 'C' of qua Import Policy Order.
That the respondents submitted in parawise comments :--
(i) That the importer has claimed the classification of said vehicles under HS Code 8705.1000 "cranes Lorries". The heading 87.05 covers "Special Purpose Motor Vehicles" other than those principally designed for the transport of persons or goods (for examples, breakdown lorries, crane lorries, fire fighting vehicles, concrete mixture lorries, road sweeper lorries, spraying lorries, mobile workshops, mobile radiological units). The physical condition of the vehicle in question is not compatible with special purpose motor vehicles principally designed for the cranes. This is further strengthened by the Explanatory Notes to Harmonized Commodity Description and Coding System (4th edition, 2007) which gives the characteristics of the crane lorries as "cranes lorries (trucks), not for the transport of the goods, consisting of a motor vehicle chassis on which a cab and a rotating crane are permanently mounted". While in the instant case the aforementioned characteristics of crane lorries are absent. Therefore, the vehicles in question are essentially vehicles for transport of goods being in used second hand condition are not importable as falling at Sr. No. 10 of Appendix- C of the Import Policy Order, 2007- 2007. In view of the fact that neither crane is permanently mounted nor a cab exists on the vehicle chassis in the vehicles in question for rotating crane.
Cranes can be conveniently attached/detached from the vehicles. The vehicles in question are essentially designed for transport of goods falling under PCT Heading 87.04, which are not importable in second hand condition as mentioned at Sr. No. 10 of Appendix-C. The importer has failed to provide any technical literature to substantiate his claim.
(ii) That the physical examination revealed that the vehicles have only one cabin for driver and no proper sitting arrangement for operator is existed for operation of the crane. When the importer carried out demonstration of the crane operation by placing it on the bed of the vehicle, it has been observed that the levers of the crane are handled manually by an operator standing on the ground or on the bed of the truck. It has been further observed that no special structural/mechanical slots/frames or support exist for proper installation of cranes thereon, ln fact, the cranes found accompanying the vehicles are loosely mounted on the chassis, in a make shift manner and could only be described as non-integral adjuncts, rather integral compatible or adapted part of the structure of the vehicles, which are essentially those designed for transport of goods or persons. The position laid down in the Custom Tariff and Explanatory Notes when seen in the context of the present form of the imported goods, clearly runs against the contention of the importer. Keeping in view the physical condition, the goods in the present form do not qualify to fall in PCT heading 87.05. The importer in their letter dated 18.06.2008 has himself admitted that these cranes are operated with manual livers fitted with cranes. Therefore, the goods i.e. Vehicles are correctly classified under PCT heading 87.04 and cranes in their respective heading.
(iii) That the adjudicating authority adjudged that the appellant's contention for classifying the vehicles under H.S Code 87.05 has no merit, which are in fact classifiable under H.S. Code 87.05 on the basis of their original and current configuration. Since these vehicles are more than eight years old as computed from the year of manufacture, they are hit by the restriction for import as stipulated under S. No. 10 of Appendix-C of the Import Policy Order, 2007-2008.
6. That arguments were heard of both the parties. The Learned counsel emphasized on the submissions as made in the memo, of appeal and had also submitted list of Single/Double Cabin crane lorries being released under PCT heading 8705.1000 by the respondents during the period 01.07.2008 to 30.06.2009. That the Learned counsel for the appellant referred to Appendix I of paragraph 6(1) of Import & Export Policy Order, 2007-2008 wherein at Sr. No. 6 of Schedule is "Truck mounted crane/crane lorries" and are covered under the PCT heading 87.05. The Learned counsel for the appellant also referred to release of Single/Double crane lorries by the respondents of the similar in nature as are made reference in appeal being wrongly confiscated by the respondents.
7. That in order to evaluate the exact position of import of crane mounted trucks (dismantled) and were confiscated by the respondents being an import in violation of Section I6 of Customs Act, 1969 read with para. 16(A)ii of SRO 1020(I)/2007 dated 08.07.2010 and is covered at Sr. No. 10 of Imports and Exports Policy Order, 2007-2008, the respondent was asked to furnish reply on the issues as raised while the arguments were heard.
8. That the respondents submitted reply to the queries is raised as under:-
(a) Whether the certificate issued by the SGS Gulf Limited (Pre-shipment inspection report) is not sufficient that the imported goods are used truck mounted cranes as mentioned at Sr. No. 1 of the said certificate.? In response to this query, it is submitted that such pre-shipment inspection certificates are required under paragraph 6(1) and 6(2) laid down in notification No. SRO 1020(I)/2007 dated 08.10.2007 for the items listed in Appendix-I of the Import Policy Order, 2007- 2008. But in the instant case, the said certificate was not required and is not fit because as per examination conducted by the Customs Staff reveals that the imported goods are not truck mounted cranes and therefore those do not fall in the list Appendix-I. The appellants succeeded to obtain the said certificate on their specific request to prove that the imported goods fall under PCT heading 87.05 instead of 87.04 but the same has been issued by SGS keeping them on safer side, as the certificate has a number of exceptions and restrictions. It is further added that:-
(i) At Sr. No. 1.3 of the certificate dated 30.04.2008, it is indicated that the used Hino Truck-mounted crane may be able to continue the service for at least ten years, whereas, in notes of the said certificate, it has been mentioned that "we also cannot attest to the functionality of the equipment since we did not witness the actual operation of the equipment" which is contrary to their earlier version.
(ii) The custom examination of the imported goods is mandatory under section 80 of the Customs Act, 1969 in order to ascertain the correctness of the declaration and determination of correct description. In this legal context, the physical custom examination was made notwithstanding the importer's declaration or SGS certificate.
(iii) The importer has claimed the classification of said vehicles under H.S. Code 8705.1000 "crane Lorries". The heading 87.05 covers "Special Purpose Motor vehicle, other than those principally designed for the transport of persons or goods (for examples, breakdown lorries, crane lorries, fire fighting vehicles, concrete mixture lorries, road sweeper lorries, spraying lorries, mobile workshops, mobile radiological units)." The , physical condition of the vehicle in question is not compatible with special purpose motor vehicles principally designed for the cranes. This is further strengthened by the Explanatory Notes to Harmonized Commodity Description and Coding System 4th edition, 2007 which gives the characteristics of the crane lorries as under:- "cranes lorries (trucks), not for the transport of the goods, consisting of a motor vehicle chassis on which a cab and a rotating crane are permanently mounted." Therefore, the vehicle in question being in used/second hand condition are not importable as falling at Sr. No. 10 of Appendix-C of the Import Policy Order, 2007-2008. In view of the fact that neither crane is permanently mounted nor a cab exists on the vehicle chassis for rotating crane and cranes can be conveniently attached/detached from the vehicles, the vehicles in question are essentially designed for transport of goods falling under PCT heading 87.04. The importer has failed to provide any technical literature to substantiate his claim.
(b) Whether the invoice/packing list issued by Big Star, U.A.E. (Exporter) in which the exported goods are mentioned as "'used Hino Truck Mounted Cranes" can be challenged that those are separate things?.
In this regard, it is submitted that M/s. Big Star deals in sale/purchase of used cars and are not manufacturer of cranes. In the instant case, it appears that due to mutual understanding of the exporter (M/s. Big Star) and importer, the exporter provided the packing list/invoice on the sweet will of the importer (buyer). Generally, almost in all the cases of import of old/used goods/machinery, the packing list/invoices provided alongwith clearance document do not bear the H.S Code of the importer goods. But in the instant case, the exporter has specifically mentioned the PCT head 8507.1000 to influence the decision of the Customs authorities to treat the goods as truck mounted cranes instead of trucks and cranes. The said packing lists/invoices are not reliable because letterheads used varying formatting styles and authorized signatories at various customs clearing stations.
(c) What was the name of authority or technical expert who ascertained that the trucks and cranes are separate and not to be treated as truck mounted cranes?.
In this regard, it is submitted that in the instant case there was no need to call any expert to ascertain the actual description of the imported goods. The Customs examining staff themselves have good expertise to examine the imported consignments in an objective and fair manner to determine the description of goods.
The physical examination revealed that the vehicles have only one cabin for driver and no proper seating arrangement for operator does exist for operation of the crane. When the importer carried out demonstration of the crane operation by placing it on the bed of the vehicle, it has been observed that the levers of the crane are handled manually by an operator standing on the ground or on the bed of the truck. It has been further observed that no special structural/mechanical slots/frames or support exists for proper installation of cranes thereon. In fact, the cranes found accompanying the vehicles are loosely mounted on the chassis, and could only be described as non-integral adjuncts, rather integral part of the structure of the vehicles, which are essentially those designed for transport of goods or persons. The position laid down in the Customs Tariff and Explanatory Notes when seen in the context of the present form of the imported goods, clearly runs against the contention of the importer. Keeping in view the physical condition, the goods in the present form do not qualify to fall in PCT heading 87.05. The importer in their letter dated 18.06.2008 has himself admitted that these cranes are operated with manual levers fitted with cranes.
Therefore, the goods i.e. Vehicles are correctly classified under PCT heading 87.04 and cranes in their respective heading.
The pre-requisite for the vehicles classifiable under H.S Code 87.05 is that such vehicles must be specially adapted or constructed to perform non- transport functions, such as haulage of broken- down vehicles, sweeping or cleaning of roads, drilling of hard surfaces etc., which is visible from their configuration and the matching equipment fitted on them. Going by the comprehensive list of special purpose vehicles enumerated in the Explanatory Notes to H.S Code 87.05, one reaches the conclusion that term "adaption" used therein is meant to convey the overall modeling of the vehicle for the special purpose for which it is to be ultimately used, apparent from its structure and the paraphernalia attached to it, rather than a make-shift addition, alteration, or a super imposition to accomplish a function, which going by the original structure of the vehicle, was not meant to be performed through it. Therefore, the said goods cannot be classified under PCT heading 8705.1000.
Under which rule the trucks have been confiscated?
In this regard, it is submitted that the adjudicating authority confiscated the subject vehicles under clauses 09 and 14 of sub-section (l) of Section 156 of the Customs Act, 1969 read with section 32(1) ibid, for violation of Section I6 ibid, read with 16(A)(ii) of SRO 1020(I)/2007 dated 08.10.2007 and serial No. 10 of Appendix "C" of the Import Policy Order, 2007-2008. As for the cranes imported in conjunction with the subject vehicles, they were allowed release on payment of leviable duties and taxes."
9. That we have heard both the parties at length and perused the record carefully. We have given our anxious thoughts. The appellant has claimed the classification of the vehicles under H.S. Code 87.05 "crane Lorries", which covers "Special Purpose Motor Vehicles, other than those principally designed for the transport of persons or goods (for example breakdown lorries, crane lorries, fire fighting vehicles, concrete-mixture lorries, road sweeper lorries, spraying lorries, mobile workshops, mobile radiological units)". The physical condition of the vehicles in question, as reported by the department, is not compatible with special purpose motor vehicles principally designed for the cranes and this gets strengthened by the explanatory Notes to Harmonized Commodity description and Coding System (4th Edition, 2007), which gives the characteristics of the crane lorries to be in H.S . Code 87.05 is:- "Crane lorries (trucks) not for the transport of the goods, consisting of a motor vehicle chassis on which a cab and a rotating cranes are permanently mounted." That the aforementioned characteristic being permanently mounted crane lorries is absent. Factually, the imported cranes and trucks accompanying the vehicles are loosely mounted on the chassis, in a make shift manner and could only be described as non-integral adjuncts, rather integral compatible or adapted part of the structure of the vehicles which are essentially those designed for transport of goods or persons. In the case in hand neither the crane is permanently mounted nor a cab exists on the vehicle chassis in the vehicles in question for rotating the crane. Cranes can be conveniently attached/detached from the vehicles. The vehicles in question are essentially designed for transport of goods falling under PCT heading 87.04, which are not importable in second hand condition. The position laid down in the Customs Tariff and Explanatory Notes when seen in the context of the present form of the imported goods clearly runs against the contention of the appellant. That the parallel cases of release of crane mounted lorries can not be the basis as total factual position regarding parallel similar cases is not available and present imports can not be compared as equal in its release as made in other parallel cases. That list of special purpose vehicles enumerated in the Explanatory Notes to H.S Code 87.05 term "adaptation" as used therein is meant to convey an overall modeling of the vehicle for the special purpose for which it is to be ultimately used, apparent from its structure and the paraphernalia attached to it, rather than a make shift addition, alteration, or a super imposition to accomplish a function, which going by the original structure of the vehicle was not meant to be performed through it. Keeping in view the physical condition, the vehicles in the present form do not qualify to fall under PCT Heading 87.05 and were rightly confiscated by the lower appellate forums.
10. That the appeal is devoid of any merits on factual and legal position obtaining on the record, hence is dismissed.
11. This judgment shall also apply mutatis mutandis to the following two cases being identical on facts and law:- S. No.Appeal No. Name of the parties No. & date of order appealed against
01. C.A. No. 49/LB/09 Azhar Brothers V/s. Collector of Customs, Faisalabad.Order-in-Appeal No. 43-45/2008 dated 24.10.2008.
02.C.A. No. 50/LB/09Azhar Brothers V/s. Collector of Customs, Faisalabad.Order-in-Appeal No. 43-45/2008 dated 24.10.2008.