Classification of Cranes used in Lifting and Handling
·
Self-Propelled
Mobile Crane Classified under 8426.41 by the WCO
·
Essentially cranes that are used in
lifting and handling and are therefore to be classified under heading 8426. On
the other hand, there is a different opinion relying on the ability of these
goods to be propelled and moved from one place to other which makes them
similar to the motor vehicles classified under 8705.
Important
aspects for classification:
9.
The classification of goods
having the general features pointed out in para 2 above, has been examined in
consultation with the International Centre for Automotive Technology (ICAT) and
the Automotive Research Association of lndia (ARAI).
A detailed examination of the relevant Section notes, Chapter notes and
Explanatory notes of the headings 8426 and 8705 reveals the following aspects
which guide the classification of mobile machines:-
A. Movement
under load
•
As a general principle it
can be seen that mobile machines that can move under load are classifiable
under 8705.
•
However, when the machine
does not move under load or, if they do, when movement is limited and
subsidiary to their main function, it is classifiable under 8426.
B. Location
of propelling and control elements
• It
is clear that when one or more of the propelling or control elements that are
features of an automobile chassis, are located in the cab of a lifting or
handling machine (such as a crane) mounted on a wheeled chassis, the product is
to be included in the heading 8426.
•
When there are two cabs in
the mobile machine- one that houses the propelling function connected to the
chassis and one having the controls for the hand ling and lifting, the
inclusion or exclusion from a heading can only be decided by examining the
integration of the chassis with the working machine
C.
The number of engines
•
Whether the mobile machine
comprises of a single engine used for propelling as well as lifting, or if it
consists of two separate engines ie
one each for propelling the vehicle and for the lifting function, does not have
a bearing on the classification between 8426 and 8705.
•
Presence of a separate
engine only for the lifting and handling purpose is generally indicative of a
larger load lifting capability of the mobile machine.
D.
Integration of the working
machine with the chassis
•
When the work machine is merely
mounted (not integrated mechanically) on the chassis, the goods are
classifiable under 8705.
•
When chassis and working
machine are specially designed for each other and form an integral mechanical
unit and the chassis cannot be used for any other purpose- the goods are
excluded from 8705 and are thus classifiable under 8426.
•
Outriggers are crucial to
the functioning of the mobile machine as they provide the necessary stability
in order for the machine to lifts heavy loads. If the outriggers are connected
to and are a part of the sub structure i.e. the
chassis and are controlled from the engine fitted with the chassis, it implies
that the functioning of the outriggers which are a part of the chassis are
crucial to the functioning of the crane
•
In such a scenario, the
superstructure i.e. the crane and the sub structure
i.e. the chassis, can be said to be working in tandem and can thus be
considered to be mechanically and electrically integrated and the goods are be
classifiable under heading 8426.
•
In the absence of such
integration of the chassis and working machine, the goods are classifiable
under 8705.
[CBIC Circular No. 20/2022-Customs dated 22
September 2022]
Subject:
Classification of goods that undertake lifting and handling functions and have
mobility as a function.
Various
references have been received in the Board regarding the classification of the
goods referred as Truck Cranes or All Terrain Cranes. These are essentially
goods that are used in handling and lifting heavy loads and have mobility as a
function.
2.
These goods come in various
types and sizes, depending on the requirement of the users and factors such as
load to be handled, the terrain where it is put to use etc. A simple generic
description such as All Terrain Cranes would thus represent a large category of
similar goods. However, some of the basic features common to goods of this type
include:
a)
The primary purpose of these
goods is not transport of persons or goods.
b)
These are equipments designed to lift extremely heavy loads.
c)
The goods have wheels
indicating that they have mobility as a feature.
d)
There is a superstructure
which is the revolving frame of equipment on which operating machinery are mounted
along with operator 's cab.
e)
The carrier or chassis is
the under carriage of the crane and includes the carrier cab, wheels, and
outriggers. This chassis is designed to support the rotating crane
superstructure.
f) When
in operation, the outriggers fix the equipment to the ground to provide support
to life heavy loads. The wheels do not touch the ground in such instances.
3.
Since the goods have
features that are similar to motor vehicles, as well as to that of load
handling heavy machines, there are differing opinions on the classification of
such goods. One opinion states that the goods are essentially cranes that are
used in lifting and handling and are therefore to be classified under heading
8426. On the other hand, there is a different opinion relying on the ability of
these goods to be propelled and moved from one place to other which makes them
similar to the motor vehicles classified under 8705.
4.
The classification of
similar goods has also been interpreted in various judgements of the Courts and
Tribunals as well as in the discussions between parties at the World Customs Organisation (WCO). Some of these include-
a)
The Hon'ble Supreme Court,
in the case of Commissioner vs Sanghvi
Movers Ltd- 2016(337) ELT A.208(SC) ruled on the classification of 'hydraulic
truck mounted mobile cranes' and upheld the ruling of the Tribunal which stated
that the special purpose vehicles listed in the inclusive clause of explanatory
notes to 8705 continue to have mobility as a very significant function. While
stating that the crane portion and the chassis portion of the product stand
fairly integrated, the Tribunal ruled that the product is a crane which is
mobile rather than a vehicle fitted with a crane. It was held that the product
in question is covered by the exclusion clause of explanatory notes to heading
8705 and therefore the classification of the product under 8426 appeared to be
correct.
b)
In the case of Collector of Central Excise Baroda vs LMP
Precision Eng. Co. Ltd the Hon'ble Supreme Court ruled on the classification
of 'water well drilling rigs mounted on motor vehicles chassis. By relying on
the specific inclusion of 'mobile drilling derricks' under heading 8705, the
Court gave precedence to the 8705 over the inclusions mentioned in the Section
notes to heading 8430 and thus classified the goods under heading 8705.
c)
It is also pertinent to note
the classification opinion of the WCO (HSC/5 I /March 2013) for a self-propelled
mobile crane consisting of a six wheeled chassis with a diesel engine, four
outriggers and a driving cum operator's cab which houses both crane and driving
controls. During driving on the road, the cab is positioned and mechanically Jocked at the front of the chassis. During crane operation,
the cab can be lifted upto a height of 7.8m. This self-propelled
mobile crane has been classified under 8426.41 by the WCO.
5.
However, it is pertinent to
note that the judgements and the classification opinions are specific to a
particular good or product. The legal notes and the explanatory notes have been
interpreted in the context of those specific goods with particular features. As
already pointed out above, the goods referred as 'all terrain trucks' come in
various types and it would not be advisable to apply any of the judgements
above or other similar judgements and opinions squarely to all goods of a
similar nature. Therefore, it is imperative to outline a set of parameters that
can serve as a guide to arrive at the classification of all such goods.
Relevant portions of the explanatory
notes:
6.
The inclusionary clause in
the explanation to heading 8426 states:
This heading includes self-propelled
machines in which one or more of the propelling or control elements referred to
above are located in the cab of a lifting or handling machine (generally a crane)
mounted on a wheeled chassis, whether or not the whole can be driven on the
road under its own power. The cranes of this heading do not generally move
under load or, if they do, the movement is limited and subsidiary to their main
function of lifting.
7.
The inclusion mentioned in
the explanatory notes to heading 8705 states that the heading includes-
(7) Crane lorries (trucks), not for the
transport of goods, consisting of a motor vehicle chassis on which a cab and a
rotating crane are permanently mounted. However, lorries (trucks) with
self-loading devices are excluded (heading 87.04).
8. The
specific exclusions mentioned in the explanatory notes to 8705 are -
Seif-propelled machines (e.g., cranes,
excavators) in which one or more of the propelling or control elements referred
to above are located in the cab of a working machine mounted on a wheeled or
track-laying chassis, whether or not the whole can be driven on the road under
its own power, remain classified in, for example, heading 84.26, 84.29 or 84.30.
Similarly, this
heading excludes self propelled wheeled machines in
which the chassis and the working machine are specially designed for each other
and form an integral mechanical unit (e.g., self-propelled motor graders). In
this case, the machine is not simply mounted on a motor vehicle chassis, but is
completely integrated with a chassis that cannot be used for other purposes and
may incorporate the essential automobile features referred to above.
Important
aspects for classification:
10.
The classification of goods
having the general features pointed out in para 2 above, has been examined in
consultation with the International Centre for Automotive Technology (ICAT) and
the Automotive Research Association of lndia (ARAI).
A detailed examination of the relevant Section notes, Chapter notes and
Explanatory notes of the headings 8426 and 8705 reveals the following aspects
which guide the classification of mobile machines:-
A. Movement
under load
•
As a general principle it
can be seen that mobile machines that can move under load are classifiable
under 8705.
•
However, when the machine
does not move under load or, if they do, when movement is limited and
subsidiary to their main function, it is classifiable under 8426.
B. Location
of propelling and control elements
• It
is clear that when one or more of the propelling or control elements that are
features of an automobile chassis, are located in the cab of a lifting or
handling machine (such as a crane) mounted on a wheeled chassis, the product is
to be included in the heading 8426.
•
When there are two cabs in
the mobile machine- one that houses the propelling function connected to the
chassis and one having the controls for the hand ling and lifting, the
inclusion or exclusion from a heading can only be decided by examining the
integration of the chassis with the working machine
E.
The number of engines
•
Whether the mobile machine
comprises of a single engine used for propelling as well as lifting, or if it
consists of two separate engines ie
one each for propelling the vehicle and for the lifting function, does not have
a bearing on the classification between 8426 and 8705.
•
Presence of a separate
engine only for the lifting and handling purpose is generally indicative of a
larger load lifting capability of the mobile machine.
F.
Integration of the working
machine with the chassis
•
When the work machine is
merely mounted (not integrated mechanically) on the chassis, the goods are
classifiable under 8705.
•
When chassis and working
machine are specially designed for each other and form an integral mechanical
unit and the chassis cannot be used for any other purpose- the goods are
excluded from 8705 and are thus classifiable under 8426.
•
Outriggers are crucial to
the functioning of the mobile machine as they provide the necessary stability
in order for the machine to lifts heavy loads. If the outriggers are connected to
and are a part of the sub structure i.e. the chassis
and are controlled from the engine fitted with the chassis, it implies that the
functioning of the outriggers which are a part of the chassis are crucial to
the functioning of the crane
•
In such a scenario, the
superstructure i.e. the crane and the sub structure
i.e. the chassis, can be said to be working in tandem and can thus be
considered to be mechanically and electrically integrated and the goods are be
classifiable under heading 8426.
•
In the absence of such
integration of the chassis and working machine, the goods are classifiable
under 8705.
11.
The classification of mobile
machines that undertake handling and lifting functions as well as having
mobility as a crucial feature may thus be decided on the basis of the various
aspects outlined above.
12.
Difficulty, if any, faced in
the implementation may be brought to the notice of Board immediately at the
email id dircus@nic .in.
F.
No.528 / 10/2021-STO(TU)