Yes that’s how the Central Excise clarifies it, much to the relief of Sedan car manufacturers in its recent Circular No. 972/06/2013.CX dated 24th July, 2013. The issue gains significance from the fact that notification No. 12/2013-Central Excise dated 1st March, 2013 (vide Budget 2013-14) introduced a higher level of excise duty i.e. at the rate of 30% on motor vehicles of engine capacity exceeding 1500 cc, popularly known as Sports Utility Vehicles (SUVs) including utility vehicles vide Sl. No. 284A of the above-said notification. In the Explanation appended at Sl. No. 284A of the afore-cited notification, it has been mentioned that for the purposes of this entry, SUV includes a motor vehicle of length exceeding 4000 mm and having ground clearance of 170 mm and above.
This clarification from TRU suggests that that the higher excise duty of 30% is applicable on motor vehicles which are popularly known as SUVs and which satisfy all the three conditions, viz. (i) the engine capacity exceeds 1500 cc, (ii) the length exceeds 4000 mm; and (iii) the ground clearance is 170 mm and above.
Any car stated to satisfy all the three conditions but, they are not popularly known as SUVs and neither are they known so in trade parlance. They are reportedly known as sedans in trade and common parlance.
Hence the cars which are known as sedans, will attract the excise duty of 27% as applicable to large segment cars.[Sl. No. 284 (ii) of the Table in notification ibid]
Source :- F. No. 354/04/2013 – TRU dated 24th July,2013
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CA Ankit Gulgulia (Jain) – Author is practicing Chartered Accountant in New Delhi and specialising in Indirect Taxes, Corporate Laws and Transfer Pricing. He can be reached at ankitgulgulia@gmail.com or +91-9811653975
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