Toyota Kirloskar Auto Parts Private Limited Vs Commissioner of Customs (CESTAT Chennai)
CESTAT Chennai disposed of four interconnected appeals arising from Order-in-Original No. 102836/2023 dated 17.07.2023 concerning classification of imported automobile gears and differential parts by Toyota Kirloskar Auto Parts Pvt. Ltd. (TKAP). TKAP had classified the imported goods under CTI 84834000, paying BCD at 7.5% and IGST at 18%, while the Department proposed classification under CTI 87085000, attracting BCD at 15% and IGST at 28%. The disputed goods included Final Gear Kit, Differential; Gear, Differential Side; Pinion, Differential; Rotor, Skid Control, RR; and Gear, Differential Ring. The Department alleged misclassification and proposed differential duty of Rs.14,88,51,255/-, along with interest, confiscation under Section 111(m) of the Customs Act, 1962 and penalties under Sections 112(a) and 114AA. The adjudicating authority classified the goods under CTH 8708, confirmed the differential duty with interest, imposed an equivalent penalty under Section 114A, ordered confiscation with redemption fine of Rs.7 crore, and imposed penalties on TKAP personnel. The Department separately appealed against non-imposition of penalty under Section 112(a) on TKAP.
TKAP contended that the imported goods were gears and gearing specifically covered under Heading 8483 and that none of the gears were assembled at import. It relied upon Heading 8483, the HSN Explanatory Notes and Section XVII exclusions, besides various judicial precedents. The Revenue maintained that the goods were principally and solely used with motor vehicles and therefore fell under Heading 8708. The Tribunal examined the competing headings, Section XVI and Section XVII Notes, HSN Explanatory Notes and the General Rules for Interpretation. It noted that Heading 84.83 covers gears and gearing, while its HSN Explanatory Notes exclude transmission equipment designed solely or principally for vehicles and aircraft to Section XVII. The Tribunal also considered the three cumulative conditions in the General Explanatory Notes to Section XVII for classification of vehicle parts: exclusion under Note 2, suitability for sole or principal use with Chapters 86 to 88, and absence of a more specific classification elsewhere in the nomenclature.
