Case Law Details
Honda Siel Power Products Limited Vs Commissioner of Customs (CESTAT Chennai)
Introduction: In a significant ruling by the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Chennai, the classification of “lawn mowers” under the Customs Tariff has been debated. The case between Honda Siel Power Products Limited and Commissioner of Customs revolved around the question of whether lawn mowers should be classified under ‘Harvesting or Threshing Machinery’ or fall under a different category.
Analysis: The legal dispute started with the importation of lawn mowers by Honda Siel Power Products Limited. The adjudicating authority had doubts about the classification of the imported goods, leading to a legal struggle between Honda and the Commissioner of Customs. The main argument rested on the correct classification of the products under the Customs Tariff Heading (CTH). Honda believed it should be CTH 8433 1110, while the Revenue argued for re-classification under CTH 8467 9900.
Honda’s arguments were based on the weight and design of the lawn mowers, asserting that they were not portable and thus didn’t fit under heading 8467. They cited the specific exclusion of electric lawn mowers from heading 8467 and the specific inclusion of the same under 8433.11.
The Revenue’s contention, on the other hand, was based on the verification of the Owner’s Manual & Service Booklet and the interpretation of the competing Tariff Headings, concluding that the goods were classifiable under CTH 8467 only.
Conclusion: The CESTAT Chennai, after careful examination of the arguments from both sides and the Customs Tariff Headings, concluded that the lawn mowers were indeed classifiable under CTH 8433 1110, as declared by the appellant. The Tribunal found that the specific inclusion of lawn mowers under heading 8433.11 ruled out the applicability of other HSN. Thus, the appeal was allowed, and the previous classification made by the Deputy Commissioner was set aside.
This ruling sheds light on the critical importance of precise classification under the Customs Tariff and sets a precedent for future cases dealing with similar classification disputes. It emphasizes the need for a clear understanding of product specifications and corresponding Tariff Headings to avoid misinterpretation and legal challenges.
FULL TEXT OF THE CESTAT CHENNAI ORDER
This appeal is filed against the Order-in-Appeal C.Cus. No. 348/2014 dated 25.02.2014 passed by the Commissioner of Customs (Appeals), Chennai.
2. Relevant facts, leading to the present appeal, as recorded in the impugned order are that the appellants appear to have filed a Bill-of-Entry No. 6058653 dated 21.02.2012 for the clearance of “lawn mowers”. The said item was declared under CTH 8433 1110. The adjudicating authority entertained a doubt that the impugned goods under challenge were required to be re-classified under different heading namely, CTH 8467 9900.
3. It appears that soon thereafter, the importer filed six more Bills-of-Entry for importing six more consignments of lawn mowers wherein the importer itself appears to have classified the same under CTH 8467 9900 and also paid the duty under protest, but however, it appears that the importer did not provide any technical literature or specifications of the product.
4.1. During adjudication proceedings, it appears that the authority verified the Owner’s Manual & Service Booklet provided by the importer, which were filed along with the Bill-of-Entry, from where the authority appears to have understood that the imported item, namely, Honda lawn mower fitted with internal combustion petrol engine, was directed by hand and fixed with cutter blades.
4.2. He appears to have proceeded thereafter to examine CTH 8433 1110, covering mowers for lawns, parks or sports-grounds powered with 3HP or more, with the cutting device rotating in a horizontal plane. The same was understood with HSN Explanatory Notes to CTH 8433 to mean that lawn mowers were classifiable under the heading, but the heading excluded portable machines for trimming lawns, cutting grass along walls, borders or under shades, which were composed of self-contained internal combustion engine in a light metal frame, or of an electrical motor mounted on a metal handle and a cutting device, which were classifiable under 84.67.
4.3. The officer has also discussed the CTH 8467 which, according to him, covered ‘tools for working in the hand’ which were fitted with pneumatic, hydraulic, electric or non-electric motor. Further, the explanatory notes to the heading, according to the officer, stated that the expression ‘tools for working in the hand’ meant the tools designed to be held in the hand during use, and also heavier tools which are portable and could be lifted and moved by hand, which are also designed to be controlled and directed by hand during operation.
5. From the above, the Deputy Commissioner concluded that from the study of technical specifications as described in the User Manual, the imported product was an electrically operated device with a cutting device rotating in the horizontal plane and a large handle, thereby enabling a person to direct it by hand during operation. It is thus his case that when the specifications were compared with the explanatory notes to the competing Tariff Headings 8433, and 8467, the subject goods were nothing but ‘tools for working in the hand’, classifiable under CTH 8467 only. Thus, vide the Order-in-Original No. 19694/2012 dated 31.10.2012, the assessing officer ordered confirming the classification of the goods imported by the appellant under CTH 8567 9900.
6. Not satisfied with the above assessment, the importer preferred an appeal before the first appellate authority, who vide impugned Order-in-Appeal C.Cus. No. 348/2014 dated 25.02.2014 also confirmed the classification made by the Deputy Commissioner and it is against this order that the present appeal has been filed before this forum.
7. Heard Shri S. Murugappan, Ld. Advocate appearing for the appellant and Shri S. Balakumar, Ld. Assistant Commissioner representing the Revenue.
8.1 Contentions of the Ld. Advocate could be summarised as under: –
(i) Lawn mowers are specifically covered under heading 8433.
(ii) They weigh more than 40 kg., and cannot be held in hand while working.
(iii) They are not portable and only the person walks behind the machine for controlling its movement by hand.
(iv) They cannot be lifted or held by hand while in operation.
(v) They will not fall under the excluded category mentioned under heading 8433.
(vi) The portable machines for trimming lawns mentioned under heading 8467 are of a different type altogether, which may get covered under the exclusion category.
(vii) Electric lawnmowers are specifically excluded from the heading 8467.
8.2 Thus, the Ld. Advocate submits that the classification adopted by the appellant under CTH 8433 was correct and in order and hence, the classification adopted by the Revenue under CTH 8467 does not stand.
8.3.1 He would invite our attention to HSN Explanatory Notes to Heading 84.33 to support his claim that the lawn mowers imported by the importer which are in question here, are specifically covered under 8433.11. He would also refer to the definition, which is the inclusive definition, wherein it has specifically included – the lawn mowers, whether worked by hand or motor driven, which may have a cutter bar like an agricultural mower, rotary blades which cut the grass against a fixed horizontal blade or a rotating disc with knives on the outer edge.
8.3.2 He would thereafter take us to the exclusion clause, which reads as under: –
“However, the heading excludes portable machines for trimming lawns, cutting grass along walls, borders or under bushes, for example. These machines, which are composed of a self-contained internal combustion engine in a light metal frame, or of an electric motor mounted on a metal handle, and a cutting device usually consisting of one or more thin nylon threads, are classified in heading 84.67.”
From the above exclusion category, it is very much clear that machines like lawn mower, which is used for cutting grass along walls, borders or under bushes, are obviously capable of being held in hand.
8.3.3 He would also take us through the HSN Explanatory Notes to Heading 84.67 and the relevant portion reads as under: –
“The heading covers such tools only if for working in the hand. The expression “tools for working in the hand” means tools designed to be held in the hand during use, and also heavier tools (such as earth rammers) which are portable, that is, which can be lifted and moved by hand by the user, in particular while work is in progress, and which are also designed to be controlled and directed by hand during operation. To obviate the fatigue of taking their full weight during operation they may be used with auxiliary supporting devices (e.g., tripods, jacklegs, overhead lifting tackle).”
8.3.4 The said heading also has exclusion categories, which read as under: –
“The heading excludes tools which, because of their weight, size, etc., obviously cannot be used in the hand as described above. It also excludes tools (whether or not portable) fitted with a base plate or other device for fixing to the wall, bench, floor, etc., those with provisions for running on rails (e.g., machines for slotting or drilling railway sleepers) and walk-behind or similar hand-directed machines on wheels e.g., floor grinding machines, for concrete, marble, or wood, etc.”
8.3.5 He would thereafter refer to the specific exclusions of the heading wherein, at serial number (e), the reference is specifically to ‘Electric lawn mowers’.
8.4 He would thus conclude his arguments by seriously contending that only when there is an exclusion clause and there is no specific category, only then a product could be classified under a different heading; but however here the imported goods are nothing but electric lawn mowers and therefore clearly and specifically covered under the heading 84.33; when this is so, there was no need for the Revenue to entertain any doubt which was not there.
9. Per contra, Ld. Assistant Commissioner supported the findings of the lower authorities. He would also contend that the importer did not supply the technical specifications of the imported goods and therefore, requested for upholding of the impugned order.
10. After hearing both sides, we find that the only issue that is to be decided by us is: whether the imported lawn mowers were to be classified under CTH 8433 or 8467?
11.1 We find prima facie that the very heading of both the Chapters in question sufficiently helps us in deciding the classification. Heading 84.33 refers to harvesting or threshing machinery, including, inter-alia, grass or hay mowers.
11.2 Heading 84.67 refers to tools for working in the hand, pneumatic, hydraulic or with self-contained electric or non-electric motor. This gives a prima facie indication that the tools referred to are invariably portable, designed to be held in hand during use, which can be lifted and moved by hand by the user during the work. It is interesting to see the conclusion of the HSN Explanatory Notes to this Heading, wherein a reference is made to the exclusion category and it has specifically referred to electric lawn mowers.
12. From the above discussion vis-à-vis the specific entry in the CTH, the maxim Expressio Unius Est Exclusio Alterius – the special mention of one thing operates as the exclusion of things differing from it, is squarely applicable.
13. Hence, when the lawn mower in question is specifically included under heading 8433.11, we do not have to consider the applicability or otherwise of other HSN.
14. In view of the above, we are of the opinion that the product under consideration is classifiable under CTH 8433 1110 as declared by the appellant and hence, the impugned order deserves to be set aside, which we hereby do.
15. In the result, the appeal is allowed.
(Order pronounced in the open court on 10.08.2023)
