Order without finding for deciding the classification of goods – CESTAT remands matter back

Suzuki Morots Gujarat Private Limited Vs C.C. (CESTAT Ahmedabad)

The Commissioner (Appeals) while deciding the classification of the disputed goods, in question, under heading 8708, has not given any finding as to whether all the above conditions which are very important for deciding the classification of goods, satisfy / comply in respect of the disputed goods. The Commissioner (Appeals) findings are silent on this vital aspect of the above provisions.

Further, we also find that Learned Commissioner (Appeals) in impugned order not given his finding related to classification of goods individually item wise. Whereas Appellant produced the list of 14 items imported vide above Bills of Entry.

In view of our above observation, we find that the lower authorities have not examined the legal aspects properly to come to conclusion for correct classification of the goods in question. Hence in our considered view the matter needs to be remitted back to the Commissioner (Appeals).

We, therefore, set aside the impugned order and remand the matter for to the Commissioner (Appeals).

FULL TEXT OF THE ORDER OF ITAT AHMEDABAD

This appeal is directed against Order-in-Appeal No. AHD-CUSTM-000-APP-471-19-20 dated 10.12.2019 passed by the Commissioner of Customs (Appeals), Ahmedabad. By the said order Commissioner (Appeals) upheld the Order-in-Original dated 14-03-2019 of Assistant Commissioner, Customs, ICD- Sanand, Ahmedabad holding that goods imported by the Appellant are appropriately classifiable under CTH of 8708 and have been correctly assessed at BCD @15% and IGST 28%.

1.1 Briefly stated, the fact of the case are that the Appellant have imported Controller Assembly, Bolt, Nut, Screw, Rivet etc and filed Bills of Entry declaring the goods as ^„Components for Suzuki Vehicles‟ classifying under respective CTH and attracting customs duty. The details of which are as follows:

The assessing officer had noticed that the goods were not declared under CTH 8708 even though the goods were meant for use in Motor Vehicles -Car i.e. Components of Motors Vehicles and hence contended it merit classification under CTH 8708. The issue of classification was adjudicated by the Assistant Commissioner vide Speaking Order No. 01/A.C./Suzuki/ICD-SND/2018-19 dtd. 14.03.2019 and held that the above items are correctly and appropriately classifiable under CTH 8708. Aggrieved by the order of Assistant Commissioner, appellants filed the appeal before Commissioner (Appeals). The learned Commissioner (Appeals) upheld the order of Assistant Commissioner and dismissed the appeal filed by the Appellant. Aggrieved, the appellant have filed this appeal before this CESTAT.

02. Shri T. Vishwanathan, Learned counsel appearing on behalf of the Appellant submits that Bolts, Nuts, Screw, rivets, etc imported by the Appellant are made of steel. Chapter 73 of the Customs Tariff includes articles of Iron and Steel. Heading 7318 of the Customs Tariff specifically covers screws, bolts, nuts and similar articles, of Iron or steel. Thus the goods are correctly classifiable under heading 7318 of the Customs Tariff. The HSN Explanatory Notes to Heading 7318 expressly specify that nuts, bolts, etc are to be classified under Heading 7318, irrespective of its shape or end use.

2.1 He submits that said imported goods are parts of general use in terms of Section Note 2 of Section XV. The said Section Note 2 specifies that items of Heading 7318 along with other few headings are parts of general use. Further, Section Note 2 to Section XVIII, which cover Chapter 87, excludes “parts of general use”. Also HSN Explanatory Notes to Section XV which provides that springs specialized for motor cars are to be classified under heading 7322 and not under heading 8708. Thus it is evident that even if goods are specifically designed for motor vehicle the same will not be classified under Chapter 87 if they are explicitly excluded under Note 2 to Section XVII.

2.2 He also submits that HSN Explanatory Notes to Section Note 2 to Section XVII expressly states that nails, bolts, nuts washers, cotters and cotter -pins, springs (including leaf spring for vehicles) (such goods of base metals fall in chapter 73 to 76 and 78 to 81, and similar goods of plastics fall in Chapter 39) will not be identifiable as articles of this Section. Thus, even if the parts are for specific purpose but falls within the scope of the parts of general use, it will be classifiable under respective heading and not under Heading 8708.

2.3 He further submits that as per Part (III) of HSN Explanatory Notes to Section XVII, goods may be classified as parts and accessories under this Section, which cover Chapter 87 of the Customs Tariff, only if they satisfy all the three conditions, namely:

(a) They must not be excluded by the terms of Note 2 of this Section; and

(b) They must be suitable for use solely or principally with the articles of Chapter 86 to Chapter 88 and

(c) They must not be more specifically included elsewhere in the Nomenclature

He placed reliance on the Judgment of Hon‟ble Supreme Court in the case of CCE Vs Uniproducts Ltd. [2020 (5) TMI 63 ] where it was ruled that to classify an items under 8708 all the above three conditions prescribed in HSN to Section XVIII has to be fulfilled. Also as per Rule 3(a) of the General Rules of Interpretation of Customs Tariff specific heading has to be preferred over general headings. Heading 7318 expressly coveres nuts, bolts, etc made of steel. Thus Heading 7318 has to be preferred over heading 8708 which is general heading.

2.4 He also submits that Heading 9032 of the Customs Tariff provides for “automatic regulating or controlling instruments and apparatus”. HSN to 9032 specifies that automatic controlling instruments should consists of three components, i.e. -a measuring device, an electrical control device and a starting, stopping or operating device. In the present case, Controller Assy, AT consist of all said three devises. The basic function of Controller Assy, AT is to send signals to the electrical panel to achieve the required change in speed. To perform the said function it performs three steps-first it measure the speed, second it reads the required speed and third it adjusts the speed of the vehicle. Thus, it is evident that Controller Assy consist a measuring and controlling device that can also perform start and stop function. Thus the goods in question are correctly classifiable under Heading 9032 of the Customs Tariff. He placed reliance on the following judgments:-

• CC, DELHI VS. UNI PRODUCTS INDIA LTD. –[2020(5) TMI 63]
• SHIROKI AUTO COMPONENTS INDIA PVT. LTD. VS. CCE [2020 (7) TMI 706-CESTAT]
• SUNDARAM FASTENERS LTD. VS. COMMISSIONER [2007 (213) ELT 215 ]
• MERCEDES BENZ INDIA LTD. VS. CC [2008 (364) ELT 226]
• K. PLAY (INDIA) LTD. VS. COMMISSIONER [2005 (180) ELT 300 (SC)
• COLLECTOR VS. WOOD CRAFT PRODUCTS LTD. [1995 (77) ELT 23 (SC) ]
• COLLECTOR VS. BAKELITE HYLAM LTD. [1997 (91) ELT 13 (SC)
• COEN BHARAT LTD. VS. COMMISSIONER [2007 (217) ELT 165 (SC)]
• M.L. LTD. VS. COMMISSIONER [2010 (258) ELT 321]
• S. ENTERPRISES VS. COMMISSIONER [2016 (343) ELT 551] AFFIRMED IN 2017(345) ELT A68 (SC)
• SPIRE INDIA CC, MUMBAI [2006 (200) ELT 539]
• CC VS. SHIV SHAKTI INDUSTRIES [2004(173) ELT 241]
• COMMISSIONER VS. AUTOMATIC ENGINEERING WORKS [2001 (130) ELT 331]
• JAISHREE CO. (P) LTD. VS. COLLECTOR [1989 (40) ELT 214]
• ASSOCIATED MANUFACTURER (INDIA) VS. COMMISSIONER [2002(147) ELT 714]
• ARVIND CONSTRUCTION CO. LTD. VS. CCE [1997 (93) ELT 115]
• (XV) SHRI RAMDAS MOTORS TRANSPORT LTD. VS. COLLECTOR [1983 (14) ELT 2067]

2.5 He further submits that as per Section Note 2 to Section XVII, which covers Chapter 87, articles of Chapter 90 are not to be classified as parts of goods covered under Chapter falling in this Section. Thus the imported goods do not satisfy all the three conditions prescribed in HSN to Section XVII and thus, cannot be classified under Heading 8708. Controller Assy, AT have specifically been provided under Heading 9032. Thus, according to Rule 3(a) they are rightly classifiable under Heading 9032.

2.6 He also submits that revenue has wrongly placed reliance on the case of G.S. Auto International Ltd. Vs. Collector of C.EX. Chandigarh [2003 (152) ELT 3 (S.C.) ]. The said Judgement was passed without referring to various relevant circulars and HSN and is not in accordance with the principle that specific heading has to be preferred over the General heading. The said Judgment is not applicable in the present case as Nuts, Bolts, etc imported by the Appellant are in common parlance considered as Nuts, Bolts etc and not as parts of Motor Vehicle.

03. Arguing for the Revenue, Learned Authorized Representative Shri T. G. Rathod supported the impugned order and submits that goods imported are unquestionably parts & accessories and are to be solely used with automobiles. Appellant importer had themselves declared the imported goods as ^„components of Suzuki Vehicles‟. Therefore, impugned goods are correctly classifiable under chapter heading 8708 as parts and accessories of Motor Vehicles. He also placed reliance on the following decisions:-

• Westinghouse Saxby Farmer Ltd. Vs. CCE, Calcutta – 2021(376)ELT 14 (SC)
• G S Auto International Ltd. Vs. CCE, Chandigarh -2003(152) ELT 3 (SC)
• Advani Pleasure Cruise Co Pvt. Ltd. Vs. CC, Nhava Sheva, Raigad-2020(371) ELT 408 (Tri-Mum)
• Cast Metal Industries Pvt. Ltd. Vs. CCE-IV, Kolkata – 2015(325)ELT 471(SC)
• CCE, Coimbatore Vs. Premier Instrument & Contorls Ltd.- 2004 (174) ELT 49 (Tri. Chennai)
• Premier Instrument & Contorls Ltd. Vs. Commissioner – 2015(321)ELT A130 (SC)
• Pragati Silicons Pvt. Ltd. Vs. CCE, Delhi – 2007(211)ELT 534 (SC)
• CCE, Delhi Vs. Insulation Electrical Pvt. Ltd.- 2008(224)ELT 512 (SC)
• A Raymond Fasteners Pvt. Ltd.- 2021(46) GSTL 306

04. Heard both the sides and perused the records. The issue to be decided is whether the Controlled Assembly CVT imported by the appellant is classifiable under CTH 9032 and other items imported are classifiable under CTH 7318 as declared by the appellant or under CTH 8708 as parts and accessories of motor vehicles of heading 8701 to 8705 as assessed by the Customs.

4.1 We noticed that the HSN explanatory notes in respect of Tariff items 8708 provided as under:

“This heading covers parts and accessories of the motor vehicles of heading 87.01 to 87.05, provided the parts and accessories fulfil both the following conditions:

(i) They must be identifiable as being suitable for use solely or principally with the above-mentioned vehicles; and

(ii) They must not be excluded by the provisions of the Notes to Section XVII (see the corresponding General Explanatory Note).”

As per above notes, both the conditions prescribed under Clauses (i) and (ii) need to be fulfilled for classifying parts and accessories of motor vehicle.

4.2 We also find that part (III) PARTS AND ACCESSORIES of the HSN Explanatory Notes to Section XVII, provides as under :

“ It should, however be noted that these heading apply only to those parts or accessories which comply with all three of the following conditions:

(a) They must not be excluded by the terms of Note 2 to this Section (see paragraph (A) below) and

(b) They must be suitable for use solely or principally with the articles of chapter 86 to 88 (see paragraphs (B) below) and

(c) They must not be more specifically included elsewhere in the Nomenclature (see paragraph (c) below.

In view of above provisions, it is clear that for classification of goods under chapter heading 8708 i.e. parts and accessories of Motor Vehicles above conditions require to be satisfied.

4.3 The Commissioner (Appeals) while deciding the classification of the disputed goods, in question, under heading 8708, has not given any finding as to whether all the above conditions which are very important for deciding the classification of goods, satisfy / comply in respect of the disputed goods. The Commissioner (Appeals) findings are silent on this vital aspect of the above provisions.

4.4 Further, we also find that Learned Commissioner (Appeals) in impugned order not given his finding related to classification of goods individually item wise. Whereas Appellant produced the list of 14 items imported vide above Bills of Entry.

4.5 In view of our above observation, we find that the lower authorities have not examined the legal aspects properly to come to conclusion for correct classification of the goods in question. Hence in our considered view the matter needs to be remitted back to the Commissioner (Appeals).

5. We, therefore, set aside the impugned order and remand the matter for to the Commissioner (Appeals). The appeal is allowed by way of remand to the Commissioner (Appeals).

(Pronounced in the open court on 07.06.2022 )