2025 (3) TMI 1076 - HC - Customs

Restricted import or not - Scope of N/N. 12/2015-20 dated 12th June 2020 - Brand New All Steel Radial Mining tires fall within the purview of said notification or not - amendment to import policy by the notification for various goods falling under Customs Tariff Heading (CTH) 4011 from Free to Restricted - HELD THAT - In 2024 the disputed goods were tested by IRMRA. However the tests were carried out on specific assumptions / requests of the DRI. The letter by DRI requesting the IRMRA to test the subject goods as per specific assumptions is neither on record nor provided to the Respondents when specifically asked. As per the tests reports of the IRMRA the tests were not conducted on the basis of IS 15636 2022. In other words despite the tires being categorized as D marking (i.e. speed not to exceed 65 km/hr) the disputed goods were tested as J/K category (i.e. speed not to exceed 100 km/hr or 110 km/hr). The tests shall be conducted by Indian Rubber Manufacturers Research Association ( IRMRA ). This is on account of the fact that in 2022 similar tests were conducted by IRMRA (in terms of IS 15636 2022) when samples were drawn and forwarded by Central Intelligence Unit ( CIU ). IRMRA vide the test reports dated 15th September 2022 certified that the intended use of the tires was mining applications. Apart from the above tests the IRMRA shall carry out any other test that it deems fit to determine whether the imported tires are of a kind used on construction mining or industrial handling vehicles and machines. In the event the IRMRA also decides to do a speed test on the tires the test report should indicate clearly that at what speed the tires were tested and the duration of the test as well as the wear and tear if any on the said tires. Conclusion - IRMRA shall conduct specific tests to determine the classification of the tires as Special-use or Normal-road-use . The results of these tests will inform the final determination of whether the tires fall under the restricted import category. Stand over to 15th April 2025.

Summary

1. ISSUES PRESENTED and CONSIDERED

The primary issue considered by the Court was whether the "Brand New All Steel Radial Mining tires" (hereinafter referred to as "Subject Goods") fell under the purview of Notification No. 12/2015-20 dated 12th June 2020, which amended the import policy for various goods under Customs Tariff Heading (CTH) 4011 from 'Free' to 'Restricted'. This included radial tires, which could only be imported if they complied with Bureau of Indian Standards - IS 15636.

2. ISSUE-WISE DETAILED ANALYSIS

Relevant Legal Framework and Precedents

The legal framework revolves around the Notification No. 12/2015-20, which amended the import policy for radial tires under CTH 4011, requiring compliance with IS 15636. The IS 15636:2022 defines "Special - Use Tires" and outlines criteria for classification, including speed symbols and tread characteristics. The UN Standards, which the IS 15636:2022 is based on, provide additional criteria for classifying tires as "Special - Use Tires".

Court's Interpretation and Reasoning

The Court noted that the Subject Goods were marked with a speed symbol "D", indicating a speed limit of less than 65 km/hour. This categorization excluded them from the scope of IS 15636:2022, which applies to tires with speed symbols corresponding to speeds above 80 km/hour. The Court emphasized the importance of the manufacturer's declaration on the sidewall in determining the applicability of IS 15636:2022.

Key Evidence and Findings

The Directorate of Revenue Intelligence (DRI) collected samples of the Subject Goods, which were tested by the Indian Rubber Manufacturers Research Association (IRMRA). The tests conducted by IRMRA in 2024, however, were based on assumptions requested by the DRI, which did not align with the IS 15636:2022 standards. The Court highlighted discrepancies in the testing process, noting that the tires were tested as "J/K" category (i.e., speed not to exceed 100 km/hr or 110 km/hr) instead of the "D" category.

Application of Law to Facts

The Court applied the legal framework of IS 15636:2022 and UN Standards to the facts, determining that the Subject Goods, marked with a speed symbol "D", should not be subjected to the same testing criteria as higher-speed tires. The Court ordered specific tests to be conducted by IRMRA to determine the classification of the tires as "Special - Use Tires" or "Normal Road Use Tires". These tests included tread pattern, tread depth, and sidewall thickness tests.

Treatment of Competing Arguments

The Respondents, including importers, argued that the tests conducted by IRMRA were not based on the appropriate standards, as the tires were incorrectly categorized. The Court acknowledged these arguments and ordered retesting to ensure compliance with the correct standards. The Court also considered the DRI's position but found the initial testing assumptions to be flawed.

Conclusions

The Court concluded that the Subject Goods should be retested by IRMRA according to the specific criteria outlined for "Special - Use Tires" and "Normal Road Use Tires". The results of these tests would determine the applicability of the import restrictions under Notification No. 12/2015-20.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning

The Court stated, "In light of the foregoing, the tests mentioned in paragraph 10 shall be conducted by IRMRA...to determine whether the imported tires are of a kind used on construction, mining or industrial handling vehicles and machines."

Core Principles Established

The judgment established that the classification of tires under IS 15636:2022 depends on the manufacturer's declaration and specific criteria such as speed symbols and tread characteristics. It emphasized the need for accurate testing based on the correct standards to determine compliance with import regulations.

Final Determinations on Each Issue

The Court ordered IRMRA to conduct specific tests on the Subject Goods to determine their classification and compliance with IS 15636:2022. The results of these tests would inform the final determination of whether the tires could be imported under the amended policy.