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November 16, 2020
All Articles by: Mr.áM. GOVINDARAJAN       View Profile
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In ‘Shiroki Auto Components India Private Limited v. Commissioner of Central Excise & Service Tax, Ahmadabad’ – 2020 (7) TMI 706 – CESTAT, Ahmadabad, the appellant has imported certain child parts which they have assembled in their plant at Gujarat. The assembled item is named as Round Recliner. The Round Recliner is thereafter sold to the manufacturing facility of the appellant’s sister concern Shiroki Technical India Private Limited (STIPL) in Haryana where said Round Recliner is used to make Recliner Assembly. STIPL Haryana sold the Recliner Assembly to the seat manufacturer namely Krishna Maruti Limited, Gurgaon. Krishna Maruti Limited after purchase of Recliner Assemblies fixed/ welded the same into the seat frame in the course of manufacture of complete seat of motor vehicles. The complete seat duly fitted with Recliner Assembly is supplied to Maruti Suzuki India Limited, Gurgaon.  The appellant claimed that the imported parts are parts of motor vehicle seats and classifiable under 9401 9000.   The Adjudicating Authority held that child/ spare parts imported by the appellant are correctly classifiable under CTH 8708. 

The Adjudicating Authority relied on the following judgments to come to his conclusion-

Against the order of the Adjudicating Authority the appellant filed the present appeal before the Appellate Tribunal.  The appellant submitted the following before the Tribunal-

  • In the present case explanatory notes of Section XVII specifically excludes the vehicle seats of heading 9401.
  • Motor vehicle seats are specifically mentioned under heading 9401 and this heading also covers parts of seats under heading 9401 9000 therefore, parts of motor vehicle seats can only fall under 9401 9000.
  • US Customs Ruling NY R04585 dated 15.08.2006 in regard to very same product i.e. Recliner Assembly has held the same to be parts of seats used in motor vehicles. 
  • The judgments relied on by the Adjudicating Authority, are clearly distinguishable as the facts in those cases are different from the case in hand.

The Revenue contended that-

  • The parts in question are used in the automobile seats therefore, it is clearly classifiable as parts and accessories of motor vehicle. 
  • In the case of O.K. Play (India) Limited, parameters were given on how to classify the goods. The same parameters i.e. HSN, Rules on interpretation of Customs Tariff can be adopted even for classification under Customs since Customs harmonized to nomenclature.
  •  In the Harmonized Tariff Schedule of the United States, under the heading parts 9401.90, they have a further sub-heading which pertains to parts of seats of a kind used for motor vehicles.
  •  Sub-heading specifically deals with parts or seats of motor vehicles is missing in tariff. Even otherwise only where the goods are identical then law laid down by the earlier judgments is required to be followed.
  •  In this case, neither are the goods similar/ identical nor are the judgments/ orders so relied upon given by any Court within the territory of India. Therefore, the said US authority cannot be relied upon.

As per the directions of Appellate Tribunal, the appellant submitted an affidavit as regards to their manufacture from imported child parts and supply thereof along with copies of sample invoices, which is taken on record. 

The Appellate Tribunal considered the submissions by both parties to the appeal.  The Appellate Tribunal framed the issue to be decided in the appeal is whether the child parts imported by the appellant from Japan is classifiable under CTH 94019000 as parts of vehicle seats as declared by the appellant or under CTH 87089900 as parts and accessories of motor vehicles of heading 8701 to 8705 as assessed by the Customs.

The Appellate Tribunal observed that the appellant has manufactured Round Recliner which is part of Recliner Assembly. Recliner Assembly is part of complete seat and classification of goods at both the stages is for parts of seats. This classification under CETH 9401 has not been disputed by the department therefore, the classification of goods manufactured by the appellant as well as subsequent manufacturers of Recliner Assembly and even manufacturer of seat i.e. Krishna Maruti Limited under heading 9401, has been accepted by the department.   Round Recliner manufactured by the appellant is not used as parts or accessories of motor vehicle. It is undisputedly used as part of sub assembly of the seats.  It cannot be imagined that the child parts which is used for manufacture of Round Recliner is classifiable under CETH 8708 as parts and accessories of motor vehicles.

The Appellate Tribunal analyzed the relevant tariff entries, HSN and explanatory notes, General Rules for interpretation, Section notes on Customs Tariff for classification of goods.  The HSN Code 9401 relates to Seats (Other Than Those of Heading 9402), whether or not convertible into beds, and parts thereof.  The HSN Code 8708 relates to parts and accessories of the motor vehicles.  The Appellate Tribunal observed that CTH 8708 there is general entry of parts and accessories of motor vehicles but there is no specific entry for seat or its parts.  Whereas in tariff item 9401, there is entry specifically for seat, wherein under tariff sub-heading 9401 20 00 entry describes “Seats of a kind used for motor vehicles” and in tariff item 9401 9000 is for Parts of various seats and the said seats includes ‘seats of kind used in motor vehicles’. Therefore, from the tariff entries it is clear that the seat for motor vehicles is specifically included under heading 9401.

The Appellate Tribunal also analyzed the explanatory notes in respect of tariff item 8708.  The explanatory notes provide that this heading covers parts and accessories of the motor vehicles of headings 87.01 to 87.05, provided the parts and accessories fulfill both the following conditions-

  1. They must be identifiable as being suitable for use solely or principally with the above-mentioned vehicles; and
  2. They must not be excluded by the provisions of the Notes to Section XVII (see the corresponding General Explanatory Note).

The Appellate Tribunal observed that both the conditions prescribed under Clause (i) and (ii) need to be fulfilled for classifying parts and accessories of motor vehicle.   The vehicle seats is excluded by the provisions of notes (II) to Section XVII, therefore, clause (ii) is not fulfilled. Consequently, the vehicle seats will not cover under heading 8708. In view of the above unambiguous provisions for classification, there is no iota of doubt that vehicle seats will not fall under 8708 whereas, the same is correctly classifiable under 9401.  The child parts used for making parts which are subsequently used in the complete assembly of vehicle seat and the vehicle seat has been classified under 9401.  If Revenue’s contention is accepted then the tariff entry i.e. seats of a kind used for motor vehicles under 9401 2000 will become redundant.

In the case of Pragati Silicons Pvt. Limited (supra), the Supreme Court held that there is no specific entry for name plate in Chapter 39 therefore, it was held that name plate would fall under heading 8708 whereas in the present case there is a specific entry for seats of motor vehicle under CETH 9401.  Therefore, the judgment of Pragati Silicons Pvt. Limited is not applicable.

The Appellate Tribunal held that Child Parts imported by the appellant is correctly classifiable under CETH 9401 90 00 of Customs Tariff Act.


By: Mr.áM. GOVINDARAJAN - November 16, 2020



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