TaxTMI 
TaxTMI 
2020 (9) TMI 951
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....t Schedule Customs Tariff Act, 1975 at serial no. 49 in notification no. 85/2004-Cus dated 31st August 2004, on import from Thailand. The adjudicating authority re-determined the classification under sub-heading no. 841581 of First Schedule to Customs Tariff Act, 1975 and assigned the rate of duty corresponding to one of the two tariff items, distinguished by the benchmark of cooling capacity, therein. 2. The impugned goods of Thai origin had been imported against 220 bills of entry filed at Nhava Sheva, Chennai and Kolkata between 2009-10 and 2013-14, commencing with the earliest consignment on 27th May 2009 and the last in July 2013, with declared assessable value of Rs. 33,71,77,094 and cleared on payment of duty of Rs. 5,38,43,436. While 210 consignments were dealt with at Nhava Sheva, Chennai and Kolkata dealt with nine consignments and a single consignment respectively. It is seen from the records that 25 consignments had been imported in 2009-10 and, in the succeeding years, 75, 53, 58 and 9 respectively. Learned Counsel for appellant submits that the proceedings were initiated with intent to deny entitlement to the exemption notification. In support of this contention, he ....
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....ription that envisages lack of 'refrigerating unit'- the expression, in our speculation, that prompted the investigators to consider the proposed classification premising upon one of the components of 'split air-conditioners' to be 'refrigerating unit'- which no air-conditioner can, conceivably, do without, the investigators should have been alerted to the scope of the sub-headings below the four digit level. The First Schedule to Customs Tariff Act, 1975 is not to be attended to with casualness of reading a thriller but to be referred with complete comprehension of the statutory provisions, the General Rules for the Interpretation of Import Tariff, the General Explanatory Notes to Import Tariff and the Additional Notes. It is by disregard of these vital auxiliaries in deliberating on classification in the First Schedule that misadventures occur. 4. In the context of classification sought by an importer, it is for the customs authorities to assume the onus of justifying discard of the claimed classification and of justifying the applicability of the proposed classification. In doing so, the inexorable logic of its architecture, in its entirety as well as in the several groupings w....
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....esiduary, as indicated by the description 'other:', without accompanying digits but comprising of three sub-headings at the six digit level and within each of which, at the eight digit level, is segregation as 'split air-conditioners of two tons and above' and 'other' indicating intention of distinguishment, according to capacity with single benchmark, for 'air conditioning machines, comprising a motor driven fan and elements for changing the temperature and humidity' - 'incorporating refrigerant unit and a valve for reversal of the cooling or heat cycle (reversible heat pumps):' - 'incorporating the refrigerating unit:' - 'not incorporating a refrigerating unit:' It also appears from this architecture that 'split system' is not the same as 'split air-conditioner' which is to be considered, given that all of these are branched under the residuary 'others', only after elimination of the description, corresponding to sub- heading no. 841510, which is 'Of a kind designed to be fixed to a window - ', wall, ceiling or floor, self-contained or "split-system";' comprising of 'split-system' and the residuary 'others' within it, for conformity with the goods. Thus, it was incumb....
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.... the sub- heading 8415. 10 clearly emphasises upon the mandatory element of a separate evaporator for each group. However, I observe that the same is silent on the presence of one condenser and one evaporator, From the scope of this sub-heading and the explanatory notes above, it is seen that the impugned items are not expressly excluded from this sub-heading. However, to derive at the correct classification, the scope of the sub-heading 8415.81 too, needs to be analysed.' which, when concatenated with the General Rules for Interpretation and the Additional Notes, appears to be inherently self-contradictory as resort cannot be had to a sub-heading under the residuary description without the goods having been found to be excludible from the declared sub-heading. A further observation of the adjudicating authority that '19.3.5 Now, coming to sub- heading 841581, it is seen that the scope of sub heading 841581, specifies that conditioning machine incorporating a refrigerant unit and a valve for reversal of the cooling and heat cycle (reversible heat bonds) are classifiable under the said sub-heading. It is a matter of fact that the impugned goods have both cooling and heating capac....
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....e a separate evaporator for each area to be air-conditioned' and self-contained type air conditioners be in in 'the form of single units encompassing all the required elements and being self-contained.' It was also pointed out that the Interim Rules of Original for Preferential Tariff Concessions for Trade between India and Thailand issued on 31st August 2004, at serial no. 12 of Annexure A, describes conditions against the description which matches the sub-heading notes supra. 10. Learned Authorized Representative referred to the Explanatory Notes to the Harmonised System of Nomenclatures which explained the scope of the heading as 'covers, inter alia, reversible heat pumps designed, through a single system fitted with a valve for reversal of the cooling/heat cycle, to perform the dual function of heating and cooling premises. In the cooling cycle, the reversing valve directs the flow of hot, high-pressure vapour the outdoor coil where the heat released during condensation is fanned into the outdoor air and then compressed refrigerant flows into an indoor coil where it vaporizes and absorbs heat and cool the hair that is driven around the premises by a fan. In the heating cycle....
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....claimed tariff item, the segregation, ranging from the presence of 'refrigerant unit with heat reversible pump' to an incorporation of none with the existence of 'refrigerant unit' alone in between, should make it apparent, considering every air conditioning machine to be capable of cooling, that the 'refrigerant unit' referred to in sub-headings under the residuary branch of dichotomy is not the normal cooling system but a special feature. This aspect appears to have been lost sight of in the impugned order prompted, probably, by the intent to proceed directly to an ostensibly conforming description. The additional feature, whose presence or absence, determines the sub-heading within the residuary category, has not been established as incorporated in the impugned goods. In the absence of such, customs authorities are not enabled to proceed to the tariff item below the sub-heading. The impugned order is flawed for that reason. 14. The classification declared by the appellant at the time of import corresponds to the description of 'split system' and the scope of 'split system' is elaborated in the subheading notes in the Explanatory Notes to the Harmonised System of Nomenclature. F....