TMI Blog2021 (1) TMI 492X X X X Extracts X X X X X X X X Extracts X X X X ..... tially in the nature of rails made out of iron and steel which are affixed/welded/bolted into the lower cushion of the seat which helps the driver or passenger to slide the seat back and forth, as per his convenience/requirement and comfort, with the operation of a lever forming part of the rail assembly. However, it cannot be considered a part of the seat as stated by the applicant as it is not an essential component of the seat i.e. the seat is complete and fully functional even without it. We find that the seat adjuster merely helps in the adjustment of the seat i.e. moving it back and forth as per requirement/convenience and merely improves the efficiency and convenience of the seat but does not form a part of the seat. Thus it can be concluded that the seat adjuster is just an accessory which improves the efficiency and convenience of the seat. Since the seat adjuster is an accessory of the seat which is an essential part of the motor vehicle, it would be aptly covered under the Sub-heading 87089900 as accessory of the motor vehicle under the head Parts and accessories of the motor vehicles . From a bare reading of the Chapter Heading 8708.00, it can be deriv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on No.01/2017-Central Tax (Rate) dated 28.06.2017. Whether the product seat adjuster finds mention under the Heading 9401, for which we would be required to go through the said heading as appearing in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975)? - HELD THAT:- A seat adjuster cannot, by any stretch of imagination, be defined as a part of a seat as it is not an essential component of the seat i.e. the seat is complete and fully functional without it. Further, as per definition, accessories are different from parts as it is not an essential component of the whole without which the whole cannot be complete or function, but it is a thing which can be added to something else in order to make it more useful, versatile, or attractive. We find that seat adjuster fits the definition of accessory perfectly - the seat adjuster is essentially in the nature of rails made out of iron and steel, which are affixed/welded/bolted into the lower cushion of the seat , which helps the driver or passenger to slide the seat back and forth, as per his convenience/requirement and comfort, with the operation of a lever forming part of the rail assembly. We find tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, the major impact load in a collision is transferred through the seat adjuster , so it must be ensured that the mechanism has adequate strength to withstand the load because it plays an important role in protecting the car driver and co-passenger in the event of a crash. The seat adjuster needs to be carefully designed, manufactured and fitted in way to meet the properties of a good car seat besides an attractive style. 2. The applicant has stated that prior to implementation of the Goods and Services Tax, they used to classify seat adjuster under HSN 9401 and discharged applicable excise duty on the same and the specific HSN is mentioned below: Tariff item Description of Goods Unit Rate of Duty 9401 Seats (other than those of heading 9402, whether or not convertible into beds and parts thereof. 94019000 Parts U 12.5% 2.1 The applicant has further stated that even after the implementation of Goods and Service Tax ( GST ), the applicant classified seat adj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CGST Rate 170 8708 Parts and accessories of the motor vehicles of headings 8701 to 8705 [other than specified parts of tractors] 14% 2.3 The applicant as a measure of caution and to avoid any steep interest liability changed the classification of seat adjuster from HSN 9401 to HSN 8708 with effect from April 1, 2019 and paid the applicable GST from November 2017 and also paid the differential duty arising for which they have submitted a copy of the challan. However, the applicant believes that seat adjuster is rightly classifiable under HSN 9401 and the applicable rate of CGST/GGST ought to be 9%. The applicant has also filed a letter with the jurisdictional officer on 29.05.2019 asserting their views and indicating that the payment of additional GST on account of change in classification is being made under protest and have submitted a copy of the said letter. They submitted that the present application is being preferred by the applicant to seek clarity on the appropriate classification of seat adjuster . 3. The applicant has further stated that the product seat adj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to clear the said product under Chapter 9401 under the erstwhile regime as well and also after the implementation of GST; that in light of Serial No. 170 wherein parts and accessories of motor vehicles are differentially treated than parts of seats , the Applicant seeks the Advance Ruling on the appropriate classification of seat adjuster and to ascertain its exact tax liability. The Applicant states and submits that seat adjuster are rightly classifiable under Serial No. 435A (HSN 9401) as the seat adjuster is an essential and integral part of seats without which seat can be rendered dysfunctional; that it is imperative to first understand the roles and the functions which are performed by seat adjuster . The key functions can be summarized as below: Seat Adjuster helps the driver and the passengers to get into the most comfortable position inside the car by using it to move the seat forwards and backwards as per their convenience; It helps in adjusting the position of the seat; Additionally, it also contains necessary safety features to protect the occupants in case of a collusion/accident; Further, it is to be noted that the major impact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Comm. Of Central Excise, Delhi [2007 (211) ELT 534 (SC] = 2007 (4) TMI 263 - SUPREME COURT wherein while determining as to whether name plates form part of a motor vehicle or not; it was observed that: part is an element of a sub-assembly, not normally useful by itself and not amenable to further disassembly for maintenance purpose. In common parlance parts are used in the manufacture of the final product and without which the final product cannot be conceived of. (iii) The applicant places further reliance in the case of Collector of Customs v Hydranautics Membrane India Ltd [1994 (71) ELT 711 (Tri-Del)] = 1994 (1) TMI 150 - CEGAT, NEW DELHI wherein the meaning of part was held to be: part as something essentially belonging to a larger whole, an integral portion . (iv) The applicant also places reliance on the Advance Ruling in the case of Mazagaon Dock Shipbuilders Limited [2019 (020) GSTL 0475 (AAR)] = 2018 (12) TMI 1153 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA wherein while referring to Cambridge Dictionary, the AAR observed that: Part as a noun - a separate piece of something or a piece that combines with other pieces to form the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y or secondary to something of greater or primary importance additional , any of several mechanical devices that assist in operating or controlling the tone resources of an organ . Accessories are not necessarily confined to particular machines for which they may serve as aids. The same item may be an accessory of more than one kind of instrument. The applicant submits that based on the above case laws and the actual nature of the products, what summarizes is that accessory per se is something which are complimentary to the main product; but at the same time it is something which can be used with various equipments or machines or commodities. However, the seat adjuster in question can only be used with seats and nothing else. They are manufactured keeping in mind the purpose and functions of a seat and are designed in a way so that they can be affixed only with seats . Hence, they cannot be termed as mere accessory . As a corollary, if the seat adjuster in question do not qualify as accessory , the same has to be classified as part at Serial No. 435A under Chapter 94 of Notification No.1 as amended by Notification No. 41. Thus, the applicant submits that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a comfortable position to the drivers and the passengers. Further, they are equipped with safety mechanism so as to provide a cushion of safety and give stability to the seats . Hence, the Applicant submits that seats per se would be incomplete without the seat adjuster in question in as much as it forms an integral part of the seats and hence, merit classification under HSN 9401. It is stated that seats are not be judged only on the basis of their affixing to a motor vehicle. It has to be seen as a whole and a seat would be complete only when the products in question are affixed to a seat . 6.3 The applicant submits that for determining the appropriate classification of a product, reference can be placed on Explanatory Notes to HSN to understand the scope and applicability of a particular Chapter. That HSN Explanatory Notes can be referred to for determining the classification of a product was observed in the case KSE Ltd v Comm. Of Customs, Cochin [2017 (352) ELT 46 (Tri-Bang)] = 2017 (5) TMI 1434 - CESTAT BANGALORE wherein it was held that it is not disputed that the HSN explanatory notes have persuasive value. The Customs Tariff at the relevant time is f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssarily classified under the same Heading as opposed to the general heading of chapter 87. 7.1 The Applicant submits that it is trite in law that a specific entry prevails over general entry. Reliance in this regard is placed in the case of AGFA India Pvt Ltd v Commissioner of Customs, Chennai [2017 (353) ELT 251 (Tri-Che)] = 2017 (11) TMI 973 - CESTAT CHENNAI wherein the dispute was with regard to classification of X-ray machines under Chapter 84 and Chapter 90. Noting that Chapter 90 specifically provided for the same, the Tribunal observed that On the submission of Revenue and on perusal of rival entries, it is made clear that specific entry relied upon by Revenue demonstrates the nature and character of the goods to attract it to the category it serve purposes of that entry. Although end-user is not the criteria for classification, but the very character and nature of goods when subscribe to a specific entry, that prevails over a general entry for classification. Therefore the classification sought by Revenue under CTH 9022 is appropriate for which appeal is dismissed. 7.2 The Applicant submits that on an analysis of the Explanatory Notes, it is stated that Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resorted to. The nomenclature given by the parties to the word or expression is not determinative or conclusive of the nature of the goods. The same will have to be determined by application of the well-settled rules or principles of interpretation which have been referred to as common parlance rule. 8.1 The applicability of the common parlance test has been upheld and resorted to in various cases by the Supreme Court like Indo International Industries v Commissioner of Sales Tax [1981 (8) ELT 325 (SC)] = 1981 (3) TMI 77 - SUPREME COURT and Commissioner of Sales Tax v Macneill Barry Ltd [1986 (23) ELT 5 (SC)] = 1985 (11) TMI 56 - SUPREME COURT . The applicant has submitted that applying common parlance test to the present factual scenario, it is to be analysed as to how the products in question are treated in the market. It can be said that the products in question by their very nomenclature gives the impression that the same is treated as part of seats . Even otherwise as well, the products in question are manufactured in conjunction with seats by the applicant. Further, the purchase orders as raised by the customers on the Applicant also classify the same unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Chapter 94 considering the specific use of the same. A similar view basis the specific use of components was also taken in the cases of Rotomatic Containers Pvt Ltd v Commissioner of Central Excise, Nashik [2010 (10) GSTL 568 (Tri-Mum) = 2017 (12) TMI 87 - CESTAT MUMBAI and Commissioner of Central Excise, Nagpur v Duraweld Wear Plates Pvt Ltd [2009 (234) ELT 491 (Tri-Mum)] = 2008 (7) TMI 726 - CESTAT, MUMBAI . Based on the above, the applicant submits that seat adjuster is also used only in conjunction to the seats . The same cannot be used otherwise apart from being affixed to seats which are in turn affixed to a motor vehicle. Considering the specific use of the same in assembling of seats , it is submitted that the same ought to classified at Serial No. 435A under Chapter 94. 9. The applicant has concluded his submission by stating that seat adjuster rightly merit classification under Chapter 9401 at Serial No. 435A to Notification No. 1 as amended by Notification No. 41. Therefore, the said product ought to be taxable at 9% CGST and 9% GGST. He has put forward the following question on which advance ruling is required: Whether the product namely se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 vide Notification No.41-Central Tax (Rate) dated 14.11.2017, the rate of seat adjuster was reduced from 14% to 9% vide insertion of a new entry at Serial No. 435A in Schedule-III of the said notification. 12.1 The applicant has further submitted that during an internal check of the processes adopted by the applicant by a third party being carried out as a routine exercise, it was pointed out that there may be a competing entry at Serial No. 170 of Schedule-IV of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 pertaining to parts and accessories of motor vehicles, which may be applicable for seat adjusters . Under the said entry, the rate of GST is 28% (14% SGST + 14% CGST). The applicant, as a measure of caution and to avoid any steep interest liability, changed the classification of seat adjuster from HSN 9401 to HSN 8708 with effect from April 1, 2019 and paid the applicable GST from November 2017 and also paid the differential duty arising for which they have submitted a copy of the challan. However, the applicant believes that seat adjuster is rightly classifiable under HSN 9401 and the appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not under Heading 8708 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), we need to examine each of the Headings in detail in order to find out under which heading the aforementioned would be correctly classifiable. Let us first examine the Heading 8708 first. 15. In order to examine the aspect as to whether the product seat adjuster finds mention under Heading 8708, we would be required to go through the said Heading as appearing in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), which reads as under: 8708 PARTS AND ACCESSORIES OF THE MOTOR VEHICLES OF HEADINGS 8701 TO 8705 8708 10 - Bumpers and parts thereof : 8708 10 10 --- For tractors 8708 10 90 --- Other -- Other parts and accessories of bodies (including cabs) : 8708 21 00 -- Safety seat belts 8708 29 00 -- Other 8708 30 00 - Brakes and servo-brakes; parts thereof 8708 40 00 - Gear boxes and parts thereof 8708 50 00 -Drive-axles with differential, whether or not provided with other transmission components, non-driving axles; parts thereof 8708 70 00 - Road wheels and parts and accessories thereof 8708 80 00 - Suspension syst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on which when combined with others, makes up the whole of something. In other words, a 'part' is an essential component of the whole without which the whole cannot be complete or cannot function. Further, as per definition, accessories are different from parts, as it is not an essential component of the whole without which the whole cannot be complete or function, but it is a thing which can be added to something else in order to make it more useful, versatile, or attractive. Based on the submission of the applicant as well as the image of the seat adjuster submitted by the applicant, we find that it is essentially in the nature of rails made out of iron and steel which are affixed/welded/bolted into the lower cushion of the seat which helps the driver or passenger to slide the seat back and forth, as per his convenience/requirement and comfort, with the operation of a lever forming part of the rail assembly. However, it cannot be considered a part of the seat as stated by the applicant as it is not an essential component of the seat i.e. the seat is complete and fully functional even without it. We find that the seat adjuster merely helps in the adjustment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suspension mountings; supports and brackets for the coachwork, engine, running-boards, battery or fuel tanks, etc.) (B) Parts of bodies and associated accessories, for example, floor boards, sides, front or rear panels, luggage compartments etc.; doors and parts thereof; bonnets (hoods); framed windows, windows equipped with heating resistors and electrical connectors, window frames; running-boards; wings (fenders), mudguards; dashboards; radiator cowlings; number-plate brackets; bumpers and over-riders; steering column brackets; exterior luggage racks; visors; non-electric heating and defrosting appliances which use the heat produced by the engine of the vehicle; safety seat belts designed to be permanently fixed into motor vehicles for the protection of persons; floor mats (other than of textile material or unhardened vulcanised rubber), etc. Assemblies (including unit construction chassis-bodies) not yet having the character of incomplete bodies e.g. not yet fitted with doors, wings (fenders), bonnets (hoods) and rear compartment covers, etc., are classified in this heading and not in heading 87.07. (C) Clutches (cone, plate, hydraulic, automatic, etc., but not the el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The inflater systems include the igniter and propellant in a container that directs the expansion of gas into the airbag. The heading excludes remote sensors or electronic controllers, as they are not considered to be parts of the inflator system. The heading does not cover hydraulic or pneumatic cylinders of heading 84.12. 15.5 One thing which we would like to discuss here is that explanatory notes to the heading 8708 contains only an illustrative list of the parts and accessories covered under that heading and not an exhaustive list as stated by the applicant. Further, just because this illustrative list may or may not contain any entry relating to any specific item (in the instant case seat ) or its parts or accessories, it does not necessarily mean that the parts or accessories, which are not covered in the ambit of this list, cannot be or should not be classified under the said heading. From a bare reading of the Chapter Heading 8708.00, it can be derived that it covers parts and accessories of motor vehicles and this chapter heading is wide enough in its scope so as to cover all accessories of motor vehicles which would also cover accessories to seats. We are t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RT NO. II, NEW DELHI , whereby the Tribunal relying upon a judgment of the High Court of Karnataka in the case of Supreme Motors v. State of Karnataka has allowed the appeal filed by the assessee. The fact of the matter was that M/s Insulation Electrical (P) ltd. was engaged in the manufacture of Rail Assembly front Seat (Omni), Adjuster Assembly slider seat, YF-2, Rear Back Lock Assembly and 1000 CC Rear Back Lock Assembly. It submitted its classification list in the year 1986 under Central Excise Tariff Act, 1985 (for short 'the tariff Act') classifying its products under chapter heading 8708.00 as parts and accessories of motor vehicles which attracted the 15% rate of duty. The classification list filed by the assessee was approved. Acting on specific information that the assessee was short paying the excise duty by classifying its products as motor vehicles parts and accessories, the factory premises of the assessee was visited by a team of officers of Central Excise MOD-III on 8.12.1998. They physically verified the items being manufactured by the assessee. As per the statement of the authorized signatory of the assessee, they were supplying Rail Assembly Frost S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re parts and accessories of motor vehicles, as claimed by the assessee and classifiable under chapter heading 8708.00. Before coming to a conclusion, it would be appropriate to look at the two rival entries falling under chapter Headings 8708 and 9401 of the Act. The same are reproduced below for convenience of discussion: Heading No. Sub-heading No. Description of goods Rate of duty 87.08 8708.00 Parts and accessories of the motor vehicles of heading Nos.87.01 to 87.05 15% 94.01 9401.00 Seats[other than those of heading No.94.02], whether or not convertible into beds and parts thereof. 18% From the bare reading of the two sub-headings, reproduced above, it is clear that Chapter Heading 8708.00 covers parts and accessories of motor vehicles and this chapter heading is wide enough in its scope so as to cover all accessories of motor vehicles whereas Chapter heading 9401.00 covers all type of seats and parts thereof. This is an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial for the actual functioning of the product. Chapter 9401 covers all types of seats and not only the seats of a car and a seat is complete even without the rail assembly front seat, adjuster/assembly slider seat and rear back lock assembly. They are not essential parts of the seat. Chapter heading 9401 covers only the parts of seats and not accessories to the seats. A 'part' is an essential component of the whole without which the whole cannot function. We agree with the view taken by the Tribunal that the products manufactured by the assessee cannot be the 'parts' of seats, as claimed by the revenue. Chapter heading 8708 covers both the 'parts' as well as 'accessories'. The items manufactured by the assessee are only adjuncts. These are to be affixed on the floor of motor vehicles. When seats are affixed on these rails, seats can slide back and forth with the operation of a lever forming part of other rail assembly front seat adjuster. This enables the driver or the passenger, to adjust the position of the seat to suit his comfort and convenience. These are merely to improve the efficiency and convenience of the seat and does not form pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further, on going through the details appearing in Heading 9401 of the First Schedule of the Customs Tariff, 1975 (51 of 1975), it is seen that parts of seat appear at Sub-heading 9401 9000. The applicant vide his submission has put forward the following grounds in support of his contention that the product seat adjuster is a part of seat and is classifiable under Heading 9401: (i) The seat adjuster are rightly classifiable under Serial No. 435A (HSN 9401) as the seat adjuster is an essential and integral part of seats without which seat can be rendered dysfunctional, which can be understood on the basis of the roles and functions which are performed by seat adjuster . (ii) The seat adjuster also helps to assemble and complete the structure of seats and even though at first glance, seat adjuster per se might not seem to be essential to the completion of seats , the functions it performs are indispensable for the seats to work. Seat adjuster allows the seat to be complete in shape and perform the respective functions. Without affixing the same, a seat can be rendered dysfunctional. (iii) The seat adjuster in question can only be use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng entry or statute/notification must be accorded a plain construction and nothing should be read into it. (ii) Pragati Silicons Pvt Ltd v Comm. Of Central Excise, Delhi [2007 (211) ELT 534 (SC] = 2007 (4) TMI 263 - SUPREME COURT : part is an element of a sub-assembly, not normally useful by itself and not amenable to further disassembly for maintenance purpose. In common parlance parts are used in the manufacture of the final product and without which the final product cannot be conceived of. (iii) Collector of Customs v Hydranautics Membrane India Ltd [1994 (71) ELT 711 (Tri-Del)] = 1994 (1) TMI 150 - CEGAT, NEW DELHI wherein the meaning of part was held to be: part as something essentially belonging to a larger whole, an integral portion . (iv) Mazagaon Dock Shipbuilders Limited [2019 (020) GSTL 0475 (AAR)] = 2018 (12) TMI 1153 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA While referring to Cambridge Dictionary, the AAR observed Part as a noun - a separate piece of something or a piece that combines with other pieces to form the whole of something. One of the pieces that together form a machine or some type of equipment. (v) Supreme Motors v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that On the submission of Revenue and on perusal of rival entries, it is made clear that specific entry relied upon by Revenue demonstrates the nature and character of the goods to attract it to the category it serve purposes of that entry. Although end-user is not the criteria for classification, but the very character and nature of goods when subscribe to a specific entry, that prevails over a general entry for classification. Therefore the classification sought by Revenue under CTH 9022 is appropriate for which appeal is dismissed. (xi) Pharm Aromatic Chemicals v Municipal Corporation of Greater Bombay [1997 (95) ELT 203 (Bom)] = 1994 (2) TMI 320 - BOMBAY HIGH COURT wherein with respect to the applicability of common parlance test , it was observed that The principles which govern the interpretation of items in the list of taxable goods are no more res integra. Various principles or tests have been evolved by the Supreme Court from time to time for interpretation of items of taxable goods. One of the well-known principles of interpretation is that words of everyday use must be construed not in the scientific or technical sense but as understood in the common parlan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fixed to a vehicle and that Seat adjuster in question are affixed to seats in particular which are then affixed to a motor vehicle; that since a specific entry is there in the statute book relating to seats under Chapter 94 the same has to be classified under Heading 9401 only. We also find that they have quoted many citations to support their contention. However, after going through the above, we have no hesitation in stating that the applicant has drastically failed to prove his point. Even though the applicant has time and again stated in his submission that the seat adjuster is a part of the seat , he has failed to justify how it fits into the definition of parts . As discussed in the earlier paras, parts are an amount or section which when combined with others, makes up the whole of something which means that a 'part' is an essential component of the whole without which the whole cannot be complete or cannot function. Ideally, the parts of a seat would be the seat back (squab), seat base(cushion) and the head-rest i.e. these are the essential parts of a seat required to make it a whole or to complete it and enable it to function as a seat. Absence of a sea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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