TMI Blog2021 (1) TMI 895X X X X Extracts X X X X X X X X Extracts X X X X ..... umber of the automobile manufacturer, i.e., M/s. Tata Motors Ltd., rendering the said impugned product unique, in terms of its specifications, and materials used in the manufacture of the impugned goods which are identified by the material code of the impugned goods, and thereby lending support to our observation that the impugned goods have been manufactured at the behest of the automobile manufacturer as per the materials and design specifications of the motor vehicles to be manufactured by the automobile manufacturer, and the same is supplied solely or primarily to the said automobile manufacturer, which is also corroborated by the condition laid in the said sample Purchase Order placed by M/s. Tata Motors Ltd., which stipulates that Sale of goods mentioned in the Purchase Order to Spare Market is strictly prohibited. Thus, it has been established beyond doubt that the impugned goods are suitable for use solely or primarily with articles of Chapter Heading Nos. 87.01 to 87.05, and therefore, applying the principle laid down by the Hon ble Supreme Court in the case of G.S. AUTO INTERNATIONAL LTD. VERSUS COLLECTOR OF C. EX., CHANDIGARH [ 2003 (1) TMI 700 - SUPREME COURT] , it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chapter Notes either, and therefore is clearly distinguishable. The impugned goods, i.e., Metal Nuts with metrical threading, Metal Nuts without metrical threading, and Metal Spring Nuts, will be considered as parts of motor vehicles falling under Chapter Heading from 87.01 to 87.05, and accordingly will merit classification under the Tariff Item 8708 99 00, as purported by the Appellant - Advance Ruling decision set aside. - MAH/AAAR/RS-SK/32/2020-21 - - - Dated:- 26-11-2020 - SHRI RAKESH KUMAR SHARMA, AND SHRI SANJEEV KUMAR, MEMBER Present for the Respondent: Shri Nishant Shah, Advocate (Proceedings under Section 101 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) 1. At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the MGST Act. 2. The present appeal has been filed under Section 100 of the Central Goods and Services Tax Act, 2017 and the Mahara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subject goods which are parts of general use, are barred from being considered as parts and accessories of motor vehicles, as the said goods were used in many fields including electronic goods, solar energy and vehicles. 3.4 Aggrieved by the aforesaid Advance Ruling passed by the MAAR, the Jurisdictional Officer, Deputy Commissioner, Division - IV (Chakan), Pune-I Commissionerate, has preferred the present appeal before the Maharashtra Appellate Authority for Advance Ruling (hereinafter referred to as the MAAAR ) on the following grounds: GROUNDS OF APPEAL 4. The Appellant, in its appeal memorandum, inter alia, has mentioned the following grounds of appeal: 4.1 That the facts have been misrepresented by the Respondent before the MAAR that the goods in question i.e. metal nuts (with or without metrical threads) are essentially similar to standard nuts and may be used in other industries apart from automobiles / vehicles. However, it is revealed that the goods in question. i.e. threaded metal nuts or the fasteners, are manufactured and supplied to automobile manufacturers/customers as per the specifications required by the customers and drawings as approved by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in Note 2 to Section XV, of base metal (Section XV), or similar goods of plastics (Chapter 39); 3. References in Chapters 86 to 88 to parts or accessories do not apply to parts or accessories which are not suitable for use solely or principally with the articles of those Chapters. A part or accessory which answers to a description in two or more of the headings of those Chapters is to be classified under that heading which corresponds to the principal use of that part of accessory. 24. Section XVII deals with Vehicles, Aircraft, Vessels and Associated Transport Equipment. Note 2 says that the expression parts and parts and accessories do not apply to the articles mentioned in clauses (a) to (l) thereunder. In clause (b), parts of general use as defined in Note 2 to Section XV, of base metal (Section XV), or similar goods of plastics (Chapter 39), are mentioned. This takes us to Note 2(a) to Chapter XV, which provides that throughout that Schedule, the expression parts of general use means: (a) Articles of Heading No. 73.07, 73.12, 73.15, 73.17 or 73.18 and similar articles of other base metal; 25. Note 3 says that references in Chapters 86 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Tariff Item 8708 99 00. 4.5 That the Advance Ruling Authority s order is mainly based on the grounds that as per section note 2 (b) of Section XVII of Tariff the threaded metal nuts merits classification under Tariff Item 7318 16 00, whereas the Supreme Court Judgment that threaded metal nuts merits classification under Tariff Item 8708 99 00, is on the basis of conjoint reading of the section notes of section XV section XVII of the Tariff. 4.6 That reliance has also been placed on the Hon ble Supreme Court Judgement in the case of Cast Metal Industries (P) Ltd. Versus Commissioner of C Ex.-IV, Kolkata, 2015 (325) E.L.T. 471 (S.C.) = 2015 (11) TMI 833 - SUPREME COURT , wherein it has been held that to determine the applicability of the item under particular head, the test of commercial identity of the goods would be the relevant test and not the functional test. The Advance Ruling dated 17.03.2020 has also failed to take note of the aforesaid decision of the Supreme Court. 4.7 In view of above, it is submitted that the Threaded metal nuts merits classification under the Tariff Item 8708 99 00. RESPONDENT S SUBMISSIONS 5. In response to the afo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssifiable under the Heading 7318 tantamount to parts of general use- and are therefore disqualified from being classified under Section XVII. which contains Chapter 87. This is also corroborated by the explanatory note to the Heading 7318 of HSN. 5.5 Further on perusal of the Section Note 3 of Section XVII of the First Schedule to the Customs Tariff Act. 1975, it is understood that references to the expressions parts or accessories in chapter 86 to 88 do not cover within their ambit parts or accessories which are not suitable for use solely or principally with the articles of those chapters. Thus, as the disputed products are being used by multiple industries as parts of general use, they merit classification under Tariff Heading 7318 and not under the Heading 8708; that reliance in this regard have also been place on the following judgments: (i) Commissioner of CEx., Bombay-I Vs. Automatic Engg. Works [2001 (130) E.L.T. 331 (Tri-Mumbai)] = 2000 (7) TMI 519 - CEGAT, MUMBAI (ii) Spire India Vs. Commissioner of C.Ex., Mumbai [2006 (200) E.L.T. 539 (Tri-Mumbai)] = 2006 (2) TMI 35 - CESTAT, MUMBAI . 5.6 Reliance has also been placed by the Respondent on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strial clip fasteners and prototyping assembly systems, which are primarily used in automobiles . Product manufactured by the Applicant are supplied locally, typically to businesses which are registered under GST Act all over India. (iv) That the Respondent. in their application filed before the MAAR, had submitted that they were supplying essentially similar goods to other industrial users by showing comparison from Description of Goods such as Metal Nuts with metrical threading, Metal Nuts without metrical threading. Metal Spring Nuts and images of the product/good to project/claim the disputed products as parts/goods of general use . They have never said that the identical goods/the very goods which are manufactured for automobile customers as per particular specifications of automobile customer and drawings as approved by the automobile customers . are supplied to other industrial users . (v) The same is evident from comparing sample copies of invoices in respect of M/s. Tata Motors Ltd. enclosed by the department with appeal and sample copies of invoices in respect of M/s. Schneider Electric IT Business provided by respondent with its response/submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecifications of automobile manufacturers, therefore, the goods manufactured by the Respondent cannot be considered as parts of general use as they are suitable for use primarily in automobile industry. Their views are supported by the law laid down by the Hon ble Supreme Court in the case of G.S. Auto International Ltd. Vs. Collector of Central Excise, Chandigarh, reported in 2003 (152) E.L.T. 3 (S.C.) = 2003 (1) TMI 700 - SUPREME COURT . (iii) It was further submitted that issue of classification of fasteners used with automobiles/vehicles is being investigated by DGGI, Pune Zonal Unit for GST period. In this regard, an incident report issued by DGGI, Pune Zonal Unit, has also been furnished. The Appellant also submitted that many major fasteners are under investigation by DGGI, PZU. They also submitted that the issue of classification of fasteners used in automobiles has Pan India ramifications and involve huge amount of Government Revenue. (iv) As regards the Tribunal Judgments relied upon by the Respondent in the cases of Automatic Engineering Works and Spire India Ltd.. it was submitted that the facts and circumstances of these judgments are different from the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions: (i) That the reliance placed by the Department on the documents. such as, Purchase Order issued by M/s. Tata Motors Ltd., Invoice issued by the Respondent to M/s. Tata Motors Ltd.. is misplaced in as much as the Metal Nuts, which come with various specifications depending upon size, shape, etc. are provided with unique part number, i.e., SKU (Stock Keeping Unit) as a part of Internal Control Mechanism. This practice is similar to practice followed by different businesses for identification of products. Thus, merely provision of such part to customers of various industries cannot lead to change in the nature of the part and it continues to be called as a Metal Nut. (ii) That mere supply of such nuts on approval of design by their customer. i.e., M/s. Tata Motors Limited, does not make it an automobile product as alleged by the Department. It is not the case here where the company has manufactured nuts based on drawings provided by Tata Motors. Tata Motors. as a business practice, ask for the drawings of the Metal Nuts to check whether the nuts to be supplied are suitable for their products. That the supply of drawings and approval thereof is part of the busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as relied heavily on the Hon ble Supreme Court Judgment in the case of G.S. Auto International Ltd. Vs. Collector of Central Excise, Chandigarh, reported in 2003 (152) E.L.T. 3 (S.C.) = 2003 (1) TMI 700 - SUPREME COURT , wherein the Hon ble Supreme Court, in the identical issue as that of the case in hand, i.e., classification of the fasteners such as various types of Nuts, etc., laid down the test, which is to be applied for the classification of the various types of fasteners, such as the ones, i.e., Metal Nuts, which are the subject matter of the case at hand. The Hon ble Apex Court, inter-alia, observed as under: For the purposes of classification under Chapter Heading 87.08, the test to be applied is: whether the goods are suitable for use solely or primarily with articles of Chapter Heading Nos. 87.01 to 87.05; if the answer is in the affirmative, the goods will be classifiable under Chapter Heading 87.08, but if the answer is in the negative, they would have to be classified under Chapter Heading No. 73.18. Having regard to the finding that the goods in question cannot but be regarded as parts of automobiles, it has to be held that they are suitable for use primari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (11) TMI 833 - SUPREME COURT , wherein it has been held that to determine the applicability of the item under particular head, the test of commercial identity of the goods would he the relevant test and not the functional test . 13. On perusal of the impugned Advance Ruling, it is clearly seen that the MAAR has also recorded in its findings in para 5.1 of the said Advance Ruling that the Applicant is engaged in the manufacture of amongst others, industrial clip fasteners and prototyping assembly systems, which are primarily used in automobiles . The MAAR had based the aforesaid observation on the submission made by the Applicant-Respondent in their Advance Ruling application filed before MAAR. Thus, the Respondent themselves have revealed this fact before the MAAR, wherein they proclaimed that under pre-GST era, the impugned goods were being classified under the Chapter Heading 8708 which covers the parts or accessories of the motor vehicles falling under Chapter Heading ranging from 8701 to 8705. The aforesaid submission is also illustrated by the sample invoice produced by the Appellant- Department as well as the one produced by the Respondent. The said sample invoices ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, it has been established beyond doubt that the impugned goods are suitable for use solely or primarily with articles of Chapter Heading Nos. 87.01 to 87.05, and therefore, applying the principle laid down by the Hon ble Supreme Court in the case of G.S. Auto International Ltd. (Supra), it is manifest that the impugned products will be construed as parts of motor vehicles falling under Chapter Heading 87.01 to 87.05, and will merit consideration under the Tariff Item 8708 9900. 16. Our aforesaid observation in respect of the classification of the impugned goods also finds support from the Hon ble Supreme Court Judgement in the case of Cast Metal Industries (P) Ltd. (Supra), relied by the Appellant- Department, wherein the Hon ble Supreme Court has held that to determine the applicability of the item under particular head, the test of commercial identity of the goods would be the relevant test and not the functional test. Looking at the design and specification of the impugned goods, any person, in the common parlance, would not consider these goods as parts of general use, as the impugned goods are suitable for use solely or primarily in automobiles. Further since the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Respondent are not supplying the identical goods to customers from the other sectors. 18. On perusal of the above contentions made by the Appellant as well as the Respondent, we tend to agree with the contentions of the Department-Appellant in as much as the Respondent are not supplying the identical goods to the customers across all the sectors. The impugned goods are customized and tailor made for the automobile customers as per the specification approved by the automobile customers. Thus, the contention of the Respondent that the impugned goods are supplied to the customers across various sectors, and thereby, the impugned goods are to be construed as parts of general use, and therefore, warranting classification of the impugned goods under the Chapter Heading 73.18, is devoid of any merit, and hence not tenable. 19. The Respondent have heavily relied on the Hon ble Supreme Court Judgement in the case of Uni Products India Ltd. (Supra). In this regard, it is observed that the issue involved in the above- mentioned case was classification of Car Mats made of textile material , and the said decision in the said case was based on the facts that the Car Mats made o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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