TMI Blog2021 (12) TMI 490X X X X Extracts X X X X X X X X Extracts X X X X ..... specific, the notes can only afford guidance in isolating the appropriate tariff item in the First Schedule to Customs Act, 1975 to which the test of rule 3 of the General Rules for the Interpretation of Import Tariff appended to Customs Tariff Act, 1975 is applied. One of the fundamental principles of classification is that the identified tariff item should describe, as nearly as possible, the goods as presented. Usage as determinant, or subsuming within broader descriptions, must have specific sanction of the notes as laid down in rule 1 of the General Rules for the Interpretation of Import Tariff. It is also clear from the Rules that the comparison should be at heading level before proceeding within the more appropriate of the two for identification of the applicable sub-heading and tariff item - the proposed heading is that of parts and accessories of vehicles. The aptness of this heading can be elicited only from the scope of the description corresponding to heading 8714 of First Schedule to Customs Tariff Act, 1975 which pertains to motorcycles, bicycles and carriages for disabled persons. It is apparent that the imported goods are not solely or principally employab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 6,50,013 and ₹ 4,86,486 in the three bills of entry was upheld. 2. The appellant, having imported the impugned goods for use in the manufacture of components and systems for assembly in motorcycles , sought clearance at the rate of duty applicable to toothed wheels, chain sprockets and other transmission elements presented separately corresponding to tariff item 8483 9000 of First Schedule to Customs Tariff Act, 1975. The customs authorities did not find this acceptable and, in view of the undisputed use for which the goods had been procured, the description as Parts and accessories of vehicles of heading 8711 to 8713 which covered motorcycles corresponding to heading 8714 of First Schedule to Customs Tariff Act, 1975, the absence of the imported goods or of the product for which it was intended from among the exclusions in note 2 of section XVII of First Schedule to Customs Tariff Act, 1975 and the exclusion of articles of section XVII by note 1(l) of section XVI, proposed classification as tariff item 8714 1090 of First Schedule to Customs Tariff Act, 1975. It is seen that the claimed classification is comprehensively elaborate which cannot be said about th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that car mating which is used in the motor vehicle is classifiable under Chapter 57 and not under Chapter 87. In this case, the assessee was manufacturing car mating which was directly used in the motor vehicle and despite this the Hon ble Supreme Court held the classification under Chapter 57 whereas in the present case, child parts were not used in the motor vehicle but were used in the manufacture of another parts i.e. Round Recliner which is an integral part of motor vehicle seats. Therefore, Apex Court judgment is applicable in the facts of the present case. The Hon ble Supreme Court, in Commissioner of Central Excise, Mumbai-III v. Uni Products India Ltd [2020-VIL-17-SC-CE], had held that 25. We do not find any error in such reasoning. Chapter 87 of the Central Excise Tariff of India does not contain car mats as an independent Tariff Entry. We have reproduced earlier the various parts and accessories listed against Tariff Entry 8708. All of them are mechanical components, and revenue want car mats to be included under the residuary sub-head other in the same list. The HSN Explanatory Notes dealing with interpretation of the rules specifically exclude tufted textil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the said heading bodies of armoured vehicles and parts thereof, cover special road wheels for armoured cars, propulsion wheels for tanks, tracts etc. As per this requirement, the goods should not only be identifiable to be armoured vehicles, but it should so not have been excluded by Notes to Section XVII. The Chapter note 2(f) excludes electrical machinery and equipment falling under Chapter 85. Explanatory Notes to HSN relating to the parts and accessories excluded by Note 2 specify items with reference to specific Chapter Heading as per (7) (a), (k) which excludes photographs and other current collectors for electric traction vehicles, fuses, switches and other electric apparatus of Heading No. 85.35 or 85.36. The items, therefore, manufactured by the appellants are identifiable or are in the nature of goods falling under Chapter Heading 85.36. Since these fall under the category of excluded goods under Chapter Notes, even though they are used specifically solely or principally with the armoured vehicles of Chapter Heading 8710, they are classifiable under Chapter Heading 8536.90 only as held by the adjudicating authority. was highlighted by Learned Counsel to demonst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor vehicles. I further observe that the HSN Explanatory Notes of Heading 8714 specifically mention that parts accessories of Heading 8714 includes gears, gear boxes, clutches and other transmission equipment, and parts thereof, for motor vehicles. Thus, the HSN Explanatory Notes of Heading 8714 are in line with the decision of Hon'ble Tribunal in case of Telco Ltd. supra. It is settled law that HSN Explanatory Notes are useful guide in deciding disputed issues of classification. In these circumstances, in the face of clear HSN Explanatory Notes and decision of Hon'ble Tribunal in case of Telco. Ltd, no weightage can be given to the opinions of the so called three experts mentioned by the appellant. 6. The resolution of adversarial conflict in classification of imported goods by comparison of the claimed classification and counter-proposal of assessing authorities can be undertaken only after establishing that the distinction between the two is only one of degree. It is, therefore, not sufficient that the assessing authority demonstrate the claim to be wrong; the proposed classification should be shown to be correct failing which the claim shall, by default, prevail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) and cranks; bearing housings and plain shaft bearings; gears and gearing; ball or roller screws; gearboxes and other speed change as, including torque converters; flywheels and pulleys, including pulley blocks; clutches and shaft couplings (including universal joints) corresponding to heading 8483 of First Schedule to Customs Tariff Act, 1975. There is no allegation that this is not an eyeball perception of the impugned goods. On the other hand, the notice issued to the appellant proposes that other corresponding to tariff item 8714 10 90 under of motorcycles (including mopeds) as sub-heading within Parts and accessories of vehicles of headings 8711 to 8713 corresponding to heading 8714 of First Schedule to Customs Tariff Act, 1975 is the appropriate classification. 8. At first blush itself, it would appear that the classification proposed in the show cause notice falters on the test of specificity and, therefore, not in accord with the principle laid down in the decisions supra cited by Learned Counsel. The impugned order also does not claim to prevail by reason of misdescription in the declaration but by drawing upon the authority of the notes of ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... description of heading for engines. That is clear from 4. Where a machine (including a combination of machines) consists of individual components (whether separate or interconnected by piping, by transmission devices, by electric cables or by other devices) intended to contribute together to a clearly defined function covered by one of the headings in Chapter 84 or Chapter 85, then the whole falls to be classified in the heading appropriate to that function. in section XVI which, in the light of heading 8409 of First Schedule to Customs Tariff Act, 1975, renders superfluous a separate heading for what is essentially a means of transferring momentum generated in the engine to the wheels. 11. Gears , which are the goods impugned in this proceeding, are described in the Explanatory Notes to the Harmonised System of Nomenclature as .the toothed wheel, cylinder, cone, rack or worm, etc. in an assembly of such gears, the teeth of one engage with the teeth of another so that the rotary movement of the first is transmitted to the next, and so on. According to the relative number of teeth in the separate units, the rotary movement may be transmitted at the same rate, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficing to substitute the declared classification with the one pertaining to vehicles appears to have influenced the adjudicating authority. 13. Though the exclusion on which the disputed demand has been confirmed appears to be absolute, the reference to another section of the First Schedule to Customs Tariff Act, 1975, with potential for classification in chapter 87 of the First Schedule to Customs Tariff Act, 1975, is an implied condition that must be attended to; conformity with the description corresponding to heading 8714 of First Schedule to Customs Tariff Act, 1975 is a necessary prerequisite for the exclusion in note 1 of section XVI of First Schedule to Customs Tariff Act, 1975 to be made applicable. The impugned order, and that of the original authority, have not ventured in that direction at all. 14. The effect of (e) machines and apparatus of heading 8401 to 8479, or parts thereof, other than the radiators for the articles of this Section, articles of heading 8481 or 8482 or, provided they constitute integral parts of engines or motors, articles of heading 8483; in note 2 of section XVII is one substantial enumeration that impacts the exclusion from se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the impugned goods, when assembled as gears , are required for transmission systems that, for the purposes of classification, are engines and, by the exclusion in section XVII of First Schedule to Customs Tariff Act, 1975, is to be discarded from the exclusion in section XVI of First Schedule to Customs Tariff Act, 1975. 17. It, therefore, only remains to ascertain the relevance of the decisions relied upon by Learned Authorized Representative as binding precedent in contradistinction with our conclusion supra. In re Telco Ltd, the finding of gears, shafts and the gearboxes as classifiable under heading 87.08 of Schedule to Central Excise Tariff Act, 1985, against the claim that heading 84.83 is applicable, is a consequence of the interpretation of note 2(e) in section XVII of the Schedule to Central Excise Tariff Act, 1985 corresponding to the one in Customs Tariff Act, 1975 that is the fulcrum of our finding supra. Though the appellant therein is also, like the appellant herein, a manufacturer of vehicles, the revealed evidence of the goods in dispute not being parts of engines but of motor vehicles distinguishes the facts in the present dispute. Furthermore, that de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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