TMI Blog2023 (11) TMI 320X X X X Extracts X X X X X X X X Extracts X X X X ..... ls if polished fall under CTH 8482 and if not polished under CTH 7326 and no way under Chapter 87 - the report given by the said Chartered Engineer mentions that 5/16 and 7/32 size is rarely used in some special hub applications in bicycles as per the information collected in the survey; sizes 5/8 , 9/16 and 18.6mm are not generally used in bicycles; if they are to be used in bicycles, they should be polished. On going through the certificate issued by the Chartered Engineer, it is found that the certificate does not specify whether the impugned Steel Balls are polished and gives an impression that the same is issued on the basis of a survey rather than on technical testing and examination. Hon ble Supreme Court in the case of KRISHNA STEEL INDUSTRIES VERSUS COLLECTOR OF CENTRAL EXCISE, PATNA [ 2004 (9) TMI 107 - SUPREME COURT] held that with the incorporation of Chapter 6, the item now has to be classified either under Chapter 84 or under Chapter 73 and that an item has to be classified in accordance with Chapter notes. Tribunal in the case of Pratap Engineering Works (supra) held that in view of Note 6 to Chapter 84, Steel Balls of sizes 3/16 , 5/32 and 1/8 with the variation, of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide Bill of Entry No.5314957 dated 16.10.2019; statements of concerned persons of the appellant, some bicycle manufacturers, were recorded and a certificate of a Chartered Engineer has been obtained by the officers. A show-cause notice dated 06.09.2022 was issued proposing re-classification under CTH 8714 9990; recovering differential duty and imposition of penalty on the company and two Directors Shri Amit Arora and Sumit Arora; the proposals of the show-cause notice was confirmed vide OIO dated 18.11.2022. Hence, this appeal. 2. Shri Naveen Bindal assisted by Shri Aman Garg, learned Counsel for the appellants, submits that CTH 8482 9900 is a specific entry which covers Steel Balls , whereas CTH 8714 is a general heading which covers parts and accessories of motor vehicles; in view of Clause (a) of Rule 3 of General Rules for Interpretation, specific entry should be preferred over a general entry. He submits that heading 8482 applies to Polished Steel Balls , the maximum and minimum diameters of which do not differ from the nominal diameter by more than 1%, or by more than 0.05MM, whichever is less; other steel balls are classifiable under CTH 7326; as per the inspection report d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s wherein identical goods have been sought to be classified under CTH 8482 in place of CTH 8714 claimed by the assessee. Learned Counsel submits that the issue involved is of classification and as such, suppression with intent to evade payment of duty; therefore, extended period cannot be invoked and penalty cannot be imposed. He relies on the following cases: Krishna Steel Industries- 2004 (172) ELT 305 (SC). National Engineering Industries Ltd.- 1995 (77) ELT 719. Pratap Engineering Works- 1995 (78) ELT 472 (Tri.). CC Vs Andhra Pradesh Paper Mills Ltd.- 1997 (94) ELT 110 (Tri.) NHB Bearing Limited- 2003 (153) ELT 173 (Tri. Mumbai) and 2004 (163) ELT 268 (Tri. Mumbai) CC Vs Sanghvi Swiss Refills Pvt. Ltd.- 1997 (94) ELT 644 (Tri.) Precision Rubber Industries (P) Ltd.- 2016 (334) ELT 577 (SC) Warner Hindustan Ltd.- 1999 (113) ELT 24 (SC). Hindustan Aeronautics Ltd.- 2019 (370) ELT 699 (Tri. Bang.) 6. Shri Nikhil Kumar Singh, learned Authorized Representative for the Department reiterates the findings of the impugned order and submits that the Shri Amit Arora in his statement has accepted that they earlier classified under CTH 8714 and later changed to CTH 8482; the customers of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. On the other hand, Department relies on Section Note 2(c) to Section-XVII and General Rule 3(a) of General Rules for the Interpretation of the Harmonized System; statements of cycle manufacturers to whom the appellants have sold the imported Steel Balls; certificate issued by a Chartered Engineer Shri Rajesh John; statements of the Directors of the Company and judgment of the Tribunal in the case of National Engineering Ltd. (supra). 12. Before adverting to a discussion on the classification of the impugned goods, it would be beneficial to have a look at the relevant Section/ Chapter Notes and the Headings of the items under Customs Tariff Act, 1975.Rule 3 and 4 of General Rules of Interpretation are as follows: 3. When by application of Rule 2 (b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: (a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gines or motors, articles of heading 84.83; 14.4. Note A under Parts and Accessories of Notes to Section XVII of HSN This Note excludes the following parts and accessories, whether or not they are identifiable as for the articles of this Section: --- (6) Certain other goods of Chapter 84, e.g: (a) Taps, cocks, valves and similar appliances (e.g. radiator drainage taps, inner-tube valves) (heading 84.81). (b) Ball or roller bearings (heading 84.82) 15. Note 2 and 2 (e) under Section XVII of Customs Tariff Act, 1975 reads as under: 2. The expressions parts and parts and accessories do not apply to the following articles, whether or not they are identifiable as for the goods of this Section: (a) to (d) ---- (e) Machines or apparatus of headings 84.01 to 84.79, or parts thereof; articles of heading 84.81 or 84.82 or, provided they constitute integral parts of engines or motors, articles of heading 84.83; 16. A conjoint reading of the above provisions indicates that while deciding classification of any goods, one has to bear in mind that the heading which provides the most specific description shall be preferred to headings providing a more general description and that classification sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s imported are polished whereas the appellant claims that as per the Chartered Engineer certificate obtained by them the impugned goods are polished. We find that the report given by the said Chartered Engineer mentions that 5/16 and 7/32 size is rarely used in some special hub applications in bicycles as per the information collected in the survey; sizes 5/8 , 9/16 and 18.6mm are not generally used in bicycles; if they are to be used in bicycles, they should be polished. On going through the certificate issued by the Chartered Engineer, we find that the certificate does not specify whether the impugned Steel Balls are polished and gives an impression that the same is issued on the basis of a survey rather than on technical testing and examination. Moreover, the appellant s request for cross-examination of Shri Rajesh John was declined by the Adjudicating Authority. We are of the considered opinion that not giving an opportunity of cross-examining the Chartered Engineer constitutes violation of principles of natural justice. 19. We find that Hon ble Supreme Court in the case of Krishna Steels (supra) held that with the incorporation of Chapter 6, the item now has to be classified e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le under Chapter heading 84.81 and shall not be eligible for exemption under Notification 62/86. 20. We find that though the above cases are in regards to classification under Central Excise that the general principles of classification remain the same. We find that learned Authorized Representative relies upon the judgment of the Tribunal in the case of National Engineering Industries Ltd. (supra). However, Tribunal in the case of N.H.B. Bearing Ltd. (supra) distinguished the decision in National Engineering (supra) and observing that: 6. We have carefully examined the rival submissions. We may straightaway proceed to examine the case with reference to Chapter Note 6, which we have extracted above. This Chapter Note classifies polished steel balls under Heading No. 84.82 where maximum and minimum diameters of the balls do not differ from the nominal diameter by more than 1% or by more than 0.05 mm, whichever is less. In the instant case, we find that the test report relating to a sample of the subject goods states that the goods are polished steel balls with maximum and minimum diameters not differing from the nominal diameter by more than 1% or by more than 0.05 mm (whichever is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the appellant- importer and seeks to classify the goods as parts of bicycles as they are being used by the manufacturers of bicycles. We find that the classification of any goods should be per se as per the descriptions in the individual headings, related Section/ Chapter notes and under no circumstances on the end use of the product. The impugned order has completely ignored the submission of the appellants that the steel balls are also usable in other industries. Moreover, the Chartered Engineer, on whose certificate Revenue places reliance only makes and averment that the impugned goods are generally used by bicycle manufacturers. It is not the case of the Department that they are solely used by the bicycle manufacturers. Thus, we hold that classification cannot be based on end use. 23. We also find that learned Authorized Representative submits that the appellants in the past have classified the imported steel balls under CETH 8714.9990 and have also accepted their liability in a case of under-valuation booked against them. We find that the appellants cannot be forced to continue the classification they adopted in the past even though it was incorrect. We find that the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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