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TMI Blog2023 (12) TMI 386X X X X Extracts X X X X X X X X Extracts X X X X ..... 9900 as accessories of vehicles by the original authority. However, on appeal, the Commissioner (Appeals) observed that smartra components are made up of digital circuit with the character interface and the device directs electronic signals between the engine management system and the transponder and once the car engine is stopped the EMS immobilises the vehicle by disabling control of the spark ignition circuit and fuel supply. Going by the Australian Customs Authority's classification, the Commissioner (Appeals) classified the said item under 8536 5090. The department is in appeal against this impugned order. 2. On behalf of the Revenue, the Authorised Representative submitted that as per the catalogue provided by the supplier, "electronic control unit (Smartra)" is a part of a vehicle engine immobiliser system. Vehicle immobiliser greatly reduces the chance of a vehicle being stolen by preventing engine start if a previously electronically registered key is not presented. Smartra is one key component in vehicle immobiliser system. Immobiliser functionality: after engine stops, vehicle is immobilised after a short period of time, authentication must be repeated to mobilise the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) ELT 301 (Tri.-Mumbai) to state that Rulings of the U.S. Customs had great persuasive value on the classification and hence, the Australian Tariff Advice issued for the imported item was relevant in deciding the classification which has been rightly done by the Commissioner (Appeals) in the impugned order. 4. Heard both sides and perused the records. There is no dispute on the technical aspects of the item imported and the function of the said item that it is being used in the vehicles as an antitheft device and for security purpose. The question now arises whether it is classifiable under Chapter Heading 8701 as 'part/accessory of a motor vehicle' or as a 'switch' under Chapter Heading 8536. 5. The rival entries reads as under: 8536 Electrical apparatus for switching or protecting electrical circuits, or for making connections to or in electrical circuits (for example, switches, relays, fuses, surge suppressors, plugs, sockets, lamp-holders and other connectors, junction boxes), for a voltage not exceeding 1,000 volts : connectors for optical fibres, optical fiber bundles or cables. 8536 10 - Fuses : 8536 20 - Automatic circuit breakers : 8536 41 00 - Other apparatus for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted are neither a machinery nor an equipment but an accessory to be used in a vehicle for security purpose. 6. The HSN Explanatory Notes in respect of Tariff Item 8708 are reproduced below:- "This heading covers parts and accessories of the motor vehicles of headings 87.01 to 87.05, provided the parts and accessories fulfil both the following conditions : (i) They must be identifiable as being suitable for use solely or principally with the above-mentioned vehicles; and (ii) They must not be excluded by the provisions of the Notes to Section XVII (see the corresponding General Explanatory Note)." 7. As per above Explanatory Notes, both the conditions prescribed under Clauses (i) and (ii) needs to be fulfilled for classifying parts and accessories of motor vehicle. As per clause (ii), parts and accessories must not be excluded by the provisions of Notes of Section XVII. The Smartra Immobilser undoubtedly is used only in the vehicles for antitheft purpose and it is not excluded by the provisions of the Notes to Section XVII, thus, satisfying both the conditions as discussed supra. 8. As per the HSN Notes to Chapter Heading 8536 covers electrical apparatus for a voltage not e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven if identifiable as for the articles of this Section, are excluded if they are covered more specifically by another heading elsewhere in the Nomenclature, 10. As seen above the exclusions under Part A (k) as claimed by the respondent is not applicable and Part C excludes parts and accessories even if identifiable as for the articles of this Section are excluded if they are covered more specifically by another heading elsewhere in the nomenclature and this heading specifically excludes vehicle seats of heading 9401 but not a security device or an antitheft device. Therefore, it is seen that Part A and Part C are not applicable to the relevant items and Part B clearly establishes that it is rightly classifiable under CTH 8708 based on its principal use. Hence the reliance placed on the decision of Intel Design Systems (India) Pvt. Ltd. (supra) by the respondent is of no help since it does not satisfy the criteria laid down for classifying the item under 8536. 11. The Hon'ble Supreme Court of India in the case of C. EX, Delhi Versus Insulation Electrical (P) Ltd.: 2008 (224) E.L.T. 512 (S.C.) dated 27-3-2008 while dealing with the classification of Rail Assembly Front Seat (Omni) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the car." 12. The Hon'ble Supreme Court of India in the case of Westinghouse Saxby Farmer Ltd. Versus Commissioner of C. EX., Calcutta: 2021 (376) E.L.T. 14 (S.C.) dated 08-03-2021 was dealing with the question Whether the "Relays" manufactured by the appellant used only as Railway signaling equipment would fall under Chapter 86, Tariff Item 8608 as claimed by the appellant or under Chapter 85 Tariff Item No. 8536.90 as claimed by the Department. In the regard the Hon'ble apex court observed that : "--- it is necessary first to see the description of the goods that fall under Chapter 85 and Chapter 86 with particular reference to the relevant Tariff Items thereunder. Chapter 85 covers goods, described as "Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles." Chapter Heading 8536 covers "Electrical apparatus for switching or protecting electrical circuits, or for making connections to or in electrical circuits (for example, switches, relays, fuses, surge suppressors, plugs sockets, lamp-holders and other connectors, junction boxes), for a voltage not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ombinations of a material or substance. Rule 3 deals with cases where goods are classifiable under two or more sub-headings. But Rule 3 begins with a reference to Rule 2(b). Therefore, it is necessary to extract Rule 2(b) and Rule 3 together. They read as follows : "2.(a) xxxx (b) Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles of Rule 3. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich the expressions "parts" and "parts and accessories" mentioned in Chapter 86 do not apply. Note 2(f) reads as follows :- "(1) xxxx (2) xxx (a) xxxx (b) xxxx (c) xxxx (d) xxxx (e) xxxx (f) electrical machinery or equipment (Chapter 85)". Note 2(f) is relied upon by the Revenue, in view of the fact that Chapter Heading 8608 uses the words "parts of the foregoing" after the words "Railway or tramway track fixtures and fittings" etc. Chapter Heading 8608 does not specifically mention "electrical relays". The assessee's contention is that "it is part of the railway signalling safety or traffic control equipment" and that, therefore, Relays manufactured by them would fall under Chapter Heading 8608 due to the usage of the word "parts". It is this contention that is sought to be repelled by the Authorities by relying upon Note 2(f) of Section XVII. Though at first blush, Note 2(f) seems to apply to the case on hand, it may not, upon a deeper scrutiny. Note 3 of Section XVII reads as follows : "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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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