Custom, Excise & Service Tax Tribunal
M/S. Sandan Vikas (India) Ltd vs C.C. New Delhi (Icd Tkd) on 23 September, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. III
Customs Appeals No. C/53685-53686/2014-Cu[DB]
[Arising out of Order-In-Original No. CC(A)CUS/221-222/2014 dated 24.03.2014 passed by Commissioner of Customs, New Delhi]
For approval and signature:
Hon'ble Mr. S.K. Mohanty, Member (Judicial)
Honble Mr. Ashok K. Arya, Member (Technical)
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
Yes
3
Whether Their Lordships wish to see the fair copy of the Order?
Seen
4
Whether Order is to be circulated to the Departmental authorities?
Yes
M/s. Sandan Vikas (India) Ltd. ...Appellant
Vs.
C.C. New Delhi (icd Tkd) Respondent
Appearance:
Mr. Prabhat Kumar (Advocate) for the Appellant Mr. Govind Dixit, DR for the Respondent CORAM:
Hon'ble Mr. S.K. Mohanty, Member (Judicial) Honble Mr. Ashok K. Arya, Member (Technical) Date of Decision.12.09.2016 Date of Hearing. __________ Final Order No. 53719-53720/2016 Per Ashok K. Arya:
Both the sides have been heard.
2. The matter concerns with the classification of the goods described in the invoice by the appellant as Auto Air Conditioner Resistors. The appellant wants classification under Chapter 8533 whereas the Revenue prefers classification under Chapter heading 84159000.
3. The appellant has been represented by Ld. Advocate Mr. Prabhat Kumar. He, inter alia, mainly pleads as follows:
* Reference is made to the Tariff Entry 8533 showing that item is a Resistor and the item imported being a Resistor could be placed under Chapter heading 85334020 and there cannot be any other Chapter heading for the goods in question.
* Reference is also made to Chapter Heading 8415; there Air Conditioning Machines and in its sub heading 84159000 parts of air conditioners are covered. The subject item is primarily a Resistor, therefore should be classified under Chapter heading 8533.
* Reference is made to HSN Notes to Chapter heading 8533 which say that Resistors are covered here.
* Reference is made to Section Note 2(a) to Section XVI of Customs Tariff where it says that parts which are goods included in any of the headings of Chapter 84 or 85 (excluding certain given Headings) are to be classified in their respective headings. Therefore, the respective heading for the subject item, Resistor is 8533 only.
* Reference is made to the decisions of Hindustan Ferodo Ltd. vs CCE Bombay 1997 (89) ELT 16 (S.C.) & CCE vs Calcutta Steel Industries & Ors. 1989 (39) ELT 175 (S.C.), where it is held that classification under a particular tariff entry is the responsibility of the Revenue. Therefore, if Department does not find the classification given by the appellant appropriate, no fine and penalty can be imposed on it.
* Reference is made to the decision of Prince Marine Transport Services Pvt. Ltd. vs C.C. (Imports), Mumbai 2015 (327) ELT 283 (Tri. Mumbai), where CESTAT Mumbai held that in respect of claim of Classification for a particular heading, it cannot be treated as mis-declaration and goods cannot be confiscated and penalty cannot be imposed.
4. Revenue has been represented by Ld. AR, Sh. Govind Dixit. He, interalia, pleads as follows:
* Goods have been cleared under self assessment with RMS facility. Therefore, it is the responsibility of the appellant for right classification and when classification is wrong, the importer is to be charged for misclassification and goods can be confiscated and penalty is to be imposed.
* The goods namely Auto Air Conditioner Resistor, as declared by the appellant deserve classification under 84159000 as these are sub-assemblies and cannot be called as mere Resistors.
* The appellant wants to claim benefit of Notification No. 24/05-Cus dated 01.03.2005 that is why they wrongly classified the goods under Chapter heading 8533 as it is mentioned at serial No. 3 of the table annexed to the Notification No. 24/2005 (supra).
* Reference is made to Bill of Lading where classification for the goods has been mentioned as H S Code 85362000 When under Bill of Lading classification has been shown as 85362000, the pleading by the appellant for the classification under Chapter heading 8533 is contradictory to the classification made in the bill of lading.
* The appellant has not produced the physical item and its literature before the Tribunal for appreciating the properties etc. of the item to come to arrive at correct classification * The item is having electrical circuit with resistances. It is a safety device used in auto air conditioning system for controlling the functioning of blower motor; blower motor runs at the speeds LO Medium & Hi when current passing through the resistances given in circuit. The goods, therefore, is nothing but parts of AC system and are to be classified under Chapter heading 85149000.
5. The facts of the case along with submissions and the case laws cited have been carefully considered.
6. The importer appellant classified the goods under CTH 85334090 and claimed benefit of Notification NO. 24/2005-Cus, dated 01.03.2005. The appellants main argument is that note 2(a) of Section XVI is clear specifically indicating that only excluded items are to be classified as part of specifically mentioned headings of Chapter 84 or 85 (which are 8409, 8431, 8448, 8466, 8473, 8487, 8503, 8522, 8529, 8538 and 8548) and in all other cases parts have to be classified in their respective headings. In order to make it more clear Note 2(a) to Section XVI is reproduced below:
2.- Subject to Note 1 to this Section, Note 1 to Chapter 84 and to Note 1 to Chapter 85, parts of machines (not being parts of the articles of heading 84.84, 85.44, 85.45, 85.46 or 85.47) are to be classified according to the following rules :
(a) Parts which are goods included in any of the headings of Chapter 84 or 85 (other than headings 84.09, 84.31, 84.48, 84.66, 84.73, 84.87, 85.03, 85.22, 85.29, 85.38 and 85.48) are in all cases to be classified in their respective headings; However, Section Note 2(b) to Section XVI says as under:
(b) Other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 84.79 or 85.43) are to be classified with the machines of that kind or in heading 84.09, 84.31, 84.48, 84.66, 84.73, 85.03, 85.22, 85.29 or 85.38 as appropriate. However, parts which are equally suitable for use principally with the goods of headings 85.17 and 85.25 to 85.28 are to be classified in heading 85.17;
7. We refer to HSN Notes for Chapter 8533; this Chapter covers Electrical Resistors (including rheostats and potentiometers), other than Heating Resistors. HSN Notes to Chapter 8533 inter alia says on the Resistors as follows:
(A) Resistors (resistances). These are conductors whose function is to provide a given electrical resistance in a circuit (e.g. to limit the current flowing). They vary greatly in size and shape, and in the materials of which they are made. (B) Rheostats. These are variable resistors with a sliding contact or other means enabling the value of resistance in the circuit to be varied at will. They include, slide wire rheostats with a cursor sliding over a resistance coil; step-by-step rheostats; hydro-rheostats with movable electrodes immersed in a liquid conductor; automatic rheostats (e.g. with minimum or maximum current or voltage operating mechanisms); and centrifugal rheostats. (C) ..
7.1 From the HSN Notes for Chapter 8533 it does not clearly flow that the item in question namely, Auto Air Conditioner Resistors is to be classified under Chapter Heading 8533. It is true that it (generally) says electrical resistors are to be covered here which could be of different types. In respect of PARTS HSN Notes to Chapter 8533 says as below:
Subject to the general provisions regarding the classification of parts (see the General Explanatory Note to Section XVI), parts of the resistors of this heading are also classified here. Here it refers to General Explanatory Note to Section XVI. When we refer to Section XVI, we find as given in para 6 above Note 2(b) to Section XVI clearly says that if parts are suitable for use solely or principally with a particular kind of machine then such parts are to be classified with the goods (machines) of that kind.
7.2 The item in question is being specifically used in the Auto Air Conditioner as Resistor. There is no dispute that such item is not a mere resistor or an isolated resistor, it is the resistor (sub assembly) meant for use in Auto Air Conditioner. The documents filed by the importer appellant also describes the item specifically as Auto Air Conditioner Resistor though the assessee appellant continuously argues that this item is a mere resistor, which has been claimed to be a regulator for blower fan. Revenue has drawn the attention to the classification given under HS Code 85362000 in one of the documents namely Bill of Lading filed by the assessee appellant with the Customs though neither assessee appellant nor the Revenue (respondent) pleads for the classification of the item under this Chapter sub Heading.
7.3 We have come across one of the leaflets on this item, where it has been mentioned as Car Air Conditioning Module. It mentions two type of resistors, one has been indicated as Flat Type Air Conditioning Resistor another has been mentioned as Power MOS FET Assembly for automatic car air conditioners. We find that subject item is Auto Air Conditioner Resistor which is in the form of sub assembly and is specifically used as part of Auto Air Conditioner or Automatic Air Conditioner System, which is the item manufactured by the assessee appellant. When there is no dispute about the items use and when it is specifically used as a part of Auto Air Conditioning System, it cannot be called a mere Resistor to be classified under Chapter 8533. When a mere resistor is converted into sub assembly which is to be used as part of Air Conditioning System then as per Note 2(b) to Section XVI of Customs Tariff this item (part) is to be classified in Chapter sub-Heading 84159000 only. In other words, when the item in question is specific part of air conditioning system, there is no scope for classification of the product under Chapter 8533 as mere Resistor. Consequently, appropriate classification for the subject item is Chapter sub-Heading 84159000.
8. The impugned order confiscates the item and imposes redemption fine as well as penalty. However there is genuine dispute on the classification of the item. Therefore, following the CESTAT decision in the case of Prince Marine Transport Services Pvt. Ltd. vs C.C. (Imports), Mumbai (supra) and Honble Apex Court decisions in the cases of Hindustan Ferodo Ltd. vs CCE Bombay & CCE vs Calcutta Steel Industries & Ors. (supra), the confiscation of the goods under Section 111(m) and penalty under Section 112(a) of Customs Act are not warranted. Consequently, confiscation, redemption fine and penalty imposed by the impugned orders are hereby set aside.
9. Considering the above discussions and case laws quoted, we partly allow both the appeals in above terms and the appeals are disposed of accordingly.
(Pronounced in the open court on ____________) (Ashok K. Arya) (S. K. Mohanty) Member(Technical) Member (Judicial) Neha 8 | Page C/53685-53686/2014