Customs, Excise and Gold Tribunal - Tamil Nadu
Toyota Tsusho Pvt. Ltd. vs Commissioner Of Customs on 20 July, 2007
Equivalent citations: 2007(122)ECC449, 2007(148)ECR449(TRI.-CHENNAI), 2007(217)ELT521(TRI-CHENNAI)
ORDER P.G. Chacko, Member (J)
1. The appellants had filed a Bill of Entry dated 5.9.2005 for clearance of 54 items imported from Singapore, which included goods declared as 'Beef Leather Cut Pieces Set - TFC 235-SET, in respect of which exemption from duty was claimed under Sl. No. 149 of the Table annexed to Customs Notification No. 21/2002. For the said benefit, they classified the beef leather cut pieces under CTH 4115 20 90. On the basis of 'first appraisal' and examination report of the Department's leather expert, the Customs authorities rejected the classification proposed by the importer and took the view that the goods were finished leather cuttings liable to be classified under CTH 4205 00 90 as articles of leather. Accordingly, the benefit of the Notification was denied to the party, who were directed to pay duty on merits. As the party asked for a speaking order without issue of show-cause notice, they were heard by the Deputy Commissioner of Customs (Group 2), who passed a detailed order and directed them to pay duty of Rs. 22,86,812/- on beef leather cut pieces mentioned at Sl. Nos. 1 and 9 in the Bill of Entry. The appeal filed by the party against the Deputy Commissioner's order did not succeed. The present appeal is against the appellate Commissioner's order.
2. We have examined the records and heard both sides. The goods in question were declared as "beef leather cut pieces set TFC 235 - SET". It appears from the records that 'TFC 235 SET' consisted of 44 cut pieces of different shapes, some of which were roughly rectangular and others were rather irregular. The appellant's counsel displayed a few of these pieces before us. He submitted that the cut pieces in the above set were intended to be parts of seat cover for car. Learned Counsel submitted that it was not in dispute that the finished leather imported by the appellants was cut to a design which could not be used as such as car seat covers. These pieces were to be supplied to automobile manufacturers who would, in turn, stitch them and process them further to get fully finished car seat covers. Merely because the finished leather was cut to a specific design, it would not ipso facto be considered as an article inasmuch as it could not be used as such as a commodity. In this connection, counsel referred to the examination reports of the Shed Appraiser and his Assistant Commissioner, which confirmed that the item under import were in the form of finished leather cuttings meant for making leather seats for car. Counsel also referred to the Tribunal's decision in the case of Saru International v. Commissioner of Central Excise , wherein crust leather was held to be not finished leather as it had to undergo further processing to become finished leather. Similarly, the cut pieces of finished leather imported by the appellants were not to be considered as articles in ready-to-use condition inasmuch as they required stitching and other processing to become car seat covers, articles in ready-to-use condition. It was further submitted that the Revenue's attempt to classify the imported item as articles of leather was not supported by HSN Explanatory Notes either. It was also pointed out that identical goods imported by the appellants through Bangalore airport had been classified under Heading 4115 20 90 and the benefit of Notification No. 21/2002-Cus. extended. Such assessment had not been challenged by the department. According to learned Counsel the customs authorities at Chennai could not take a different view. In this connection, learned Counsel claimed support from the Supreme Court's judgments in the cases of Birla Corporation Ltd. v. Commissioner of Central Excise 2005 (186) ELT 266 (SC), Indian Oil Corporation Ltd. v. Commissioner of Central Excise 2006 (202) ELT 36 (SC) and Commissioner of Central Excise v. Amar Bitumen and Allied Products Pvt. Ltd. 2006 (202) ELT 213 (SC). In all these cases, it had been held that, where the facts of a given case were found to be almost identical to those of a previous case wherein the Revenue had taken a definite stand on the substantive issue, it was not open to them to take a different stand in the subsequent case. Learned Counsel also sought to distinguish the present case from the case of Kirbo Elbert Glove Co. v. Commissioner relied on by the lower appellate authority.
3. Learned JDR reiterated the findings of the Commissioner (Appeals). He referred to HSN Explanatory Notes under Chapter 41 and submitted that, according to these Notes, pieces of leather cut to special shapes were regarded as articles of other Chapters particularly Chapter 42 or 64. In this connection, he also referred to HSN Notes under Heading 42.02 and submitted that articles made of leather or composition leather were not covered under the said heading but classifiable under Heading 42.05. It was argued that functional utility, design, shape and predominant usage had also got to be taken into account while determining classification of an item. As, in the instant case, the finished leather cut pieces were of a design and shape suitable for car seat cover, they required to be classified as an article of leather rather than as waste of leather. In this connection reliance was placed on the Supreme Court's judgment in O.K. Play (India) Ltd. v. Commissioner of Central Excise .
4. After considering the submissions, we note that Chapter 41 of the Tariff covers raw hides and skins (other than furskins) and leather. Headings 4101 to 4103 cover raw hides and skins of certain animals, not tanned or parchment-dressed or further prepared. Tanned or crust hides and skins of animals referred to under Heading 4101 fall under Heading 4104. Tanned or crust skins of animals referred to under Heading 4102 fall under Heading 4105. Tanned or crust hides and skins of other animals fall under Heading 4106. Headings 4107, 4112 and 4113 cover leather further prepared after tanning or crusting. Heading 4114 covers chamois leather and patent leather and patent laminated leather - metalized leather. Then comes Heading 4115 with its sub-headings, reproduced below:
Tariff Item Description of goods (1) (2) 4115
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COMPOSITION LEATHER WITH A BASIS OF LEATHER OR LEATHER FIBER, IN SLABS, SHEETS OR STRIP, WHETHER OR NOT IN ROLLS; FABRICS AND OTHER WASTE OF LEATHER OR OF COMPOSITION LEATHER. NOT SUITABLE FOR THE OF LEATHER ARTICLES; LEATHER DUST, POWDER AND FLOUR 4115 10 00
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Composition leather with a basis of leather or leather fiber, in slabs, sheets or strip whether or not in rolls 4115 20
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Parings and other waste of leather or of composition leather not suitable for the manufacture of leather articles: leather dust, powder and flour.
4115 20 10
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Cuttings of leather 4115 20 90
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Other The appellants have classified the imported item under Heading 4115 20 as parings and other waste of leather or of composition leather, not suitable for the manufacture of leather articles. But leather articles admittedly fall under Chapter 42. The finished leather cut pieces in question were admittedly meant to be used for making car seat covers through stitching and other processes. In other words, the finished leather cut pieces were suitable for the manufacture of car seat covers. But car seat covers have not been classified as articles of leather. Instead, they have been classified under Heading 87.08 as accessories of car seats vide Guru Overseas Pvt. Ltd. v. Commissioner of Central Excise . Contextually, it may also be mentioned that the CBEC has also accepted car seat covers as accessories of motor vehicle under Heading 87.08 vide Circular No. 541/37/2000-CX dated 16.8.2000. As car seat covers are so classified as motor vehicle accessories under Heading 87.08 and not under Chapter 42 as leather articles, it has to be held that the finished leather cut pieces imported by the appellants were not suitable for the manufacture of leather articles. HSN Explanatory Notes under Chapter 41 are to the effect that finished leather in strips or sheets fall in this chapter. Chapter 42 covers articles of leather, which are ready-to-use. By no stretch of imagination can the cut pieces of finished leather imported by the appellants be considered to be ready-to-use articles of leather to be classified in this chapter.
5. For the benefit of exemption from payment of duty in terms of Sl. No. 149 in the Table annexed to Notification No. 21/2002-Cus, it was enough for the appellants to show that what they had imported was finished leather [including splits and sides] of any kind classifiable under Chapter 41. The appellants have been able to make out such a case.
6. The submission of the appellants that identical goods imported by the appellants were classified by the customs authorities at Bangalore under Chapter 41 and the benefit of the above Notification was granted to them has not been contested in this case. Therefore, in view of the apex court's ruling in Birla Corporation's case [which was followed in the cases of Indian Oil Corporation Ltd. and Amar Bitumen& Allied Products Pvt. Ltd. ], the customs authorities at Chennai should have granted the same benefit to the assessee.
In the result, we set aside the impugned order and allow this appeal.
(Operative portion of the order was pronounced in open court on 20.7.2007)