The Authority cannot deny classification of the Car Seat Components under CTH 9401 against the Rulings passed by the Superior Courts

The Hon'ble CESTAT, Principal Bench, New Delhi, in M/s Shiroki Automobiles India Pvt. Ltd. (Now known as Toyota Boshoku Device India Pvt. Ltd.) Versus Commissioner of Customs, Delhi - 2026 (4) TMI 1289 - CESTAT NEW DELHI held that specialized components like track assemblies and gear vertical adjusters are correctly classifiable as "parts of seats" under Customs Tariff Items ("CTI") 9401 90 00 rather than as "parts of motor vehicles" under Customs Tariff Heading ("CTH") 8708.

Facts:

• M/s. Shiroki Automobiles India Pvt. Ltd. ("the appellant") imported four specific goods: (i) Track assembly, (ii) Brake/case sub assembly, (iii) Gear Vertical adjuster, and (iv) Bar seat track lock. The appellant classified these goods under CTI 9401 90 00 as "parts of seats" because they are supplied to car seat manufacturers and form an integral part of the seat mechanism for movement and comfort.
• The Revenue alleged that these parts were specific to automobile parts and should be classified under CTI 8708 99 00 as "parts and accessories of motor vehicles". The revenue issued a Show Cause Notice ("SCN") demanding differential duty and holding that the goods are classifiable under CTI 9401 90 00.
• Despite putting reliance upon the decision of the Ahmedabad Bench of the Tribunal in Shiroki Auto Components India Pvt Limited Versus Commissioner of Central Excise & ST, Ahmedabad - 2020 (7) TMI 706 - CESTAT AHMEDABAD classifying a similar product in CTI 9401, the Order in original ("impugned order") ordered the classification under CTH 8708 and demanded differential duty under section 28(4) of the Customs Act, 1962 ("the Act") with interest under section 28AA of the Act. Against the impugned order, this appeal has been filed before the CESTAT Principal bench.

Issues:

• Whether the imported goods are classifiable as "parts of seats" under CTI 9401 or "parts and accessories of motor vehicles" under CTI 8708?
• Whether the Commissioner, through the impugned order, acted in breach of judicial discipline in not following the decision of Shiroki Auto (Supra)?

Held:

The Hon'ble CESTAT, Principal Bench, New Delhi, in M/s Shiroki Automobiles India Pvt. Ltd. (Now known as Toyota Boshoku Device India Pvt. Ltd.) Versus Commissioner of Customs, Delhi - 2026 (4) TMI 1289 - CESTAT NEW DELHI held as under:

• Observed that the appellant had been selling the imported parts directly to the car seat manufacturers and not to the car manufacturers. As noted above, 'track assembly' is an integral part of a complete seat and is supplied to a car seat manufacturer for the manufacture of the seats. 'Gear vertical adjuster' is affixed in a car seat at a particular location along with brake seat lifter. 'Track assembly' helps in the upward and downward seat adjustment. 'Bar seat track lock' is used to lock the position of the seat at the required position.
• held that, it cannot, therefore, be doubted that all four parts imported by the appellant are parts of car seats and cannot be described as 'parts' and 'accessories' of motor vehicles. Therefore, correctly classified the goods under CTI 9401 90 00 as 'parts of seats'
• Noted that in the appellant's own previous case, Shiroki Auto (Supra), the Ahmedabad Bench had already held that such "child parts" are classifiable under CTI 9401 90 00, a decision which was upheld by the Hon'ble Supreme Court. Also, the decision had not been set aside by the High Court or the Supreme Court. The Commissioner was bound to follow this decision.
• Relied on the judgment of the Supreme Court in COMMISSIONER OF INCOME-TAX Versus RALSON INDUSTRIES LTD. - 2007 (1) TMI 89 - Supreme Court, and KAUSALYA DEVI BOGRA Versus LAND ACQUISITION OFFICER AURANGABAD - 1984 (2) TMI 349 - Supreme Court, in which it has been observed that when an order is passed by a higher authority, the lower authority is bound to follow it, keeping in view the principles of judicial discipline.

The Tribunal set aside the reclassification and the demand for the extended period, allowing the appeal with consequential relief.

Relevant Sections & Headings:

• CTH 9401: SEATS (OTHER THAN THOSE OF HEADING 9402), WHETHER OR NOT CONVERTIBLE INTO BEDS, AND PARTS THEREOF
• CTH 8708: PARTS AND ACCESSORIES OF THE MOTOR VEHICLES OF HEADINGS 8701 TO 8705