2023 (12) TMI 386 - AT - Customs

Smartra Immobilisers classified under Chapter Heading 8708 9900 as vehicle accessories not automatic regulating instruments

CESTAT Bangalore held that Smartra Immobilisers should be classified under Chapter Heading 8708 9900 as vehicle accessories rather than under 8536 5090 as ... Classification of parts and accessories of motor vehicles - classification as electrical apparatus for switching - sole or principal use (user test) - General Rules for the Interpretation of the First Schedule (predominant/essential character rule) - HSN Explanatory Notes and Section XVII exclusionsClassification of parts and accessories of motor vehicles - HSN Explanatory Notes and Section XVII exclusions - sole or principal use (user test) - Whether the imported Smartra immobiliser is classifiable as a part/accessory of a motor vehicle under Chapter Heading 8708 or as electrical apparatus for switching under Chapter Heading 8536. - HELD THAT: - The Tribunal accepted the undisputed technical character of the Smartra immobiliser as an anti theft security device used solely in motor vehicles to prevent engine start unless an authorised transponder key is presented. The HSN Explanatory Notes to heading 8708 require that parts and accessories (i) be identifiable as suitable for use solely or principally with motor vehicles and (ii) not be excluded by the Notes to Section XVII; both conditions are satisfied. The Tribunal examined Section XVII notes and the exclusions relied upon under Note 2(f) (exclusion of electrical machinery or equipment of Chapter 85) and found them inapplicable because the Smartra's sole/principal use is as a vehicle accessory. Applying the user/principal use test (as explained in case law and the General Rules), articles suitable solely or principally for use with vehicles must be classified in Chapter 87 despite possible coverage by Chapter 85 entries. The HSN Notes to Chapter 8536 describe apparatus for switching or protecting electrical circuits generally used for dwellings or industrial equipment; the Tribunal held that the immobiliser, being a vehicle security accessory and not merely a generic switch, is not classifiable under 8536. Reliance on persuasive foreign tariff advice was rejected where primary classification criteria and Section/Chapter Notes determine classification. On these grounds the Tribunal concluded that the Smartra immobiliser is classifiable under Chapter Heading 8708 as parts and accessories of motor vehicles. [Paras 7, 8, 10, 13, 14]The Smartra immobiliser is classifiable under Chapter Heading 8708 as a part/accessory of a motor vehicle and not under Chapter Heading 8536.Final Conclusion: The appeal is allowed: the impugned order classifying the Smartra immobiliser under Chapter Heading 8536 is set aside and the goods are held to be classifiable under Chapter Heading 8708 as parts/accessories of motor vehicles. Issues Involved:1. Classification of Smartra Immobilisers under Chapter Heading 8536 or 8708.2. Applicability of HSN Explanatory Notes and relevant case laws.Summary:Issue 1: Classification of Smartra Immobilisers under Chapter Heading 8536 or 8708The respondent, M/s. Bosch Limited, imported Smartra Immobilisers and classified them under Chapter Heading 8536 5090 as automatic regulating and controlling instruments. The original authority reclassified them under Chapter Heading 8708 9900 as vehicle accessories. The Commissioner (Appeals) reverted to the classification under 8536 5090, aligning with the Australian Customs Authority's classification. The department appealed against this order.Issue 2: Applicability of HSN Explanatory Notes and relevant case lawsThe Revenue argued that Smartra Immobilisers, being antitheft devices, should be classified under Chapter Heading 8708 9900, as they do not function as switches. The respondent contended that the devices are electronic chips that switch on the EMS upon receiving the correct signal, thus fitting under Chapter Heading 8536. They relied on HSN Explanatory Notes and several case laws to support their classification.Judgment:1. Technical Function and Classification: The Tribunal noted no dispute on the technical aspects and function of the Smartra Immobiliser as an antitheft device. It emphasized that the device is used solely in vehicles for security purposes and does not fit the description of electrical apparatus under Chapter Heading 8536.2. HSN Explanatory Notes: The Tribunal referred to HSN Explanatory Notes, which state that Chapter Heading 8536 covers electrical apparatus for a voltage not exceeding 1000 volts, generally used for dwellings or industrial equipment. The Smartra Immobiliser, being a vehicle security device, does not fit this description.3. Relevant Case Laws: The Tribunal cited the Supreme Court judgments in C. EX, Delhi Versus Insulation Electrical (P) Ltd. and Westinghouse Saxby Farmer Ltd. Versus Commissioner of C. EX., Calcutta, which emphasized the principal use test for classification. The Tribunal concluded that the Smartra Immobiliser's principal use as a vehicle accessory for security purposes justifies its classification under Chapter Heading 8708.4. Final Classification: The Tribunal ruled that the Smartra Immobiliser is rightly classifiable under Chapter Heading 8708 as parts and accessories of motor vehicles, satisfying both conditions prescribed under HSN Explanatory Notes for this heading. The appeal was allowed, and the impugned order was set aside.Conclusion:The Tribunal concluded that the Smartra Immobiliser, being a security device used solely in vehicles, should be classified under Chapter Heading 8708 as parts and accessories of motor vehicles. The appeal was allowed, and the impugned order was set aside.