2025 (2) TMI 691 - AT - Customs

Imported cap sub-assembly for door handles classified under CTH 87082900 not CTH 87089900 despite requiring plastic base material

Aisin Automotive Haryana Private Limited Versus Commissioner of Customs, Delhi

CESTAT New Delhi held that imported cap sub-assembly for door outside handles are classifiable under CTH 87082900 rather than CTH 87089900 as claimed by ... Classification of imported Cap Sub Assembly for Door Outside Handle - classifiable under CTH 87089900 as claimed by the appellant or 8708 2900 as alleged by the Department? - demand of differential duty with interest - HELD THAT:- The appellant had himself described the product as ‘door handles’ in the Bills of Entry. The goods so imported were described as RR door outside handle or FR door handle or outside door handle, clearly specifying the placement of each such door handle. It has been argued before us that the door handle cannot be affixed as such and the plastic base material has to be affixed around its base in order to manufacture door handle. The true test for classification is the test of commercial identity. It has to be ascertained as to how the goods in question are referred to in the market by those who deal with them. In the instant case, the imported goods are door handles for the front door, rear door and in commercially identifiable as such, forming part of the body of the car. The Supreme Court in M/s Thermax Ltd Vs Commissioner of Central Excise, Pune [2022 (10) TMI 468 - SUPREME COURT] has reiterated the view that the HSN code is the bedrock of custom controls and procedures. It has also been held that as per the HSN, classification is done by placing the goods under the most apt and fitting sub-heading. The Appellant had declared goods as 'RR door outside handle or FR door handle or outside door handle'. The CTH 87082900-other parts and accessories of bodies-is a specific description for the imported goods. The door handles are part of door as per Section note 3 of section XVII and HSN Explanatory note B of CTH 87.08 and Rule 3(a) of the GIR. When the appellant has specifically given the description of the goods as door handles at the time of import, mere addition of a plastic material to affix the imported goods on doors does not change its principal use. As per rule 2(a) of GIR, the incomplete/ unfinished door handles has the essential character of the complete or finished door handles. Therefore, the same can be considered as 'finished door handle' and accordingly is liable to be classified under CTH 87082900. Since, the imported goods are for specific use, therefore, considering Rule 3(a) of the GIR, the goods are classifiable under CTH 87082900. The appellant is liable for the differential duty Demand of interest - HELD THAT:- In the instance case, the customs duty had already been deposited at the time of import, hence, interest is not liable to be paid. As regards interest, Supreme Court in the case of Pratibha Processors & Ors vs Union of India & Ors [1996 (10) TMI 88 - SUPREME COURT] has held that “Interest is compensatory in character and is imposed on an assessee who has withheld payment of any tax as and when it is due and payable.” As the differential duty is liable to be paid, hence, the demand for interest is also upheld. Conclusion - The imported goods are correctly classifiable under CTH 87082900, and the appellant is liable for the differential duty and interest. Appeal dismissed. ISSUES PRESENTED and CONSIDEREDThe primary issue in this case was the correct classification of the imported goods, specifically the 'Cap Sub Assembly for Door Outside Handle,' under the Customs Tariff. The appellant contended that the goods should be classified under Customs Tariff Heading (CTH) 87089900, while the Department argued for CTH 87082900. The classification was crucial as it determined the applicable customs duty rate and eligibility for concessional duty under specific notifications.ISSUE-WISE DETAILED ANALYSIS1. Classification of Imported GoodsRelevant Legal Framework and Precedents: The classification of goods under the Customs Tariff is governed by the General Rules for Interpretation (GIR) of the Harmonized System (HSN). Rule 1 emphasizes classification based on the terms of headings and relevant section or chapter notes. Rule 2(a) considers incomplete or unfinished articles as finished if they have the essential character of the complete article. Rule 3(a) prefers specific descriptions over general ones.Court's Interpretation and Reasoning: The Tribunal focused on the commercial identity of the goods and their intended use. It noted that the appellant had described the goods as 'door handles' in the Bills of Entry, indicating their commercial identity. The Tribunal emphasized the importance of the HSN Explanatory Notes and the Supreme Court's guidance on using HSN for classification.Key Evidence and Findings: The appellant argued that the imported goods were not complete door handles and required further processing. However, the Tribunal found that the goods were primarily designed for use as door handles for specific motor vehicles, satisfying the criteria under Rule 2(a) of the GIR.Application of Law to Facts: The Tribunal applied Rule 2(a) and 3(a) of the GIR, concluding that the goods, even if unfinished, had the essential character of door handles. The specific description under CTH 87082900, as parts of bodies, was preferred over the more general CTH 87089900.Treatment of Competing Arguments: The appellant's argument that the goods required additional processing was addressed by the Tribunal, which noted that the commercial identity and principal use as door handles were decisive. The Tribunal also dismissed the appellant's reliance on prior decisions, emphasizing the specific facts and commercial identity of the goods.Conclusions: The Tribunal concluded that the goods were correctly classifiable under CTH 87082900 as parts of vehicle bodies, and the appellant was not entitled to the concessional duty under the contested classification.2. Interest on Differential DutyRelevant Legal Framework and Precedents: Section 28AA of the Customs Act provides for interest on delayed payment of duty. The principle is that interest is compensatory for withholding payment of due taxes.Court's Interpretation and Reasoning: The Tribunal upheld the demand for interest, citing the Supreme Court's ruling that interest is due when tax is payable. The Tribunal found that since the differential duty was payable, the interest was also applicable.Key Evidence and Findings: The appellant argued that interest should not apply as the duty was paid at the time of import. However, the Tribunal found that the differential duty was indeed due, justifying the interest demand.Application of Law to Facts: The Tribunal applied the principle that interest is compensatory and arises when duty is short-paid or not paid when due.Treatment of Competing Arguments: The appellant's argument against interest was dismissed based on the established legal principle that interest is due when duty is payable.Conclusions: The Tribunal upheld the interest demand as the differential duty was payable.SIGNIFICANT HOLDINGSCore Principles Established: The Tribunal reinforced the principle that classification should be based on the commercial identity and principal use of the goods, as guided by the HSN Explanatory Notes and the GIR. Specific descriptions in tariff headings are preferred over general ones.Final Determinations on Each Issue: The Tribunal determined that the imported goods were correctly classifiable under CTH 87082900, and the appellant was liable for the differential duty and interest. The appeal was dismissed, upholding the impugned order.