2026 (1) TMI 406 - AT - Customs

Imported pressure relief valves for common rail fuel injection systems classified under CTI 8481 40 00; appeal allowed.

Pressure relief valves imported for use in a common rail fuel injection system were held classifiable as 'safety or relief valves' under CTI 8481 40 00, ... Classification of 'pressure relief valves' used in a common rail fuel injection system - function of valves described in the HSN Explanatory Notes - classifiable as 'Safety or relief valves' under CTI 8481 40 00, or as 'parts suitable for use solely Or principally with diesel engines for motor vehicles' under CTI 8409 99 41 - HELD THAT:- It would be seen that machinery parts which are complete valves in themselves are not excluded from the scope of CTH 8481. The goods involved in the present appeal are complete valves and are not machinery parts incorporating a valve. The goods are also not machinery parts performing the function of valve. It also needs to be noted that they do not regulate the flow of any fluid, since they only relieve excess pressure, when required. It will now be appropriate to examine whether the goods are classifiable under CTI 8409 99 41. It is seen that CTH 8409 covers parts suitable for use solely or principally with the engines of heading 8407 or 8408. CTI 8409 99 41 covers goods which are parts suitable for use solely or principally with the diesel engines for motor vehicles. Section Note 2 to Section XVI can be taken note of as it lays down provisions to classify parts of goods of Chapter 84 and 85. In the present case, the goods are covered under Section Note 2(a) as there is a specific heading for valves, which are specifically covered under CTI 8481 40 00. The Commissioner (Appeals) has recorded a finding that CTH 8409 is excluded from the purview of Section Note 2(a). To examine this, it will be necessary to examine HSN Explanatory Note to Part-II for Section Note 2 of Section XVI. It clearly provides that parts which constitute a part are to be classified in their own respective heading even if it is specifically designed to work as part of a specific machine. The HSN Explanatory Notes to Section XVI explain the scope of Section Note 2 and provide that valves are classifiable under CTH 8481 even if it is a ‘part’. Only if parts cannot be classified as per Section Note 2(a), recourse has to be made to Section Note 2(b) which states that parts other than those covered by Section Note 2(a), 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 8479 or 8543) are to be classified with the machines of that kind or in CTH 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate. The Commissioner (Appeals) has also held that the appellant had only quoted partial HSN Explanatory Notes to CTH 8481 and if the complete Note is read, machinery parts which regulate flow in a machine, though not complete valves in themselves are to be classified as part of a machine. It would be seen that machinery parts which are complete valves in themselves are not excluded from the scope of CTH 8481. The goods involved in the present appeal are complete valves and are not machinery parts incorporating a valve. The goods are also not machinery parts performing the function of valve. It also needs to be noted that they do not regulate the flow of any fluid, since they only relieve excess pressure, when required. Thus, the pressure relief valves imported by the appellant cannot not be classified under CTI 8409 99 41. Thus, the pressure relief valves imported by the appellant were correctly classified by the appellant under CTI 8481 40 00. The Commissioner (Appeals) committed an error in classifying them under CTI 8409 99 41. Appeal is, accordingly, allowed. 1. ISSUES PRESENTED AND CONSIDERED (i) Whether 'pressure relief valves' used in a common rail fuel injection system are classifiable as 'Safety or relief valves' under CTI 8481 40 00, or as 'parts suitable for use solely or principally with diesel engines for motor vehicles' under CTI 8409 99 41. (ii) Whether, applying Section Note 2 to Section XVI and the HSN explanatory treatment discussed by the Court, the goods must be classified in their own specific heading as valves (CTH 8481) notwithstanding their specialised use in an internal combustion engine system, thereby excluding resort to CTH 8409 as a parts heading. 2. ISSUE-WISE DETAILED ANALYSIS Issue (i): Correct tariff classification of pressure relief valves (CTI 8481 40 00 vs. CTI 8409 99 41) Legal framework (as discussed by the Court): The competing headings examined were CTH 8481 (covering taps, cocks, valves and similar appliances for pipes 'or the like', including safety or relief valves) and CTH 8409 (covering parts suitable for use solely or principally with engines of headings 8407/8408, with CTI 8409 99 41 for other parts of diesel engines for motor vehicles). The Court also considered the HSN explanatory description of valves under heading 84.81 to the extent it was applied to the goods' function and placement. Interpretation and reasoning: The Court accepted the functional description that the goods open automatically by spring action only when pressure in the common rail exceeds prescribed limits, releasing excess pressure into the fuel tank, and that they have no regulating/controlling function in normal operation. On this basis, the Court found the goods perform the essential function of 'relief valves' as contemplated under heading 8481. The Court further held that the goods are used at the end of the common rail, which is a metallic pipe, and therefore satisfy the 'pipes or the like' requirement; the Commissioner (Appeals)' conclusion that the goods were not used on 'pipes... or the like' was held incorrect. The Court also applied the principle that valves remain under heading 8481 even if specialised for use on a particular machine, treating the goods as complete valves rather than mere engine parts. Conclusions: The goods are correctly classifiable as 'Safety or relief valves' under CTI 8481 40 00, and not under CTI 8409 99 41. Issue (ii): Effect of Section Note 2 to Section XVI and the 'parts' rules-whether classification must remain under the specific valve heading (8481) rather than the engine-parts heading (8409) Legal framework (as discussed by the Court): The Court analysed Section Note 2 to Section XVI, particularly that (a) directs classification of parts that are goods included in headings of Chapters 84/85 in their respective headings, while (b) applies only where the part is not classifiable under (a) and is suitable for use solely/principally with a particular machine, in which case it may be classified with that machine or in the relevant parts heading (including 8409). The Court also relied on the explanatory treatment it reproduced regarding parts that 'in themselves constitute an article covered by a heading of this Section' being classified in their own heading even if specially designed for a specific machine, and that this rule applies to valves. Interpretation and reasoning: The Court held that where the item is itself a complete article covered by a specific heading in Section XVI (here, a valve under heading 8481), it must be classified in that specific heading, even if it is designed for exclusive use in a particular machine/system. Consequently, resort to the 'parts' heading 8409 arises only if the goods cannot be classified under Section Note 2(a). The Court rejected the approach that treated the goods as engine parts merely because they are used in a fuel injection system, and further reasoned that the exclusion contemplated in the HSN discussion for certain 'machinery parts' did not apply because the goods are complete valves and are not machinery parts incorporating a valve or incomplete parts merely performing a valve-like function. The Court also emphasised that the goods do not 'regulate' flow; they relieve excess pressure when required, reinforcing their treatment as relief valves rather than engine-part components falling into 8409 by default. Conclusions: By applying Section Note 2(a) and the Court-applied explanatory approach, the pressure relief valves must be classified under CTH/CTI 8481 40 00; classification under CTI 8409 99 41 was held unsustainable and was set aside.