TaxTMI 
TaxTMI 
TaxTMI 
2025 (2) TMI 380
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....f transportation of passengers and goods by air from various places in India and outside India. To carry out scheduled operations in India, the appellant imports aircrafts and their parts. The appellant also imports aircraft engines with engine stands, when required for repair, maintenance or otherwise. 3. The dispute pertains to classification of such aircraft engine stands imported with engines by the appellant during the period from April, 2018 to March, 2019. 4. During the relevant period, the appellant imported engine stands under CTI 7310 29 10/ 7310 29 90 on payment of basic customs duty @ 10% and IGST @ 18%/ 12%. The classification adopted by the appellant was for the first time objected to by the department in November 2018 for the import made by a Bill of Entry dated 19.11.2018. According to the department, the classification of aircraft engine stands should have been under CTI 8716 39 00, which covers trailers / semi-trailers. 5. The appellant objected to such re-classification by a protest letter dated 10.12.2018, but the appellant claims that due to commercial reasons it had to clear the consignment as per the classification revised by the department on payment of d....
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....f 8716 10 00 - Trailers and semi-trailers of the caravan type, for housing or camping u 10% - 8716 20 00 - Self-loading or self-unloading trailers and semi-trailers for agricultural purposes u 10% - - Other trailers and semi-trailers for the transport of goods: 8716 31 00 -- Tanker trailers and tanker semi-trailers u 10% - 8716 39 00 -- Other u 10% - 8. A show cause notice dated 13.06.2019 was issued to the appellant and paragraphs 4 and 5 of the show cause notice are reproduced: "4. However, an engine stand is a tool commonly used to repair large heavy gasoline or diesel engines. It uses a heavy cantilevered support structure to hold the engine in midair so that the mechanic has access to any exposed surface of the engine. Engine stands are typically mounted on large casters so that an engine can be moved around to different test and repair stations, and the engine can often be rotated in midair to provide easier access to underside surfaces of the engine. A caster is a wheeled device typically mounted to a larger object that enables relatively easy rolling movement of the object. Caster....
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....ed in the repair shop or while installation / removal from the aircraft. The engine stand allows limited mobility within the repair workshop and for adjustment of direction for easy access to all sides of the engine. The images are given above already and detailed explanation of the functioning of the engine stand is also given above in the facts. B.6 It is humbly submitted that the essential character of aircraft engine stands is given by the cradle holder which is used to accurately grip and secure the engine and not by the caster wheels. It may be noted that the aircraft engine stands are principally used as a safety guard for the engine. The reasons are given below: (i) The impugned engine stands are essential and mandatory for safely transporting engines either by truck, sea or air. In fact, engine stands are always prescribed by the engine manufacturers to be used for safe transportation of the engines. Specific engine preservation requirements are described in the Engine Maintenance Manual or airframe manual. Pratt & Witney's (Supplier's) instructions on transportation of engine are enclosed as Annexure-7. The instruction clearly provides that recommended transport of ....
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....rcraft engine stand is not a container. The relevant portions of the order are reproduced below: "10.10 Thus, I find that the Explanatory Notes to CTH 8609, specifically covers only different types of containers, which may be open, closed, specially designed for fluids, cubical or cylindrical and usually vary in size from 4 to 45m3 capacity. Here, it is important to note that this chapter does not cover any casters, or mechanically propelled/ non- mechanically propelled vehicles or sledges/special sleds running on timber trackways that may be joined with another vehicle for transportation from one place to another placed for safe movement. 10.11 Thus, from the above, I am of the view that the main feature of the impugned item is to move the aircraft engine from one place to another place in a safe manner and therefore, these are not containers as described under CTH 8609. 10.13 Moreover, I have noted that the importer, in his reply dated 05.11.2019, have stated that HSN Explanatory Notes of 8609 also provide that such containers may also contain casters and caster is a wheel which is free to swival about on axis on right angles to the axis of the wheel, used to support tru....
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....mporter's contention that the presence of castor wheels does not give essential character to the engine stand and its function is ancillary to the main function of securely holding and protecting the engine during transportation. ***** 10.21 I am of the view that the transportation/ movement with or without wheels is the essential characteristics of goods of CTH 8716 and simultaneous reading of HSN Explanatory Notes for CTH 8716 with the GI Rules as well as essential characteristics of item, I am of the view that the goods are appropriately covered under CTH 8716." (emphasis supplied) 12. The Principal Commissioner ultimately, by the order dated 30.01.2020, held that as the appellant had misclassified the imported goods, it resulted in short levy of customs duty which was, therefore, directed to be paid by the appellant with interest. 13. This order dated 30.01.2020 passed by the Principal Commissioner has been assailed in this appeal. 14. Shri B.L. Narasimhan, learned counsel for the appellant assisted by Ms. Jyoti Pal and Ms. Anjali Singh made the following submissions: (i) The aircraft engine stands were correctly classified by the appellant under CTI 8609 ....
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....st under section 28AA of the Customs Act. 16. The submissions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the department have been considered. 17. The issue that arises for consideration in this appeal is regarding classification of aircraft engine stands. For this purpose, it would be useful to first consider the description of aircraft engine stands. 18. According to the appellant, aircraft engine stands are made of welded steel frames and are fabricated from structural-steel shapes. It comes with attachment parts such as structural bolt, which are made of high strength corrosion resistant, SAE grade hardware. It comprises of miscellaneous units such as two-bar, rings, lock pins and shock mounts. The aircraft engine stands, and its units are primed and paint-protected with a resistant enamel. They are specifically designed to support an engine with or without the Engine Build Unit. The aircraft engine stands majorly comprise of a base, a cradle set and caster wheels for ease of movement of the stand with engine on it. The cradle supports the engine and is mounted to the base through a shock attenuation system which....
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....erent modes of transport i.e., by land, air and sea. The engine stand comprises of a cradle (holder), a base and four caster wheels. The cradle holds the engine safely and prevents impact of any shock or jerk to the aircraft engine during transportation. An engine is kept on engine stand even while it is getting repaired in the repair shop or during installation/removal from the aircraft. An engine stand allows limited mobility within the repair workshop for adjustment of direction for easy access to all sides of the engine. It is, therefore, moved along with the engine right from its loading on to a truck, vessel or aircraft till the time it is unloaded and even during repairs. 23. The GI Rules provide that the classification of goods shall be governed by the following principles: "1. The titles of sections, Chapters and Sub-Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions: 2. (a) Any reference in a heading to an article shall be taken to ....
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....aracter of an aircraft engine stand is given by the cradle/holder which is used to accurately curb and secure the engine and not by the caster wheels. This is apparent from the fact that an aircraft engine stand is essential and mandatory for safely transporting the engines by road, sea or air. In fact, engine manufacturers mandate that engine stands should be used for safe transportation of engines. The shape of the cradle is specific to the engine and designed to provide grip to the engine so that the engine does not move during transportation. Engine stand also contain a shock attenuation system, which dampens shock loads introduced to the engine during transportation. The cradle is mounted to the stand base through this shock attenuation system. An engine stand does not by itself enable transportation of engines but is placed on another mode of transportation, be it a truck for road transportation, aircraft for air transportation, or a vessel for sea transportation. An engine stand is not designed to be used on concrete roads for taking the engine from one place to another. Caster wheels installed on an engine stand only enables limited mobility and that too only on smooth surf....
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....e and size in which goods are enclosed for transport on a lorry, train or ship" (iii) Oxford Dictionary of English (3rd Ed.)- "an object for holding or transporting something" 30. In G. Claridge & Company Ltd. Vs. Collector of Central Excise [1991 (52) E.L.T. 341 (S.C.)], the Supreme Court considered the meaning of the term "container" and the relevant portion of the judgment is reproduced below: "9. The above definitions would show that the expression 'container' is used in three different senses: in a broad sense, it means a receptacle which contains; in a narrower sense, it means a receptacle in which articles are covered or enclosed and transported; and in a more limited sense, it means enclosures used in shipping or railway for transport of goods. If used in a broad sense, 'container' would include a tray because it is receptacle which contains articles and, therefore, an egg tray would be a 'container'. But an egg tray would not be a 'container' in a narrower sense because articles placed in it are not covered or enclosed and they cannot be transported as such. It is, therefore, necessary to ascertain whether the expression 'container' in Item 17 of the old Tariff ....
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....apply the narrow meaning of the term "container" as against the broad meaning as discussed by the Supreme Court in G. Claridge & Company Ltd. 33. Thus, a product would merit classification under CTH 8609 if it fulfills the following conditions: (i) It must be a container, which can be of any type, including an open container. (ii) It must be a packing receptacle that is specially designed and equipped for carriage by one or more modes of transport i.e. road, rail, water or air. (iii) It must be equipped with fittings (hooks, rings, casters, supports, etc.) to facilitate handling and securing on the transporting vehicle, aircraft or a vessel. 34. Engine stand is a form of an open container as it holds/ contains the engine during its transportation/ repair process. Engine stand is specially designed for safely transporting the aircraft engines through different modes of transport, i.e., by truck, air and sea. Engine stand is in fact called as 'engine transport stand' denoting that it is a stand to be used during the transportation of aircraft engines. This is because the stand comes with a shock attenuation system to ensure safe transportation of the engine by avoidi....