TaxTMI 
TaxTMI 
2025 (6) TMI 374
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....ed the demand of differential basic customs duty under section 28(1) of the Customs Act, 1962 [the Customs Act] with interest under section 28AA of the Customs Act. The Principal Commissioner, however, held that the goods are neither liable for confiscation under section 111(m) of the Customs Act nor penalty can be imposed under section 112(a) (ii) of the Customs Act. 2. The dispute in the present appeal is as to whether Blower, Filter, Water Valve Assembly, Control Panel, Module JCBHP and Thermostat (hereinafter referred to as "goods") are classifiable as parts of air conditioner under CTI 8415 90 00 as claimed by the department or are classifiable under CTI 8414 59 30, CTI 8421 39 90, CTI 8481 10 90, CTI 8538 10 90 and CTI 9032 10 10 as claimed by the appellant. 3. The appellant is engaged in the import, manufacture and sale of parts and accessories of Automobiles Air Conditioning machines. During the period 03.08.2018 to 01.10.2020, the appellant imported the disputed goods and classified them under various Customs Tariff Items indicated above and paid basic customs duty @ 7.5%/15%, social welfare surcharge @10% and Integrated Goods and Service Tax @ 18% in terms of the classi....
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....mobile Air Conditioner. Therefore, it is not disputed that the items under import are specific part/ assembly of Air Conditioner and are suitable for use solely or principally with the Air Conditioner for Automobile only. I find that there is a specific CTH 8415 90 00 in the Customs Tariff Heading to classify the parts of Air Conditioner. The tariff headings being claimed by the noticee, as described above, indicates that the headings claimed by the noticee are not specific to the goods but are "others" under the respective tariff headings, as detailed below: CTH declared in the Bill of Entry Description in the Tariff Findings with reference to Note 2(a) (1) (3) (2) 8414 59 30 "Industrial fans and blowers" under "Other" The Blower imported as parts for automobile a/c cannot be said to be goods included in this heading as firstly the heading claimed is 'other' and it covers 'industrial blowers 8421 29 00 "Other" under Filtering or purifying machinery and apparatus" The filter/ filter coil imported as parts for automobile a/c cannot be said to be goods included in this heading as firstly the heading claimed is 'other' and it covers 'mach....
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....ich provides the most specific description shall be preferred to headings providing a more general description'. Therefore, in the present case the impugned goods being specific part/assembly for Air Conditioner for Automobile only are more specifically covered under Customs Tariff Heading 8415 90 00." (emphasis supplied) 7. Shri B.L. Narasimhan assisted by Shri Shubham Jaiswal, Shri Anurag Kapoor and Shri Ashwin Sundaram made the following submissions: (i) Blowers are correctly classifiable under CTI 8414 59 30. This is because the product comprises mainly of blower wheels, housing and a motor and is designed to deliver large volumes of air at relatively low pressure. The product is specifically covered by name and description under CTI 8414 5930 i.e., "Industrial Fans and blowers". Consequently, by application of Note 2(a) to Section XVI and HSN Explanatory Notes to CTH 8414, it can be concluded that blowers are correctly classifiable under CTH 8414 of the Customs Tariff. The Principal Commissioner was not justified in holding that CTI 8414 5930 covers only industrial blowers. This entry covers both industrial fans and blowers which are two separate categories of product....
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....to Section XVI can be taken only when the goods cannot be classified by the application of Note 2(a). This view is supported by the HSN Explanatory Notes to CTH 8415; (ix) Classification claimed by the appellant earlier would not operate as estoppel in case of the impugned Bills of Entries, as it is a settled principle of law that estoppel is not applicable to matters relating to classification; and (x) Section 3(12) of the Customs Tariff does not borrow interest and penal provisions from the Customs Act. In absence of machinery provisions, no interest can be recovered from the appellant on the IGST demand. 8. Shri Rajesh Singh, learned authorized representative appearing for the department supported the order passed by the Principal Commissioner and made the following submissions: (i) The Principal Commissioner has given good and cogent reasons why Note 2(a) to Section XVI would not be applicable; (ii) CTH 8414 is for fan of different kind and CTI 8414 59 30 is 'Others': of Fan, further sub-divided in blower portable and Industrial Fan and Blower which in itself is complete goods and not as a parts; (iii) As per Chapter Heading of 8421, the filter of A/C i....
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.... It is a device to control temperature automatically in the vehicle. It is essentially used to perform the function of thermostat in air-conditioning machines. In addition to this, one of the components of the device i.e., PCB has IC which is being programmed by the software for operation control. Thermostat This product prevents evaporator from freezing in climate control system. The sensor which detects the temperature is the temperature sensing probe (metallic portion with the wire) which is sensitive to changes in temperature. The electronic part of the thermostat disconnects the voltage supply to the compressor when it reaches the cut-off point. When the temperature again increases above the set point, then it re-engages the compressor. This cycle continues to prevent the evaporator from freezing. Control Panel The product is an injection moulded plastic plate used in the assembly of control panel. Once assembled, it forms the outer cover of the control panel. It does not have any wires or printed circuit boards in the manner in which it is imported. It is designed solely and principally to be used as an outer cover of a control panel. 11. In order to apprecia....
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....f Chapter 84 or 85, would be classified in their respective headings. The same is supported by the HSN Explanatory Notes to CTH 8415 which state that parts of air-conditioning machines have to be classified in accordance with Note 2(a) of Section XVI. Thus, even though the goods are parts of air conditioners, they would continue to be classified under their respective headings in terms of Note 2(a) of Section XVI for the reason that the goods are themselves goods of Chapter 84. Resort to Note 2(b) to Section XVI can be taken only when the goods cannot be classified by the application of Note 2(a). This view is supported by the HSN Explanatory Notes to CTH 8415. 16. The Supreme Court in M/s. Secure Meters Ltd. vs. Commissioner of Customs, New Delhi - 2015 (5) TMI 241-SUPREME COURT observed that Note 2(b) would apply only when Note 2(a) is not applicable. The Supreme Court also held that Note 2(b) would apply only if the items in question are not specifically classifiable under their respective headings. The relevant portion of the order of the Supreme Court is reproduced below: "16. It was sought to be argued by Ms. Kiran Suri that as per Note 2(b), when these LCDs are use....
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....entral Excise, Mumbai v. Unicon Connectors Pvt. Ltd. It is not the case of the Revenue that electric control panels are not goods included in Heading 85.37 of the Central Excise Tariff. Thus applying the Note 2(a) to Section XVI the electric control panels are classifiable under Heading 85.37. Rule (1) of the Rules for the Interpretation of the Schedule also provides that classification shall be determined according to the terms of the Headings and any relevant Section or Chapter Notes. The Explanatory Notes of HSN as pointed out by the learned Advocate, clearly provide that the Rule that the parts which are suitable for solely or principally with particular machines are classifiable in the same Heading as machine, does not apply to parts which in themselves constitute an article covered by a Heading of Section XVI." (emphasis supplied) 18. It would now be useful to examine each of the goods imported by the appellant. BLOWERS 19. The description of goods under CTH 8414 is Air or vacuum pumps, air or other gas compressors and fans; ventilating or recycling hoods incorporating a fan, whether or not fitted with filters. CTI 8414 59 30 is "industrial fans and blowers". Acc....
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....lows: "Taps, cocks, valves etc., remain in this heading even if specialized for use on a particular machine or apparatus, or on a vehicle or aircraft. However, certain machinery parts which incorporate a complete valve, or which regulate the flow of a fluid inside a machine although not forming a complete valve in themselves, are classified as parts of the relative machines, for example, inlet or exhaust valves for internal combustion engines(heading 84.09), slide valves for steam engines (heading 84.12), suction or pressure valves for air or other gas compressors (heading 84.14), pulsators for milking machines (heading 84.34) and non-automatic greasing nipples." 24. Water Well Assemblies imported by the appellant control the flow of coolant (liquid) in the cabin heating system of the vehicle. The product functions like a tap. It is, therefore, specifically covered under CTH 8481 and, would fall under CTI 8481 80 90. Thermostat 25. CTH 9032 covers "automatic regulating or controlling instruments and apparatus." Note 7(a) to Chapter 90 states that all the instruments or apparatus used for automatically controlling the temperature by constantly or periodically measuring....