TaxTMI 
TaxTMI 
2024 (12) TMI 1663
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....namely "Resistor Blower", imported vide Bills of Entry as shown in the Annexures-A to F to the Show Cause Notice, is classifiable under CTH 8415 90 00 of the Customs Tariff Act, 1975 for the purpose of levy and collection of Customs duty c) I deny the benefit of exemption from Customs duty under Notification No. 24/2005-Cus (S.N. 21) dated 01.03.2005 claimed by the importer noticee M/s Subros Ltd., LGF, World Trade Centre, Barkhambha Lane, New Delhi, on the item "Resistor Blower" imported vide Bills of Entry as shown in the Annexure-A to F to the Show Cause Notice; d) I hereby confiscate the goods namely "Resistor Blower" imported vide Bills of Entry as shown in Annexure-A to F to this SCN totally valued at Rs. 47,04,29,596/- (Rupees Forty Seven Crore Four Lakh Twenty Nine Thousand Five Hundred Ninety Six only) under Section 111 (d) & (m) of the Customs Act, 1962; e) I order for recovery of the differential duty amounting to Rs.5,66,91,471/- (Rupees Five Crore Sixty Six lakh Ninety One Thousand Four Hundred Seventy One only) as shown in the Annexure-G to this SCN (summary of Annexure- A to F) short paid, under Section 28(4) of the Customs Act, 1962 along ....
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....conditioning V systems classifiable under CTH 84159000 of the Customs Tariff Act, 1975. Accordingly, case was booked against the Importer noticee for mis-declaring the goods. 2.3 Also Appellant had in the past had cleared the item namely "Resistor Blower vide Bills of Entry Nos. 7196970 dated 23.06.2012 7250625 dt 29.06.2012, 7345078 dt 10.07.2012 and 7393640 dt 16.07.2012 classifying them under CTH 84149090 as part of machines of other category other than air or vacuum pump, gas compressor, bicycle pumps, piston generator electric fan or industrial fan. This fact strengthens department view that item in question namely Resistor Blower is not merely a resistor but a specific part of a machine. 2.4 As per details available on the EDI system and its further comparison with the details provided by the party vide letter dated 13.04.2017 for the FY 2012-13; 72 2013-14; 2014-15, 2015-16, 2016-17 8 2017-18, inventory of consignments of "RESISTOR BLOWER" which have earlier been cleared by the importer noticee under CTH 85334090 of the Customs Tariff Act, 1975 claiming benefit under Notification No. 24/2005-Cus (S.N. 21) dated 01.03.2005 or by paying Customs duty @ 7.5% under CTH 8414....
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....ix Lakh Thirty Nine Thousand Six Hundred Fourteen Only) paid towards duty under protest against Bills of Entry as shown in the Annexure-F to this SCN should not be appropriated towards duty demanded against the said Bills of Entry as shown in Annexure-F to the Show Cause Notice; 2.6 The show cause notice has been adjudicated as per the impugned order. 2.7 Appellant being aggrieved of confirmation of demands and penalties imposed filed the appeal 2.8 Revenue being aggrieved that penalty imposed under Section 114A did not include the interest amount filed the appeal 3.1 We have heard Shri B L Narasimhan & Shri Atul Gupta advocate for the Appellant and Smt Chitra Srivastava, Authorized Representative for the Revenue. 3.2 Arguing for the Appellant learned counsel submits that: ⮚ This issue of classification in the present case is no longer res integra since it has been decided unconditionally and conclusively in favour of Appellant ⮚ the show cause notice admittedly considered the issue of classification in the present case as similar to the earlier case where the issue of classification was decided in favour of the Appellant vide Order-in....
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....n the Air-conditioning circuit in a vehicle to control the speed of the fan in the system. It is also mentioned that the Blower Resistor consists of resistors, terminals to connect to the blower switch and circuit, heat sink to dissipate heat and plastic base for housing the resistor, terminal and heat sink alongwith PCB. The importer have also submitted that the Resistor Blower does not contain any other active or passive component, other than a resistor The importer vide letter dated 28.07.20 16 further submitted that the imported Resistor Blowers are classifiable under CTH 8533 which covers "Electrical Resistors (including rheostats and potentiometers) other than heating resistors and thus all type of Electrical resistors including variable Resistors are covered 1o6 under CTH 85334090. The importer in support of the claimed classification of the" esistor blower under CTH 85334090,`also referred to CBEC Circular No. 78/2002-Cus dated 28.11.2002 and Hon'ble Supreme Court's decision in case of Collector of Central Excise vs. Delton Cable Ltd. reported in (ELT 181/373 decided on 15.02.2005. Vide said Circular it was clarified that Metal Oxide Varistors are classifiable under....
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....159000 of the Customs Tariff Act, 1975. By filing the said item under CTH 85334090, the importer had claimed and availed the benefit under Notification No. 24/2005-Cus (S.N. 21) dated 01.03.2005 to pay NIL Customs duty. 17.1. Classification is most critical when new products are introduced into a company's trade environment because it requires an in-depth understanding of the product description, its character and use as well as knowledge of the 107 classification system process. Any ambiguity in the product descriptions and different classifications are the biggest challenges to product classification globally. Governments scrutinize HS codes and product descriptions to detect fraudulent activities 17.2. The Comptroller and Auditor General of India, an independent Supreme Audit Institution, mentioned in its report no.12 of 2014 that the Directorate of Revenue Intelligence of India had detected 298 duty evasion cases involving mis-declaration of goods to the tune of Rs.2392. .26 Crore (USD 378 Million) in the financial year 2013. 17.3. A lot of risk to a misleading product classification brings company and can substantially erode its reputation and pr....
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....of Section note 2 (a) to Section XVI. 20. The importer had all along been contending that the item in question is BLOWER RESISTOR and is classifiable under CTH 85334090. They also admitted that the same i.e. BLOWER RESISTOR allows the driver of a vehicle to regulate the blower speed of its air conditioning system. This is achieved by providing different levels of resistance in the circuit. Their argument implies that irrespective of the air conditioning system, the BLOWER RESISTOR imported by them is classifiable under CTH 85334090 and eligible for exemption under Notification No. 24/2005-Cus (S.N. 21) dated 01.03.2005. 21. I agree that the relevance of end use in classification is only under certain circumstances and not always. In a judgement relating to a multi-functional machine, the Supreme Court has held that the predominant function would be relevant in determining the classification. In the case of Xerox India Ltd. vs. Commissioner of Customs, Mumbai - 2010 (260) ELT 161 (SC), the issue was about the classification of a multi-functional machine which works as printer, fax machine, copier and as scanner when it is attached to a computer. The importer notice....
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....Ganeshwal v. State of Karnataka - 1995 (96) STC 149 (Kar.), relating to the Karnataka Sales Tax Act, 1957, the High Court has held that balloons are primarily used as children's toys and the decorative purpose is incidental. So, it would fall under Entry 47 which is *children toys costing not more than twenty rupees per item" 23. The conclusion is that end use is not relevant for classification as much as the basic identify of the goods, tariff entry and market parlance are. It is relevant only when the description or definition of the goods in the tariff is based explicitly or implicitly on use criterion. If the description of the definition is not based on use criterion, it is the market parlance which determines the issue. Use is also the basis of coming to the correct understanding of the market parlance. End use and manufacturing process can be taken into consideration, if they agree with market parlance. But if they differ from the market parlance, then the latter will prevail. When there are various uses, it is the predominant or principal or primary use which has to be taken into account. 25. I find that the importer has declared the subject item as Re....
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.... that it has been claiming classification for the same goods i.e. "Register Blower" under different Customs Tariff Headings at different points of time, only to tailor make its classification for the same product "Resistor Blower" under different Customs Tariff Headings (CTHs), only to avail the benefit of exemption from Customs duty under particular notifications containing those CTHs. I, therefore find that in the absence of a copy of the Shipping Bill containing the correct classification in respect of the imported goods under consideration in the foreign supplier country, the classification claimed by the importer noticee in the present case is unacceptable and untenable. This is particularly so when the Shipping Bill of the same foreign supplier for the period subsequent to the period under consideration can be submitted and has been submitted to me. 29. It is also a fact on record that the importer noticee itself now, had classified the same items i.e. the Resistor Blowers imported now, under CTH 84149090 during the period prior to the issuance of Show Cause Notice. In this regard, the importer has submitted that it is a well settled principle in taxation law that th....
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....ated 27.07.2016 (RUD-4), the party vide letter dated 29.07.2016 (RUD-5) sought time till 10.08.2016 for submission of relevant data. The party vide two letters both dated 01.08.2016 (RUD-6 & RUD-7) submitted that they had received a communication from the office of the Commissioner (Appeals) vide OIA No.DII/994/647/2016 dated 12.07.2016 in - their favour allowing classification of Resistor Blower under CTH 85334090 and declined to provide the data of imports of resistor blower for earlier period. In the matter, it has, however, been informed by the Assistant Commissioner Review), ICD, Patparganj & Other ICDs, Delhi vide letter dated 08.03.2017 RUD-8) that on being aggrieved; the department has filed an appeal before the Hon'ble CESTAT against OIA No. DI1/994/647/2016 dated 12.07.2016 The party vide letter dated 03.08.2016 (RUD-9) requested to allow clearances of all' future shipments containing Resistor Blowers on duty payment under protest till the time the issue is finally concluded. Accordingly, after 18.07.2016, the said goods were cleared classifying them under CTH 84149090 and the importer paid duty under protest and got cleared the goods. The party vide letter dated ....
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....he fact is not contested that the present resistor are used in automobile only. The point of dispute is whether such usage will determine the classification of the product or it should be by its nature as resister. 7. Reference to Section Note 2(a) and 2(b) has been made in the case. We note the Hon'ble Supreme Court in CCE vs. Delton Cables Ltd. -2005 (181) ELT 373 (SC) = 2005-TIOL190-SC-CX held as below: "3. There appears to be no dispute that were it not for the Section Note 2(b), the item in question would be classified under Tariff Heading 85.44 as contended by the Appellant. Section Note 2(a) an (b) respectively provide as follows: "(a) Parts which are goods included in any of the headings of Chapter 84 or Chapter 85 (other than Heading Nos. 84.85 and 85.48) are in all cases to be classified in their respective headings, (b) Other parts, 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 No. 84.79 or Heading No. 85.43) are to be classified with the machines of that kind. However, parts which are equally suitable for use principally....
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....avour of the Appellant by the above referred order in appeal, which has been upheld by the CESTAT as per order referred in para 1 above, we do not find any merits in the impugned order which on merits decides the issue contrary to this order of the tribunal in the Appellant own case. 4.8 As there is no merits in the order of demand, the penalties imposed under section 112 (a) and 114A are also set aside along with the demand of interest under Section 28AA. 4.9 As we are setting aside the penalties imposed under Section 114A the appeal filed by Revenue becomes in-fructuous as same has been filed for enhancing the penalty imposed by adding interest amount to penalty imposed. However, we point out that taking note of the decision of Karnataka High Court in the case of Sony Sales Corporation [2021 (376) E.L.T. 472 (Kar.)] a coordinate bench in which Member (Tech) was party had dismissed similar appeals filed by the Revenue in case of Commissioner, Customs, Noida V/s M/s Vikas Globalone Ltd. (Tri.All) in Customs Appeal No.70562 of 2020 having Final Order No.70150 of 2025. Relevant para of the judgment are reproduced below:- "The Revenue has relied on the CBEC Circular No.....