TaxTMI 
TaxTMI 
2025 (12) TMI 1623
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..... Submission by the Applicant: 2.1 M/s. Valeo India Private limited ("the Applicant"), a Private Limited company is engaged in the manufacture of automobile components and has a strong presence in areas of Mechanical Design, Simulation, Embedded Software Development, Vision Systems Software and Hardware and Functional Safety Design. 2.2 The applicant is importing Clutch Master Cylinders and Concentric Slave Cylinders (hereinafter referred to as "CMC and CSC"), which are used in motor vehicle's clutch system. Though the CMC and CSC may not look the same, they are integral parts of the hydraulic clutch system. Function and Composition of 'CMC' 2.3 A CMC is a component of a car clutch system, specifically semi- hydraulic and fully- hydraulic clutch systems and is used to transfer the clutch pedal movement to the clutch via hydraulic fluid. The CMC consists of a body, piston, primary seal, secondary seal, a push rod, a low-pressure nozzle and a high- pressure nozzle. The body is made up of aluminium or plastic and the piston is made up of anodized aluminum. The primary seal of the CMC is used to isolate the reservoir from the hydraulic chamber and the secondary ....
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....raulic fluid building up pressure. The pressure is transmitted through the high-pressure pipe (4) to the slave cylinder (5). The pushrod (6) is connected to the piston of the salve cylinder. Due to the increase of pressure in the slave cylinder, the pushrod is pushed outside acting on the clutch fork, which releases the pressure plate and opens the clutch. The hydraulic fluid used for actuation is usually brake fluid or mineral oil. The working of the CSC is depicted in the picture below. (Picture 4) 2.11 It could be seen that both the CMC and CSC are essentially linear acting hydraulic cylinders, and their operation depends on the hydraulic pressure created by the hydraulic fluid. 3. Applicants interpretation of Law/Facts: APPLICANT'S ELIGIBILITY TO SEEK ADVANCE RULING 3.1 The Applicant is eligible to seek an advance ruling under the Customs Act, 1962. As per Section 28E(c) of the Act, an "applicant" is defined as a person holding a valid Importer-Exporter Code (IEC) under the Foreign Trade (Development and Regulation) Act, 1992. The Applicant holds a valid IEC (No. 0508058899), satisfying this requirement. The present application seeks an advance ruling on the ....
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....YDRAULIC POWER ENGINES AND MOTORS This group includes: (1) Certain engines, other than turbines or wheels of heading 84.10, producing mechanical power by utilising the energy of the waves or sea swell (Savonius rotor with two semicylindrical bladings) or of the tides. (2) Water column machines operating by the pressure of water on pistons. The water acts on two or more pistons moving inside the (cylinders which in turn drive a shaft. (3) Hydraulic cylinders consisting, for example, of a brass or steel barrel and a piston operated by oil (or other liquid) under pressure applied on one side (single-acting) or on both sides (double-acting) of the piston, the energy of the liquid under pressure being converted into a linear motion. These cylinders are used on machine-tools, construction machines, steering mechanisms, etc. (4) Hydraulic valve actuators, presented separately, consisting of a metal casing containing a piston which, by means of a pin perpendicular to the piston rod, converts the linear motion caused by the action of a liquid under pressure into a rotary motion, in order to operate a plug valve or other appliance with a rotating.....
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....es; and (ii) They must not be excluded by the provisions of the Notes to Section XVII (see the corresponding General Explanatory Note)". 3.11 The HSN Explanatory Notes under Section XVII lay down the most important principle for classification of parts and accessories of the goods of Section XVII thus: "(III) PARTS AND ACCESSORIES "It should be noted that Chapter 89 makes no provision for parts (other than hulls) or accessories of ships, boats or floating structures. Such parts and accessories, even if identifiable as being for ships, etc., are therefore classified in other Chapters in their respective headings. The other Chapters of this Section each provide for the classification of parts and accessories of the vehicles, aircraft or equipment concerned. It should, however, be noted that these headings apply only to those parts or accessories which comply with all three of the following conditions: (a) They must not be excluded by the terms of Note 2 to this Section and (b) They must be suitable for use solely or principally with the articles of Chapters 86 to 88 and (c) They must not be more specifically included e....
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....8708 only on the ground that these components are identifiable for use solely or principally with motor vehicles in question will not be appropriate. 3.18 It is therefore apparent that classification of CMC and CSC in question under CTH 84122100 will be appropriate in terms of GIR 1 read with Note 2(e) to Section XVII and for the same reasons classification of the CMC and CSC in question under CTH 8708 and more specifically under CTH 8708 9300 as parts of clutches of motor vehicles can be ruled out. 3.19 The American Customs in their Ruling No HQ H195876 dated March 24, 2016 dealt with identical components. In this ruling, the American Customs revoked their earlier ruling for these components under CTH 87089375 and approved the classification of the CMC under CTH 8413 5000 as a reciprocating positive displacement pump, while approving the classification of CSC under CTH 8412 2100. 3.20 While this ruling has clearly ruled out classification of CMC and CSC under CTH 87089375 correctly, in our view the suggested classification for CMC under CTH 84135000 as reciprocating positive displacement pump, may not be correct as pumps are defined by the HSN ENs under CTH 8413 as under:....
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....e: 4.1 The applicant in their CAAR-1 indicated that they intend to import the subject goods i.e. Clutch Master Cylinder (CMC) and Concentric Slave Cylinder (CSC) at the jurisdiction of Office of the Commissioner of Customs, Air Cargo Complex, Chennai. The application was forwarded to the Office of the Commissioner of Customs, Air Cargo Complex, Chennai for their comments on 05.03.2025. The concerned jurisdictional Commissionerate vide their letter dated 08.04.2025 has submitted as follows: ⮚ It is noticed that items Clutch Master Cylinder (CMC) and Clutch Slave Cylinder (CSC) do not have any specific entry or any reference in Section Notes/Chapter Notes. As the goods under reference are admittedly for use with motor vehicles, the principal contending tariff heading is noticed to be CTH 8708, which pertains to "Parts and Accessories of the Motor Vehicles of Headings 8701 to 8705". However, in terms of Note 2 to Section XVII of the Customs Tariff Act, 1975, for classification of goods under CTH 8708, the exclusions thereof shall be verified first. ⮚ As per HSN Explanatory Notes regards Parts and Accessories of Section XVII, it is noticed that the....
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....hat Brake Systems too contain Brake Master Cylinder similar to that of Clutch Master Cylinder. However, as provided in HSN Explanatory, cylinders of brakes are classifiable under CTH 8708 as Brakes and parts thereof. The relevant portion of HSN Explanatory to CTH 8708 is reproduced below: "Parts and accessories of this heading include: xxxx (C) Clutches (cone, plate, hydraulic, automatic, etc., but net the electro magnetic clutches of heading 85.05), clutch casings, plates and levers, and mounted linings. Xxxx (H) Brakes (shoe, segment, disc, etc.) and parts thereof (plates, drums, cylinders, mounted linings, oil reservoirs for hydraulic brakes, etc.); servo brakes and parts thereof. Xxxx" Therefore, from the above, it appears that Clutch Master Cylinder (CMC) and Clutch Slave Cylinder (CSC) are rightly classifiable under CTI 8708 9300. ⮚ Also, the Trade Parlance Theory, which has evolved by the Courts and Tribunals over the years, inter-alia, provides that: Natural and ordinary meaning to be considered - When an expression is not defined in the Act, natural and ordinary meaning of such expressi....
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....le universal test in these matters. The several decided cases drive home this truth quite eloquently ......... There may be cases, particularly in the case of new products, where this test may not be appropriate. In such cases, other tests like the test of predominance, either by weight of value or on some other basis may have to be applied. It is indeed not possible, nor desirable, to lay down any hard and fast rules of universal application". Further, the Hon'ble Supreme Court, in the case of Commissioner of Central Excise, Mumbai v. M/s. Fiat India (P) Ltd. [2012 (283) E.L.T. 161 (S.C.)], has observed that, - "a case is only an authority for what it actually decides and not for what may seem to follow logically from it. ... Each case depends on its own facts and a close similarity between one case and another is not enough because either a single significant detail may alter the entire aspect ... To decide, therefore on which side of the line a case falls, the broad resemblance to another case is not at all decisive." ⮚ The rulings relied upon by the applicant may therefore not be taken into consideration as the complete details of the produ....
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....t be justified as notwithstanding the fact that the CMC and CSC are identifiable for use with a motor vehicle, they cannot be regarded as 'parts' or 'parts or accessories' for purposes of Section XVII as could be seen from Note 2 which states as under: 2. The expressions "parts" and "parts and accessories" do not apply to the following articles, whether or not they are identifiable as for the goods of this Section: ⮚ Therefore, classification of the CMC and CSC in question under CTH 8708 as parts of motor vehicles cannot be legally justified. ⮚ Yet another argument extended by the commissioner is the reference to the term 'cylinders' in the HSN ENs under CTH 8708 as shown below: "(H) Brakes (shoe, segment, disc, etc.) and parts thereof (plates, drums, cylinders, mounted linings, oil reservoirs for hydraulic brakes, etc.); servo brakes and parts thereof." ⮚ The Applicant submits that the CMC and CSC are not parts of brakes. The CMC and CSC are use in the clutch hydraulic lines. Having said that, the reference to cylinders in the HSN ENs under the brakes category can include only such cylinders ....
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.... provided by the Section Notes ⮚ In this case as has been adequately shown by the Applicant, the GIR 1, Note 2 ( e) to Section XVII, HSN ENs under Section XVII and also the ratio laid down by the Hon'ble Supreme Court in the Uni Products case referred to supra, provide a clear direction as to how the CMC and CSC in question should be classified. Therefore, there is no need to resort to the Trade Parlance theory to classify the CMC and CSC in question. ⮚ Significantly the Commissioner has not given any reason for ruling out the applicability of Note 2(e) to Section XVII. Further he has not given any justification as to how the CMC and CSC in question meet two of the three mandatory tests laid down for regarding the CMC and CSC as parts for purposes of Section XVII. ⮚ The Commissioner has also not given any reasons as to why the ratio laid down by the Hon'ble Supreme Court in the Uni Products matter and also the direction given by the CBIC in their Instructions No 1/2022 Customs dated 5-1-2022 and 25/2022 Customs dated 3-10 22 will not apply in the present case ⮚ Therefore, the reliance placed on the Trade Parlan....
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....spect of the subject goods. I have gone through the submission made by the applicant, response received from the concerned Commissionerate, the arguments presented during the hearing, and the rebuttal filed by the applicant. Therefore, I proceed to pronounce a ruling on the basis of information available on record as well as existing legal framework. 7.2 The Applicant has sought advance ruling in respect of the following question: a. Whether the products i.e., Clutch Master Cylinder (CMC) and Concentric Slave Cylinder (CSC) are classifiable under CTH 8412 as a Linear Acting (Cylinders), or under CTH 8708 as parts of motor vehicle of heading 8701 to 8705, of the First Schedule of the Customs Tariff Act, 1975. 7.3 At the outset, I find that the issue raised in the question in the Form CAAR-1 is squarely covered under Section 28H(2) of the Customs Act, 1962 being a matter related to classification of goods under the provisions of this Act. 7.4 Before deciding on the issue, let me deliberate on the legal framework prescribed in Customs Tariff Act, 1975, Chapter/ Section notes along with HSN explanatory notes. As per Rule 1 of GRI, the titles of Sections, Chapters and ....
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....d used for actuation is usually brake fluid or mineral oil. Their operation depends on the hydraulic pressure created by the hydraulic fluid. Based on their function, as discussed above, both the CMS and CSC are the essentially linear acting hydraulic cylinders as covered under the category of (B) HYDRAULIC POWER ENGINES AND MOTORS as per HSN Explanatory Notes to CTH 8412 (Other engines and motors). In this regard, I note that the Chapter Heading 8412 covers "Other engines and motors". The relevant Explanatory Note to CTH 8412 provides that, "8412.10 - Reaction engines other than turbo-jets - Hydraulic power engines and motors: 8412.21 -- Linear acting (cylinders) 8412.29 -- Other - Pneumatic power engines and motors: 8412.31 -- Linear acting (cylinders) 8412.39 -- Other 8412.80 - Other 8412.90 - Parts This heading covers engines and motors not included in the preceding headings (headings 84.06 to 84.08, 84.10 or 84.11) or in heading 85.01 or 85.02. It therefore covers non-electric engines and motors other than steam turbines and other vapour turbines, spark ignition and compression-ignition inter....
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....c cylinder is a linear actuator that converts hydraulic energy (fluid pressure) into linear mechanical force and motion. It typically consists of: * A cylinder barrel * A piston and piston rod * Seals * Hydraulic ports for fluid input/output 7.6.2 In the present case, the Clutch Master Cylinder (CMC), based on its function as discussed, does not perform this conversion. Instead, it converts mechanical input from the clutch pedal into hydraulic pressure, which is then transmitted via a pressure pipe to the slave cylinder to engage or disengage the clutch. The CMC does not generate mechanical power or produce linear motion from hydraulic energy. Rather, it functions as a hydraulic pressure generator, not an actuator. It simply creates and transmits hydraulic pressure. Accordingly, since the Clutch Master Cylinder does not convert fluid pressure into motion, it does not fulfil the essential characteristics of a hydraulic cylinder as defined under the category of (B) Hydraulic Power Engines and Motors in the HSN Explanatory Notes to CTH 8412 (Other engines and motors). Therefore, it does not merit classification under CTH 8412. 7.6.3 In t....
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.... unit, effectively making it a single component. Although the CSC contains a hydraulic cylinder, it also incorporates a release bearing specifically designed for clutch actuation in vehicles. The release bearing's design enables it to rotate with the diaphragm spring, ensuring smooth and frictionless operation. Its integration into the CSC housing simplifies the system by eliminating the need for a separate release bearing, thereby improving reliability and reducing maintenance requirements. As such, it performs a function that extends beyond that of a standard hydraulic cylinder as described in the HSN Explanatory Notes to Heading 8412. Consequently, the CSC cannot be classified as Linear acting hydraulic cylinder under Heading 8412. 7.6.4 In view of the above, it is also evident that the Clutch Master Cylinder (CMC) does not convert fluid above, it is also evident that the Clutch Master Cylinder (CMC) does not convert fluid pressure into mechanical motion; rather, it converts mechanical input (from the clutch pedal) into hydraulic pressure. As such, it does not fulfill the essential characteristics of a "hydraulic cylinder" as provided in the HSN Explanatory Notes to He....
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....o 8479, or parts thereof, other than the radiators for the articles of this Section, articles of heading 8481 or 8482 or, provided they constitute integral parts of engines and motors, articles of heading 8483; (f) electrical machinery or equipment (Chapter 85); (g) articles of Chapter 90; (h) articles of Chapter 91; (ij) arms (Chapter 93); (k) luminaries and lighting fittings and parts thereof heading 9405; or (l) brushes of a kind used as parts of vehicles (heading 9603). 7.7.3 Thus, Section Note 2 of Section XVII restricts the application of the expression "parts" and "parts and accessories" by excluding certain articles from being classified under the chapter 87 of this Section. The applicant has contended that, in accordance with Note 2(e) to Section XVII of the Customs Tariff, machines and apparatus falling under headings 8401 to 8479, or parts thereof, are not to be classified as parts or accessories of motor vehicles, even if they are identifiable as being suitable for use with such vehicles. The applicant argues that, as the Clutch Master Cylinders (CMC) and Concentric Slave Cylinder (CSC) in question are essentially....
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....conditions: (a) They must not be excluded by the terms of Note 2 to this Section and (b) They must be suitable for use solely or principally with the articles of Chapters 86 to 88 and (c) They must not be specifically included elsewhere in the Nomenclature. The above provisions show that for any item to be classified as a part and accessories in Chapter 87, all the three conditions as at (a), (b) and (c) above have to be fulfilled cumulatively. 7.7.5 I have gone through the list of 'parts and accessories' excluded as per the provisions of the Explanatory Notes 2 to Section XVII and found that 'Clutch Master Cylinders (CMC) and Concentric Slave Cylinder (CSC)' are not listed among the excluded items, thereby satisfying the first condition. Furthermore, based on the applicant's submission, it is clear that the Clutch Master Cylinders (CMC) and Concentric Slave Cylinder (CSC), by its configuration, specific functions, and intended use, are designed for exclusive or principal use in motor vehicles. These vehicles are classified under headings 87.03 and 87.11 of Chapter 87 of the First Schedule to the Customs Tariff Act, 1975, thereby....
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....s (hoods); framed windows, windows equipped with heating resistors and electrical connectors, window frames; running-boards; wings (fenders), mudguards; dashboards; radiator cowlings; number-plate brackets; bumpers and over-riders; steering column brackets; exterior luggage racks; visors; non-electric heating and defrosting appliances which use the heat produced by the engine of the vehicle; safety seat belts designed to be permanently fixed into motor vehicles for the protection of persons; floor mats (other than of textile material or unhardened vulcanised rubber), etc. Assemblies (including unit construction chassis-bodies) not yet having the character of incomplete bodies, e.g., not yet fitted with doors, wings (fenders), bonnets (hoods) and rear compartment covers, etc., are classified in this heading and not in heading 87.07. (C) Clutches (cone, plate, hydraulic, automatic, etc., but not the electro-magnetic clutches of heading 85.05), clutch casings, plates and levers, and mounted linings. (D) Gear boxes (transmissions) of all types (mechanical, overdrive, preselector, electro-mechanical, automatic, etc.), torque converters; gear box (transmission) casings;....
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....tomobile parts must be determined based on a holistic assessment, including the HS Explanatory Notes, relevant Section and Chapter Notes, and applicable judicial decisions. In this context, it is submitted that the classification of the product, i.e., Clutch Master Cylinder (CMC) and Clutch Slave Cylinder (CSC), under CTH 8708 has been considered after evaluating the relevant Chapter Notes, Section Notes, the three conditions outlined in Part III of the General Explanatory Note to Section XVII, the exclusionary clause under Note 2 to Section XVII, and the Explanatory Notes to Chapter 87. Additionally, I observe that that Hon'ble Supreme Court in the case of Commissioner of Central Excise Vs. Wockhardt Life Sciences Ltd reported in 2012 (277) ELT 299 (SC) had held that the functional utility and predominant usage of the commodity must be taken into account apart from the understanding in common parlance to determine the correct classification of the product. The Hon'ble Supreme Court in the case of Collector of Customs Vs. Kumudam Publications [1997 (96) ELT 226 (SC)] has held that "it is not entirely correct to say that the end use or function of the goods is irreleva....
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....foreign rulings does not hold relevance or persuasive value in determining the appropriate classification under the Indian Customs Tariff. 8. The jurisdictional Commissionerate has argued that the CMC and CSC meet the criteria for classification under Section XVII as they are not excluded under Note 2, are solely or principally used with motor vehicles, and are not more specifically included elsewhere. The Commissionerate also noted that reliance on foreign rulings is not appropriate, given that classification decisions must be case-specific, and Supreme Court decisions emphasize that each case depends on its own facts. Therefore, the goods are correctly classified under CTI 8708 9300 as "Clutches and parts thereof" instead of CTI 8412 2100. I concurred with the view expressed by the concerned jurisdictional Commissionerate regarding the classification of CMS and CSC as parts of the clutch system of motor vehicles under CTI 8708 9300 (Clutches and parts thereof). 9. The applicant, in their submission, has requested that the ruling and related information not be published, citing the highly technical nature of the data provided in the application. It has been contended that....