TaxTMI 
TaxTMI 
2026 (1) TMI 535
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....n, Switch, Washer and Buzzer, imported through various ports, which were required to be classified under the respective CTH, have been mis-classified under CTH 8431 by the Appellant. The notice proposed rejection of the classification adopted by the Appellant and reclassification under the respective headings, consequent to which differential duty of Rs.1,24,08,419/- was demanded along with appropriate interest. Further, alleging liability to confiscation of the imported goods under Section 111(m) and Section 111(o) of the Customs Act, proposals for imposition of penalties under Section 112 (a), 114 A and 114 AA of the Customs Act were also made in the said notice. 3. After due process of law, the Adjudicating Authority rejected the classification adopted by the importer and reclassified the imported goods under the Customs Tariff items as mentioned below: SI. No. Description Correct Classification (CTI) 1. Angle Steel 73089090 2. Belt 40103999 3. Bolt & Nut 73181500 for Bolts and 73181600 for nuts 4. Brush 96035000 5. Chain 73151290 6. Clamp 82057000 7. Clip 73269099 8. Door Lock 83014090 9. ....
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....unsel relies on Board circular dated 19.04.1989 which has clarified that an installed lift would be regarded as an immovable property. The Circular had gone on to clarify that where parts and components of lifts were brought together as lifts in unassembled /disassembled condition or having the essential character of lifts they would be assessed under Chapter Heading 8428, otherwise such parts and components would be assessed under Chapter Heading 8431. 7. It is submitted that it is well settled law that parts manufactured specifically and imported for a particular machine must be classified as part of the said machinery even if there is Section / Chapter Notes on parts of general use. It is essential to consider the 'predominant use' or 'sole / principal use' test for determining the classification of the products in such cases. Reliance is placed on the decisions in G.S Auto International Ltd. Vs. CCE., Chandigarh, 2003 (152) ELT 3 (SC), Westinghouse Saxby Farmer Ltd. Vs. CCE., Calcutta,2021-TIOL-121-SC-CX-LB,Cast Metal Industries (P) Ltd. Vs. CCE., Kolkata, 2015 (325) ELT 471 (SC), Shakti Tech Manufacturing Indian Pvt. Ltd. Vs. CGST & CE,2025-TIOL-137-CESTAT-MAD, Sew Eurodriv....
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.... the sole basis that it uses the term "belt", when the same do not even remotely falls within the category "belt". This fact was stated by the Appellants in their Written Submission. Instead of Department proving their claim/case with evidence, now the Commissioner has confirmed the demand on the ground that the Appellants have not submitted any evidence. That the claim of the Appellants had never been rejected or disputed in the Show Cause Notice. C) The Adjudicating Authority has classified the various types of brushes imported by the Appellant during the period in dispute under Tariff Item 96035000 on the ground that Section Note 1(o) of Section XVI refers that "This section does not cover brushes of a kind used as parts of machines (heading 9603). That some of the items categorized under the heading "BRUSH" would not even qualify as brushes viz., brush fixing plate, sealed head piece, short brush section, straight brush section, so as to classify under Tariff Item 96035000.As far as the other brushes are concerned, the Appellants submit that brushes of Heading 9603 are used mostly for sweeping, cleaning or for applying paint and polishing etc. and the "brushes constitu....
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....used to determine the desired floor to get to or to call the elevator to a specific floor, opening and closing the elevator doors and are used to control the elevator car. These push buttons are exclusively designed for lifts and cannot be used in anywhere else. Further, these buttons are in combination placed on the pre-designed panels i.e., LOP & COP installed in lifts. Further, under Section Note 1 to Section XVI, there is no exclusion from the Section for the products under question. Therefore, there is no applicability of Section Note 1 to Section XVI to these products. Further, Note 2 to Section XVI is very much relevant to the production under question. In any event, the finding of the Commissioner in the impugned order with respect to Section Notes are beyond the scope of the Show Cause Notice. The only allegation in the Show Cause Notice was that the push buttons were fitted with electric circuit and therefore it was classifiable under Tariff Item 85365090. Similar arguments that in respect of switch imported the only allegation in the SCN was the switch is specified under CTH 8536 and therefore the findings of the Commissioner with respect to section notes were beyond the....
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....sification. Ld. Counsel submits that the Appellant have been importing these goods from the year 2000 onwards and the Customs Authorities have been clearing the goods after duly examining the documents and details provided by the Appellant from time to time. Further, the classification adopted by the Appellant was in accordance with General Rules of Interpretation, Board's circular and decisions of various judicial fora. Therefore, the finding in the impugned order that the Appellant have wilfully mis-classified the goods is factually incorrect. Further, the Appellant have clearly given the description of the products in the bills of entry. Before the clearance of the goods, the same was inspected by the Customs officials. After verification of the product and approving the classification mentioned in the bills of entry the Appellant have cleared the goods on payment of applicable duties. Hence, it cannot be held that the Appellant have wilfully mis-declared or mis-classified the goods. 12. Ld. Counsel submits that it is settled law that longer period cannot be invoked in a case of classification where the assessee under bonafide belief has classified the products under one head....
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....rts as imported are insufficient to constitute a Lift/Parts of Lifts in an unassembled or disassembled condition. Reliance was placed on the decisions in Pioneer Embroideries Ltd v CC, Mumbai, 2004 (6)TMI 224-Cestat Mumbai, affirmed by Apex Court in 2015(8) TMI 1048-Supreme Court and Sony India Ltd v CC, ICD, New Delhi, 2002 (5) TMI 305-Cegat, New Delhi, affirmed by Apex Court in 2008 (9) TMI 19- Supreme Court and Otis Elevator Company (India) Ltd v CCE, Mumbai V, 2017 (9) TMI 921-Cestat Mumbai. Ld. Authorised Representative prays that the OIO be upheld and the appeal be set aside. 16. We have heard the rival submissions at length, perused the appeal records and decisions submitted. 17. The issue that arises for our consideration is whether the rejection by the Adjudicating Authority, of the classification of the imported goods as adopted by the Appellant, its consequent reclassification, and demand of duty as well as attendant penal detriments with which the appellant was visited by the impugned order, is tenable. 18. Undisputedly it has been the consistent stand of the appellant before the authorities that the appellant is a manufacturer of Lifts and Escalators and are e....
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....ification of the imported goods under the chapter heading 8431 is in consonance with the Board's Circular dated 19.04.1989 issued pertaining to classification of lifts and parts thereof. Reliance was also placed, inter-alia, on the Judgements of the Apex Court in Cast Metal Industries (P) Ltd v CCE Kolkata, 205 (325) ELT 471 (SC) and G.S.Auto International Ltd v. CCE, Chandigarh, 2003 (152) ELT 3 (SC), in support of the appellant's submissions. The Appellant had also submitted that regular import of these items have been made and all these years the Department had never raised any dispute whatsoever with the Appellant. 19. In this backdrop, we note the classification adopted by the appellant impugned in the Notice, is under Chapter Heading 8431 which pertains to the Description of goods "Parts suitable for use solely or principally with the machinery of headings 8425 to 8430" and particularly below the description '-' of machinery of heading 8428, against Tariff Item 84313100 which pertains to the Description of goods " - Of lifts, skip hoists or escalators." 20. Further, the Section Notes of Section XVI, is as under: " Section XVI MACHINERY AND MECHANICAL APPLIAN....
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.... heading 9620. 2.Subject to Note 1 to this Section, Note 1 to Chapter 84 and Note 1 to Chapter 85, parts of machines (not being parts of the articles of heading 8484, 8544, 8545, 8546 or 8547) are to be classified according to the following rules: (a) parts which are goods included in any of the headings of Chapter 84 or 85 (other than headings 8409, 8431, 8448, 8466, 8473, 8487, 8503, 8522, 8529, 8538 and 8548) 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 8479 or 8543) are to be classified with the machines of that kind or in heading 8409, 8431, 8448, 8466. 8473, 8503, 8522, 8529 or 8538 as appropriate, However, parts which are equally suitable for use principally with the goods of headings 8517 and 8525 to 8528 are to be classified in heading 8517 (c) all other parts are to be classified in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate or, failing that, in heading 8487 or 8548. 3. Unless the context otherwise requ....
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....ould be applied to interpret the meaning of the words in the tariff heading. b. Secondly, as contested in this case, the consideration of end use as a factor for determining classification is a contentious issue in many classification disputes. Consequently, it is essential to understand whether end use can be taken into account when dealing with classification disputes of imported goods under the First Schedule of the Act, 1975, and if so, what principles govern such consideration. 18. Before addressing the specific issues referred to above, we find it appropriate and necessary to discuss certain fundamental concepts related to the classification of goods imported into India. i. Classification under the Act, 1962 and the Act, 1975 19. Section 12 (1) of the Act, 1962, serves as the primary charging section for customs duties in India. It states as follows: 12. Dutiable goods - (1) Except as otherwise provided in this Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under the [Customs Tariff Act, 1975 (51 of 1975)], or any other law for the time being in force, on goods....
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....dify a particular class of goods. The Section Notes clarify the scope of chapters, headings, and other elements. The chapters include chapter notes and a brief description of commodities, arranged at four-digit, six-digit, and eight digit levels. Each four-digit code is called a 'heading', each six-digit code is called a 'subheading', and an eight-digit code is called a 'Tariff Item'. The HSN provides commodity/product codes and descriptions only up to the 4digit (Heading) and 6-digit (Sub-heading) levels. Member countries of WHO are permitted to extend the codes to any level, provided that no changes are made at the 4-digit or 6-digit levels. India has developed an 8-digit classification to specify particular statistical codes for indigenous products and also to monitor the trade volumes. 26. Customs classification is best described as the process of identifying the appropriate heading, subheading, or tariff item for a good. This is the most crucial step in the customs law, as it is not just an administrative task. Instead, the classification determines the legal and financial treatment of the goods in question, including the applicable duty rate and eligibility for exemp....
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....put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified, as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable. (c) when goods cannot be classified by reference to (a) or (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration. 4. Goods which cannot be classified in accordance with the above rules shall be classified under the heading appropriate to the goods to which they are most akin. 5. In addition to the foregoing provisions, the following rules shall apply in respect of the goods referred to therein: (a) camera cases, musical instrument cases, gun cases, drawing instrument cases, necklace cases and similar containers, specially shaped or fitted to contain a specific article or set of articles, suitable for long-term use and presented with the articles for which they are intended, shall be classified with such articles when of a kind normally sold therewith. This rule does not, however, apply to containers which give the whole its essential chara....
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....a given material or substance shall include a reference to goods consisting wholly or partly of such materials or substance. Lastly, those mixtures or goods that consist of mixtures of different materials or substances are classified according to GRI 3. 31. GRI 3 is the rule that acts as a tie breaker when, by application of GRI 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings. Such classification shall be based on the following a. As per GRI 3(a), a heading with a more specific description of goods is preferred to a heading with a more general description of goods. However, GRI 3(a) cannot be applied to decide classification when two or more headings each refer to only part of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale. Each of those headings is to be regarded as equally specific in relation to those goods, even if one gives a more complete or precise description of the goods. The decision of classification will then be made based on GRI 3(b) or GRI 3(c). [See CCEC & ST, Vishakhapatnam v. Jocil Limited, reported in (2011) 1 SCC....
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....Is as a menu of options that can be invoked randomly, but rather as a legal framework that dictates a precise and sequential methodology for classifying all goods. 36. This Court has repeatedly reiterated that GRIs 1-4 must be applied sequentially. [See Commissioner of Central Excise, Nagpur v. Simplex Mills Co. Ltd., reported in (2005) 3 SCC 51 and Secure Meters Limited v. Commissioner of Customs, New Delhi, reported in (2015) 14 SCC 239]. GRI 1, which gives primacy to the headings and notes, is the non-negotiable starting point. GRI 2, which deals with incomplete, unassembled or composite goods or mixtures, often acts as an extension of GRI 1, by deeming the headings to include incomplete/unassembled goods or mixtures or combinations of a material or substance. GRI 3 is only invoked when the application of GRI 1 and/or GRI 2 results in a good being prima facie classifiable under two or more competing headings. GRI 3 exists solely to resolve this tie. GRI 4, the rule of last resort, is mutually exclusive to GRI 3 and is only invoked if GRI 1 and 2 have failed to find even one possible heading for the good. To illustrate, let us take the analogy of "locked doorways": ....
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....g the official interpretation of the Harmonized System at the international level, would be of binding guidance in understanding and giving effect to the headings in the First Schedule. It is only when a different intention is explicitly indicated in the Act of 1985 itself that the HSN would cease to be of guidance. In effect, the legislative intention to depart from the HSN must be clear and unambiguous. For instance, in Camlin Ltd. v. Commissioner of Central Excise, Mumbai, this court found that there was an inconsistency between the Central Excise Tariff description and the entry in the HSN and, therefore, reliance upon the HSN entry was held to be invalid. It was affirmed that it is only when the entry in the HSN and the tariff description in the First Schedule to the Act of 1985 are aligned that reliance would be placed upon the HSN for the purpose of classification of such goods under the correct tariff description." (Emphasis Supplied) Thus, in Madhan Agro (supra), this Court clarified the applicability of the Explanatory Notes. Their application is governed by a single, critical condition of 'alignment'. This test is met when the domestic tariff entry (in ....
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....purposes of understanding the considerations that weighed with this Court while applying the common parlance test in classification disputes, it is necessary to analyse the relevant case law carefully. For the clarity of exposition, the case law discussed is divided into two broad categories: (a) cases where the common parlance test was applied; and (b) cases where the common parlance test was not applied." 23. After discussing a plethora of case laws in both the categories, namely, where the common parlance test was applied and where it was not applied, the Apex Court, in the a forecited Judgement in the case of Commissioner of Customs (Import) v. M/s. Welkin Foods reported as 2026 INSC 19, then expressed its cognizance of the frequent classification disputes being encountered by the Tribunal and laid down certain principles that would apply. The aforesaid expression of cognizance and the principles laid down are reproduced below: 63. Tribunals frequently encounter classification disputes in which the importer or manufacturer asserts that the subject goods possess a distinct commercial identity, warranting a classification that is independent of their....
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....found within a tariff heading or its defining criterion. b. The trade or common parlance test can be invoked when dealing with a classification dispute only when the following conditions are satisfied. i. The governing statute, including the relevant tariff heading, Section Notes, Chapter Notes, or HSN Explanatory Notes, does not provide any explicit definition or clear criteria for determining the meaning and scope of the tariff item in question. ii. The tariff heading does not include scientific or technical terms, or the words used in the heading are not employed in a specialised, technical context. iii. The application of the common parlance test must not contradict or run counter to the overall statutory framework and the contextual manner in which the term was used by the legislature. Thus, broadly speaking, the common or trade parlance test cannot be invoked where the statute, either explicitly or implicitly, provides definitive guidance. Explicit statutory guidance exists where the legislature provides a specific definition or a clear criterion for a term within the Act itself. Conversely, implicit guidance is found where the ter....
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....p India (supra) was delivered in the pre-HSN era, it laid down two principles governing classification under the customs law which remain relevant even in the HSN era. They are: (i) evaluation and classification of goods based on their condition at the time of import, generally referred to as the 'as imported' principle; and (ii) consideration of 'use' only when reference to use or adaptation is provided in the tariff heading. It is apposite to discuss a few other judgments of this Court to understand how the aforementioned principle concerning 'use' has been applied while dealing with classification disputes under various fiscal statutes." 74. In Indian Aluminium Cables (supra), this Court addressed the classification of 'Properzi Rods'. The department argued that Properzi Rods were 'aluminium wire rods' and thus fell under Entry No. 27(a)(ii) of the First Schedule to the Central Excises and Salt Act, 1944. Entry No. 27(a)(ii) states: Aluminium - wire bars, wire rods, and castings, not otherwise specified. Conversely, the appellants maintained that Properzi Rods were a distinct product, not commercially known as wire rods, differing in manufactu....
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....e Court's approach was aligned with the principle established in Dunlop India (supra), especially since the case involved Chapter Heading 84.34, which expressly included references to use, as it covered various machinery and apparatus prepared 'for printing purposes'. 77. The principle established in Dunlop India (supra), which limits the consideration of 'use' to cases where the tariff entry itself explicitly refers to use or adaptation, must be interpreted within the framework of the HSN. Under the HSN, GRI 1 gives legal force to the Section and Chapter Notes, which frequently contain binding definitions or specific criteria for classification. It is plausible, and in fact common, that such statutory definitions or criteria explicitly mention 'use'. In these cases, 'use' becomes a relevant consideration for classification, not in breach of the principle from Dunlop India (supra), but as a natural outcome of the statutory text. 78. A clear illustration of the aforesaid is the catena of decisions of this Court concerning the classification of goods as 'Medicaments' under the Central Excise Tariff Act, 1985. We are not presently concerned with the specific facts of....
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....rent use more carefully. An inherent reference to 'use' or 'adaptation' in a tariff heading may possibly be present in these two scenarios: a. Firstly, the language of the tariff heading or the supporting chapter and section notes is inherently indicative of consideration of use. For example, a heading that reads as 'refrigerating or freezing equipment' or 'tool tips' inherently refers to 'use' in the form of 'function' (refrigeration or freezing and cutting or working point of a larger tool, respectively). Consequently, use can be considered a factor when classifying goods under this heading. Another example is the heading, which reads, "Motor vehicles principally designed for the transport of goods." This clearly indicates consideration of "use" (transportation of goods), albeit such consideration of use should be primarily derived from the design features of the good. b. Secondly, in cases where the common or commercial meaning adduced to the eo-nomine good provided for in the tariff heading is such that the 'use' of the article is an important and defining component of an article's identity. For example, the common parlance meaning of 'air conditioning machine....
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....only in those rare instances where there is overwhelming statutory evidence to that effect. 86. Furthermore, relying on 'objective characteristics and properties' ensures legal certainty and ease of verification. The core of the principles outlined above is to prevent 'subjectivity' from influencing classification disputes. Reckless and unfounded consideration of subjective elements can lead to a cascade of issues in classification, as such elements may be used as a shield to import goods at a lower duty. Standard of Intended Use 87. A further issue concerns the standard of intended use that an importer must establish. This standard varies, depending on the exact wording and legal context of the tariff heading itself. The burden on the importer is to show that the product's intended use, supported by its objective features, aligns with the specific standard set by the statute. Let us understand this through a set of hypothetical illustrations: a. A tariff heading might cover "Motor vehicles principally designed for the transport of goods". If an importer seeks classification under this heading, it is not enough to merely prove the vehicle can....
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.... ways. 91. First, in cases involving explicit 'use' provisions, the common or commercial meaning is frequently employed to define the scope of the 'use' mandated by the statute. For instance, where a heading provides for "chemicals to be used for industrial purposes", the Court must necessarily inquire into the commercial understanding of the terms "chemical" and "industrial purposes". Such an inquiry serves a dual purpose: it ensures the product matches the threshold of what constitutes a 'chemical,' and it clarifies the ambit of the qualifying use, i.e., what the trade recognises as an 'industrial purpose,' thereby determining if the subject goods fall within the ambit of the said tariff heading. 92. Second, in provisions where use is inherent to the eo nomine description, the interlinkage with common or common parlance may play out in the following ways: a. In the first instance, the tariff heading itself may employ descriptors that necessitate a consideration of use, such as "household soap" or "industrial soap". When dealing with such headings, common or commercial understanding is utilised to determine the scope of these qualifying terms. The Court ....
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.... 95. The above discussion also applies to provisions that explicitly refer to use but also have an eo-nomine component. For example, if a tariff heading refers to machinery used for printing purposes, the court must satisfy itself of a two-fold criterion: (i) the goods are machinery, and (ii) the goods are capable of being used for printing purposes. Summary 96. Based on the aforesaid discussion, the legal position regarding consideration of use when dealing with classification disputes under the First Schedule, Act 1975, can be summarised as follows: a. 'Use' can be considered as a relevant factor when dealing with classification, only if the concerned tariff heading allows for consideration of 'use' or 'adaptation', either explicitly or implicitly. b. A tariff entry is said to allow consideration of 'use' or 'adaptation' for classification in the following scenarios: i. The tariff heading itself explicitly contains a reference to use or adaptation. ii. The notes related to a tariff item provide a legal definition or criterion that includes a reference to use or adaptation. iii. Use or adaptation....
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.... intended use when determining the classification of a good cannot be considered in isolation from other relevant considerations." (emphasis supplied) 26. The Hon'ble Supreme Court, has also struck a note of caution in the Welkin foods decision as under: 98. It is wise not to rely heavily on foreign cases concerning customs classification disputes, even though the HSN is adopted by most countries. This is because each nation may introduce specific additional subheadings, notes, and rules that govern customs classification under its own law alone. However, with that being said, it remains undeniable that foreign jurisprudence is especially valuable for understanding the broad principles related to customs classification under the HSN regime." 27. It is also pertinent that how to interpret the First Schedule of the Import Tariff, is specified therein, under the title, "General Rules for the Interpretation of This Schedule". It is stipulated that classification of goods in the Schedule shall be governed by the principles stated therein. Rule 1 of these rules state that the titles of Sections, Chapters and Sub-Chapters are provided for easy of reference only; fo....
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.... following Rule 1 should be applied. What it means is exactly the opposite, namely, that if a Heading does not require the exclusion of the other rules, those other rules must also be applied for determining the classification of an article. Therefore, all the relevant rules of interpretation in the Import Tariff come into play in the classificatory process. Rules 2 to 4 of the Import Tariff are not a mere adornment. Nothing ever is an adornment in an Import Tariff. Therefore, classification has to be determined both according to the terms of the Headings and according to the provisions of the rules unless, a particular Heading or Note excludes the application of rules other than Rule 1." 28. Thus, given the aforesaid exhaustive exposition of law elaborately dealing with the principles that govern classification of goods in the aforesaid pellucid terms, by the Hon'ble Supreme Court in Welkin Foods case as extensively reproduced supra, it is evident that the sentence "Therefore, classification has to be determined both according to the terms of the Headings and according to the provisions of the rules unless, a particular Heading or Note excludes the application of rules other th....
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....imed by them. The burden is on the Revenue to adduce proper evidence to show that the goods are classifiable under a different heading than that claimed by the assessee. The recent decisions in Hewlett Packard India Sales Pvt Ltd v Commr of Cus (Import), Nhava Sheva, 2023 (383) ELT 241 (SC) as well as Gastrade International v CC, Kandla,,2025 (392) ELT 529 (SC) also hold to the same effect. 30. A perusal of the impugned order reveals that the Adjudicating Authority has rejected the classification of the goods imported by the Appellant and redetermined the classification of the goods as indicated in the tabulation above by placing reliance on : a) Note 1(g) to Section XVI which excludes "parts of general use, as defined in Note 2 to Section XV, of base metal (Section XV)", from the cover of Section XVI with respect to the Angle Steels, Bolt, Nut, Chain, Clip, Fish Plate, Rope, Springs, Springs pin and Washer imported by the Appellant. b) Note 1(a) to Section XVI which excludes "transmission or conveyor belts or belting, of plastics of Chapter 39, or of vulcanised rubber (heading 4010), or other articles of a kind used in machinery or mechanical or electrical app....
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....g Authority, evidence that the pushbuttons and switches are such that they are not designed for the exclusive use in lifts or escalators as claimed by the appellant, or any statement of the appellant obtained which can be proved to be relevant and attest to the fact that these products are of the character, type or nature which would attract the classification being so redetermined by the Ld. Adjudicating Authority, etc., are completely absent. The Adjudicating Authority, ignoring that it is the Department which is choosing to change the classification contending that the belts are of vulcanized rubber and thus has to evidence the fact, has instead stated that the appellant has not adduced any evidence in support of their submission. Such an attempt to shift the burden of proof is not correct. Neither has any evidence been collected to substantiate the redetermined classification, nor any evidence shown to discredit the averments as to facts as contended by the appellant; the burden to disprove in the instant case being cast upon the Revenue, given its attempt to upset the appellant's claimed classification. Therefore, absent any evidence relied upon by the Ld. Adjudicating Authori....
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....itability for use solely or principally with lifts/escalators. The aforesaid documents adduced thus attest to this fact that those who purchase and sell these goods also identify them as such. While the general principle is that end use is not typically considered when classifying goods at the time of import- since classification should be based on the goods as they are presented- there are exceptions as was elaborated in the Welkin foods case reproduced above. In cases like this, where the description of the heading explicitly requires that the parts be suitable for use solely or primarily with the machinery of the specified headings, it is clear that the tariff heading under which the importer has sought to classify the goods allows consideration of 'use' as a relevant factor, and thus the classification claimed by the appellant is in sync with the principles laid down in the Welkin Foods case as elucidated above. The evidence in this regard can then be the nature of the activity in which the importer is engaged including the exclusivity or primacy of such activity, the customised nature of the imported goods that makes it unusable for purposes other than what is described, or wh....
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....uity about the scope of any tariff entry. The decisions in Coen Bharat Ltd v. CCE, Vadodara, 2007 (217) ELT 165 (SC) and G.M.Pens International Ltd v. Commr of Cus. (Sea Port), Chennai, 2005 (187) ELT 180 (Tri-LB) are authorities for the said proposition. Given that the chapter Heading 8431 in the Tariff itself has reference to various machinery of headings 8425 to 8430, the aforesaid explanatory note cited in the SCN at best strikes a cautionary note, more so when there are also residuary headings at six digit level indicated therein under. In any case, since the specific sub heading 84313100 pertains to parts of lifts, skip hoists or escalators suitable for use solely or principally with such machinery, we do not find any ambiguity therein that would invite the application of the aforesaid explanatory note relied on in the SCN. Our view is also fortified by the fact that HSN explanatory notes pertaining to parts of heading 8428, categorically states that, subject to the general provisions regarding the classification of parts(see the general explanatory notes to Section XVI), parts of the machines of this heading are classified in heading 8431. The general explanatory notes in tu....
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....ving two competitive headings, heading beneficial to the assessee is to be adopted. The decision in CCE Bhopal v Minwool Rock Fibres Ltd, 2012 (278) ELT 581 (SC), and CC, Customs v Lotus Inks, 1996 (87) ELT 580 (SC) refers in this regard. For the aforesaid reasons, we are of the firm opinion that the reliance placed on the explanatory note to Section 8431 and the reclassification of the goods consigning them to residuary headings, are both untenable in the facts and circumstances of the instant case. 35. Consequent to our aforesaid analysis, we are of the considered view that as per Rule 1 of the General Rules for the Interpretation of the Schedule itself, in terms of the headings of 8431 and particularly CTI 84313100, the goods imported by the appellant, except for door locks to the extent stated and for the reasons elucidated infra, are entitled to the classification as claimed by the appellant and the redetermination of their classification as done by the Adjudicating Authority will not sustain and is liable to be set aside. Our aforesaid view is also fortified by the decision of a coordinate bench of this Tribunal in Sew Eurodrive India Ltd v. CC, Chennai, 2024 (1) TMI 465Ce....
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....ed by the appellant on the decisions in CC, Mumbai v. Toyo Engineering India Ltd, 2006 (201) ELT 513 (SC) and Godrej Industries Ltd v CCE, Mumbai, 2008 (229) ELT 489 (SC) for its contention that the Adjudicating Authority cannot travel beyond the grounds raised in the show cause notice is also found to be apposite in this context. Be that as it may, even if for arguments sake Section 2(a) is taken to be applicable in so far as it relates to the classification of push button and switches, we find that the Adjudicating Authority has misapplied section 2(a). When Section 2(a) itself excludes parts which are goods included in headings 8431, without letting in evidence that the push button and switches imported by the appellant are not covered under heading 8431, reliance placed on Section 2(a) to classify these goods under the residuary heading 85365090 is wholly misconceived and thus unsustainable. In the aforesaid circumstances, we hold that the findings recorded redetermining the classification of the imported goods, which is sought to be justified by the Adjudicating Authority, based on the specific exclusions in Section Note 1 as well as the reliance on section Note 2(a), are unsu....
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....s headings 84 and 85 of Customs Tariff, Revenue argued that the subject item imported, which has been named as 'Tail Brush FIRC' cannot be classified under Chapter 84 but it should go under Chapter Heading 9603. The Tribunal held that Revenue's contentions for classifying the subject item under 9603 50 00 do not deserve acceptance mainly on account of the fact that the item imported is suitable for use principally with the machinery namely TBM, which appears to be covered under Chapter Heading 8430 of the Customs Tariff. Given the aforesaid facts and circumstances of this case, we find no reason to differ from the view taken by the coordinate bench in the said decision and hold that the findings in the instant case relating to the exclusion of brushes imported by the appellant citing Note 1(o) are untenable on this count too. 39. However, when it comes to the classification of door locks, the SCN has put the appellant to notice that the explanatory notes of heading 8431 stipulates that "The heading also excludes locks for passenger and goods lifts, etc. (heading 8301)". Indisputably the appellant's contention is also that such door locks are used in lifts/escalators while seekin....
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....ith the aforesaid reasoning of the Ld. Adjudicating Authority. As was observed by us supra, the sample purchase order placed, along with the connected invoice of the foreign supplier and certificate of origin and the Bill of entry No.2433535 dated 13.07.2017 filed, as annexed to the appeal records, reflect that the description of the goods is shown as escalator parts under HS Code/CTH 8431. It is this Tariff item 84313100, that is seen indicated in the aforementioned Bill of entry. There has been no evidence let in that the declarations made by the appellant are at variance with the supplier's document or the certificate of origin, be it as to the quantity, description, or classification. It is also pertinent to note that when the Department is alleging misclassification, it has not controverted the appellant's specific contention that the appellant has been importing these consignments for many years in the past without any dispute. That in a few instances if at all the appellant had cleared the goods under classification at variance with what has presently been claimed, which the appellant has contended was an inadvertent error/mistake at the end of CHA, the fact remains that whe....
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....re has to be an intention on the part of the assessee to evade the duty." xxxxx 24. Further, we are not convinced with the finding of the Tribunal which placed the onus of providing evidence in support of bona fide conduct, by observing that "the appellants had not brought anything on record" to prove their claim of bona fide conduct, on the appellant. It is a cardinal postulate of law that the burden of proving any form of mala fide lies on the shoulders of the one alleging it. This Court observed in Union of India v. Ashok Kumar & Ors. - (2005) 8 SCC 760 that "it cannot be overlooked that burden of establishing mala fides is very heavy on the person who alleges it. The allegations of mala fides are often more easily made than proved, and the very seriousness of such allegations demand proof of a high order of credibility." In view of our discussions supra, when the appellant can hardly be faulted for making a declaration as to the classification in line with the Certificate of Origin as well as its belief that the classification is correct, as is also borne out of its past experience while making imports under the same classification with respect to the impug....
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.... appellant is also correct in its submission that the present dispute relating to classification is primarily an interpretational dispute based on chapter headings, section notes etc. and in matters involving interpretational disputes, attributing malafide is untenable. Thus, the finding of the adjudicating authority as to the invoking of extended period of limitation, misstatement of classification by the appellant, consequent liability to confiscation under Section 111 (m) and the resultant redemption fine imposed under Section 125 of the Customs Act, 1962 and penalties imposed under Section 114 and Section 114AA are wholly untenable to the extent we have reasoned above and are hence liable to be set aside. 44. We further find that the Appellant has raised a specific ground in its Appeal that the Adjudicating Authority could not have confirmed the demands with respect to the imports made by the Appellant through ports outside the territorial jurisdiction of the Adjudicating Authority. The said ground has not been controverted in any manner by the Department. We note that the Central Board of Indirect Taxes and Customs (CBIC, formerly CBEC), in exercise of the powers derived fr....
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....empowered to adjudicate the show cause notice issued making such demands for imports made outside the territorial jurisdiction of the SCN issuing authority; we are constrained to hold that the Adjudicating Authority has acted outside his jurisdiction to the extent he has confirmed the demands even in respect of goods imported and assessed to duty at various places other than within his territorial jurisdiction. We are therefore of the considered view that for the aforesaid reasons, the confirmation of demands in the impugned order, to the extent it pertains to the goods imported and assessed to duty at various places outside the territorial jurisdiction of the Ld. Adjudicating Authority, being null and void abinitio, cannot be sustained and are liable to be set aside to that extent on this ground alone. 45. We have examined the decisions relied upon by the Ld. A.R. in support of his submissions. The reliance placed on the decision in Sony India Ltd is misconceived as the issue therein pertained to whether the goods imported are components or whether the components as presented can be considered to be a complete or finished article by virtue of the deeming provisions of Rule 2(a)....