TaxTMI 
TaxTMI 
2026 (3) TMI 1600
X X X X Extracts X X X X
X X X X Extracts X X X X
....in-Original No. 36776 dated 20.04.2015, 38332 dated 26.05.2015 and 36775 dated 20.04.2015 for clearance of "HA RR GEN 1 ASSY (BRG ASSY)", "MC FRT BRG ASSY" and "RD ASSY(BRG ASSY)". The Appellant self-assessed the classification of the goods under Customs Tariff Heading 84822090 as "Bearing-of bore diameter exceeding 100mm". The goods were cleared on the basis of the classification declared by the Appellant. Thereafter, the department entertained the view that the imported goods are not classifiable under the CTH 84822090 and they are rightly classifiable under the CTH 87087000. Accordingly, three show cause notices dated 13.09.2012, 10.09.2012 and 17.10.2012 were issued to the appellant where it was proposed to: - i. re-classify the goods under CTH 87087000; ii. demand the short collected duty amounting to Rs. 19,92,241/- on the goods imported under 12 bills of entry as detailed in the Show Cause Notice dated 13.09.2012 under Section 28(4) of the Customs Act, 1962, along with applicable interest under Section 28AA ibid. iii. demand the short collected duty amounting to Rs. 34,90,819/- on the goods imported under 18 bills of entry as detailed in the show c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at such assemblies may not be brought under the heading 8482. In the absence of any entry therein under heading 84.82, obviously in terms of Note 3 in section XVIII, the appropriate classification of these assemblies with sub parts and or accessories, shall be under the heading 87087000, as proposed in the Show Cause Notice." The lower appellate authority in paras(2) vide page Nos. 6 of Orders-in-Appeal C. Cus-II No. 706/2015 dated 30.08.2015 and C. Cus-II No. 821/2015 dated 03.09.2015 and para(2) vide page No. 5 of Order-in-Appeal No. C. Cus-II No. 820/2015 dated 03.09.2015 has observed that "At this juncture, it is useful to refer the sub-heading notes (Chapter-84) which is extracted as below : sub-heading (of chapter84) applies only to bearings with cylindrical rollers of a uniform diameter not exceeding 5 mm and having a length which is at least three times the diameter. The ends of the rollers may be rounded". Accordingly the claim of the Appellant for classification under CTH 8482 was rejected. The original authority without ascertaining the correctness of classification has assumed that imported goods may not fall under CTH 8482. The Lower appellate authority cou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of Customs Tariff Act 1975 and not under heading 8503", the Learned Advocate argued that in the same manner, even though the goods imported are meant for motor vehicle use, the imported bearings are classifiable under Tariff Heading 84822090. 4.6 Regarding imposition of penalties on the Appellant, the Learned Advocate contended that the issue involves interpretation in classifying the goods imported by the Appellant and therefore, the question of imposing penalties would not arise. In this regard, he relied upon the case of Indu Nissan Oxo Chemical Industries vs. Commissioner of Customs, Kandla [2013 (290) E.L.T. 299 (Tri. - Ahmd.)]. 5. Per contra, the Ld. Authorized Representative Ms. Rajni Menon, for the Revenue supported the findings in the impugned order and submitted that the contention of the Appellant is wholly dependent on the submission that the goods are bearings whereas the impugned goods imported by the Appellant are bearing assembly which is not a bearing but assembly of many sub parts, including bearing, which is ready to be fitted into wheels. She submitted that in terms of Note 3 to Section XVII of the Customs Tariff, the appropriate classification of these as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r precise description of the goods." Appellant has relied on rule 3(a) of GIR. However, it is seen from rule 1 of GIR that before proceeding to rule 3(a) of GIR, it is necessary to go through relevant Section or Chapter Notes of Customs Tariff. 11. Appellant's claim is that the goods are classifiable under CTH 8482 and thereby excluded from CTH 8708 in terms of clause 2(e) of Note 2 to Section XVII which reads as under: - "2. The expression "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: (a) --------------- (b) ---------------- (c) -------------------- (d) -------------------- (e) Machines or apparatus of headings 8401 to 8479, or parts thereof; articles of heading 8481 or 8482 or, provided they constitute integral parts of engines or motors, articles of heading 8483;" However, it is observed that the classification claimed by the Appellant, viz. CTH 8482, falls under Chapter 84 of Customs Tariff which in turn falls under Section XVI thereof. Therefore, notes to Section XVI are as much relevant for determination of classif....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ively. Notes 2(b) and (3) of Section XVII read as follows : "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 : (a) xxx xxx (b) Parts of general use, as defined in Note 2 to Section XV, of base metal (Section XV), or similar goods of plastics (Chapter 39);" "3. References in Chapters 86 to 88 to 'parts' or 'accessories' do not apply to parts or accessories which are not suitable for use solely or principally with the articles of those Chapters. A part or accessory which answers to a description in two or more of the headings of those Chapters is to be classified under that heading which corresponds to the principal use of that part of accessory." 24. Section XVII deals with Vehicles, Aircraft, Vessels and Associated Transport Equipment. Note 2 says that the expression "parts" and "parts and accessories" do not apply to the articles mentioned in clauses (a) to (l) thereunder. In clause (b), parts of general use as defined in Note 2 to Section XV, of base metal (Section XV), or similar goods of plastics (Chapter 39),....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... classification of parts or accessories which are suitable for use solely or primarily with articles of Chapter Heading 87.08 which pertains to parts and accessories of motor vehicles of Chapter Headings 87.01 to 87.05, the test to be applied is : 'whether the goods are suitable for use solely or primarily with articles of Chapter Headings 87.01 to 87.05' and the hinges and handles which are specifically meant for motor vehicle as its parts, are the parts and accessories of the motor vehicles classifiable under Chapter Heading 8708.00 and merely because they are hinges and handles, these, by itself, cannot be treated as accessories or fittings of furniture classifiable under Chapter Heading 8302.00 as the use of the aforesaid items is specifically for motor vehicles and cannot be used generally for any other product much less furniture. The relevant portion of the said judgment in the case of M/s. Cast Metal Industries (P) Ltd. Versus Commr. Of Central Excise-IV, Kolkata [2015 (11) TMI 833 - Supreme Court] is reproduced below: - "The goods in question are motor vehicles hinges and handles. The assessee is the manufacturer of motor vehicles parts which were supplied by the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rers. c) On the exterior portion of the door handle, there is a push button. If it is pushed, the mechanism inside the vehicle hits and pushes the plate in the locking system. Thereby the locking mechanism inside the door panel enables the door to open. d) If it is the door handle for driver's door, it is provided with lock and key. e) In the motor vehicle manufacturer's drawing/design, part number of the handle is mentioned. This part number is also mentioned in the purchase orders as well as in the Invoices raised by the Appellant. f) The appellant manufactured door handles for the motor vehicles manufactured by three motor vehicle manufacturers, viz. Tata Motors Limited, Hindustan Motors Limted and Mahindra & Mahindra Ltd. HINGES FOR MOTOR VEHICLES a) Hinges were manufactured as per the designs and drawings of the concerned model of motor vehicle as supplied by the motor vehicle manufacturers. b) These were for being fitted on the outside portion of the bonnet and dickey of the motor vehicles. c) These performed the function of enabling lifting of bonnet and dickey portions manually and at the same time prev....
X X X X Extracts X X X X
X X X X Extracts X X X X
....adings 87.01 to 87.05. The Court was also categorical that in such a case the test that is to be applied is: 'whether the goods are suitable for use solely or primarily with articles of Chapter Headings 87.01 to 87.05'. It is strange even when the judgment was specifically brought to the notice of the Tribunal and is taken note of, but the same was not dealt with by the Tribunal in the impugned judgment at all. We are of the opinion that the aforesaid judgment clinches the issue in favour of the appellant/assessee herein. Accordingly, the impugned judgment of the Tribunal is set aside and this appeal is allowed with no order as to costs." 14. It is not in dispute that the impugned goods are used solely as parts of motor vehicles. In the letter dated 09.11.2012 submitted to the original adjudicating authority in reply to the Show Cause Notices issued from file Nos. (i) TA/112074/03.09.2012-Gr.5 dated 13.09.2012, and (ii) TA/112090/01.10.2012-Gr.5 dated 17.10.2012 which culminated in orders-in-original No. 36776/2015 dated 20.04.2015 and 36775/2015 dated 20.04.2015 and subsequently in orders-in-appeal No. C.Cus.II No. 706/2015 dated 30.08.2015....
X X X X Extracts X X X X
X X X X Extracts X X X X
....td. [supra], the original adjudicating authority has also applied note 3 to Section XVII (erroneously mentioned as Section XVIII in the orders-in-original as Section XVIII of HS Nomenclature 2012 Edition does not contain any Section Notes - it only has Chapter Notes for Chapters 90, 91 and 92) for deciding the issue of classification of the impugned goods, as seen from the following identical findings in paras 16 to 18 of order-in-original No. 36776/2015 dated 20.04.2015 and paras 15 to 17 of Order-in-Original No. 36775/2015 dated 20.04.2015: - "16. The advocate, in his reply dated 09.11.2012 (in para 3) has submitted that the bearing assemblies in question (HARR Gen 1 Assy (Bearing Assy) and M.C. font Bearing Assembly) are rotation parts used respectively in Cars rear drum assembly and front wheel assembly; These imported two assembly consists of sub parts assembled together to produce the above assemblies. 17. Now the Question is, whether the above "assemblies" with the sub parts and others in the technical write up, which reveals that these consist of sub parts mentioned in the write up (inner race, outer race, Balls, and retainer) used in Car drum Assy with sk....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing the goods. Thus, LAA has found his own judgment to be superior to the judgment of Hon'ble Tribunal on the same issue of confiscation of goods on account of wrong classification and consequently, distinguished the judgment of the Hon'ble Tribunal on the issue of imposition of penalty for wrong classification of goods. Judicial discipline demands that the lower appellate authority should have followed the judgment of the Hon'ble Tribunal and set aside the penalty imposed on Appellant. Therefore, the penalties of Rs. 3,00,000/- and Rs. 1,50,000/- imposed on the Appellant under Section 112(a) of the Customs Act, 1962 are set aside. 16. In view of the foregoing discussions, the substantive issue of classification is decided in favour of Revenue and against the Appellant. The issue of imposition of penalties is decided in favour of the Appellant and against Revenue. 17. The Ld. Advocate has raised the issue that LAA has traversed beyond the scope of show cause notice and confirmed the original adjudicating authority's order on different ground which was not mentioned in the Show Cause Notice. It is observed that the LAA has decided the classification based on the fact that the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
...."HA RR Gen1" (Bearing Assembly) and "MC FRT BRG Assembly". I have to decide as to whether the said goods are correctly classifiable under heading 84822090 as applicable to tapered Roller Bearing and as availed by the importer or under 87087000 (as parts of Road Wheels of motor vehicle), as proposed by the department vide show cause notice dated 10.09.12. 10. Though Advocate stated in his reply dated 09.11.012 (In para 5(i)) there is no dispute that the goods are bearings is not true. The Show Cause Notice came into existence because the department is of the opinion that the goods are not bearings but assembly of many sub parts which is ready to be fitted into wheels. I find that the contention of the importer is wholly dependent on the submission that the goods are bearings where as I find that the goods are bearing assembly which is not a bearing but assembly of many parts including bearing. Hence the submissions made by the importer are unfounded in my opinion. The goods can be classified as bearings under heading 8482 rather they are identifiable part of road wheels for automotive and deserve to be appropriately classifiable under heading 870870." Extracts from Order....