TaxTMI 
TaxTMI 
2026 (4) TMI 1289
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....uty under section 28(4) of the Customs Act, 1962 [the Customs Act] with interest under section 28AA of the Customs Act and imposes penalty upon the appellant under section 114A of the Customs Act. 2. The disputed goods imported by the appellant are : (i) Track assembly; (ii) Brake/case sub assembly; (iii) Gear Vertical adjuster; and (iv) Bar seat track lock 3. According to the appellant, the said goods are directly sold to the car seat manufacturers and the appellant had classified the aforesaid goods under CTI 9401 90 00 as parts of seats. The impugned order has rejected the said classification and has ordered for reclassification under CTI 8708 99 00 as parts and accessories of motor vehicles. 4. The appellant has described the aforesaid goods imported by the appellant in the following manner: "Track Assembly Track Assembly is an integral part of complete seat and it is supplied as such to a car seat manufacturer for manufacturing of the seats. It is not separately supplied to the automobile manufacturer as it forms an integral part of the seat. It allows the user to adjust the seat to a particular position in order t....
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....24 to the show cause notice and contended that classification of brake Sub-Assembly had been decided by the Additional Commissioner by order dated August 01, 2022 in the matter of the appellant holding that the goods were part of seats and, therefore, classifiable under CTI 9401 90 00 and the proceedings initiated by show cause notice dated February 02, 2022 were dropped. The appellant also pointed out that the four imported goods are parts of seats and, therefore, correctly classifiable as such. The appellant also relied upon the decision of the Ahmedabad Bench of the Tribunal in Shiroki Auto Components India Pvt. Ltd. vs. Commissioner of Central Excise & Service Tax, Ahmedabad [2020 (374) E.L.T. 433 (Tri.-Ahmd)] wherein child parts imported by the appellant were held to be classifiable under CTI 9401 90 00 and the appeal filed by the department to assail this order of the Tribunal was dismissed by the Supreme Court on July 30, 2021 holding that there was no reason to interfere with the order passed by the Tribunal. 6. The Commissioner, however, in respect of the order passed by the Ahmedabad Bench of the Tribunal in the matter of the appellant did not hold that it would not be....
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....is mechanism enables the passengers and drivers of the automobile to adjust seat positions for their comfort and convenience. Thus, the Track assembly manufactured and supplied by the applicant is an adjunct to the car seat. Therefore, it is clear that the 'Track assembly' is an accessory to the Motor vehicle and is covered under CTH 8708." (emphasis supplied) 7. The Commissioner also found that the parts imported by the appellant are not parts of seats for the following reasons : "22.3.11 Therefore, the Track Assembly, Gear Vertical Adjuster, Case Sub Assembly-Seat Vertical, Brake Sub Assembly- Vertical and Bar seat Track Lock etc. do not appear to be the parts of general use in the seats classifiable under CT 9401, but very specific, meant for the automobiles only, so as to make the driving car easier and safer. They help the drivers to align the seat as per his physical requirements for a safer drive. These components enable the driver to adjusted his position in a number of ways, including the following: i. Position: Moving the seat forward or backward, or raising or lowering it ii. Backrest: Changing the incline of the backrest iii....
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....wardly and downwardly facing bearing surfaces. In an unloaded state, at least one pad section separates the upwardly and downwardly facing bearing surfaces from each other by a distance which is greater than the diameter of the rolling element. The Track Assembly is therefore not only works as platform for the automobile seats, but also provide several functions to enable drivers and passengers to adjust the height, distance and space in the cars. The Track Assembly now a days are highly automated and are functioning with the help of robotic control. The Track Assembly therefore, not basically performs the functions of the Vehicle Seat, but have the essential function to enable drivers and passengers to adjust the seats backward, forward or upward, downward based on their requirements." (emphasis supplied) 8. The Commissioner also relied upon the decision of the Supreme Court in Commissioner of Central Excise, Delhi vs. Insulation Electrical (P) Ltd. [2008 (224) ELT 512 (SC)] to hold that the products imported by the appellant are not part of seats. 9. The Commissioner, thereafter, examined whether the extended period of limitation contemplated under section 28(4) of the C....
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....ed under section 28(4) of the Customs Act could not have been invoked; and (vi) The imposition of penalty and demand of interest is not sustainable. 11. Shri Ranjan Prakash and Shri Rajesh Singh, learned authorized representatives appearing for the department supported the impugned order and made the following submissions : (i) That the goods imported by the appellant are not classifiable under CTI 9401 90 00 as 'parts of seats' as the goods are seat adjuster/track assembly mechanisms which are fixed to the floor of the motor vehicle and merely facilitate forward-backward and vertical adjustment of seats; (ii) The Supreme Court in Insulation Electrical held that rail assembly front seat, adjuster assembly slider seat and rear back lock assembly are classifiable under Chapter Heading 8708 as accessories of motor vehicles and not under CTH 9401; and (iii) The impugned order does not call for any interference. 12. The submissions advanced by the learned counsel appearing for the appellant and the learned authorized representatives appearing for the department have been considered. 13. The issue that arises for consideration in this appeal i....
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....amed as Round Recliner. Round Recliner is thereafter sold to the manufacturing facility of the appellant's sister concern M/s. Shiroki Technical India Pvt. Limited (hereinafter referred to as STIPL) in Haryana where said Round Recliner is used to make Recliner Assembly. M/s. STIPL Haryana sold the Recliner Assembly to the seat manufacturer namely M/s. Krishna Maruti Limited, Gurgaon. M/s. Krishna Maruti Limited after purchase of Recliner Assemblies fixed/welded the same into the seat frame in the course of manufacture of complete seat of motor vehicles. The complete seat duly fitted with Recliner Assembly is supplied to Maruti Suzuki India Limited, Gurgaon. As per the affidavit given by the appellant and also on perusal of the invoices, it is seen that Round Recliner supplied by the appellant to their sister unit/STIPL Haryana and also the manufacture of Recliner Assembly by STIPL Haryana and supplied to M/s. Krishna Maruti Limited, were classified under [heading] 9401. On this fact, it is clear that the appellant have manufactured Round Recliner which is part of Recliner Assembly and Recliner Assembly is part of complete seat and classification of goods at both the stages is for p....
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....ssembling of complete seat. Therefore, the child parts are integral parts of seat and not like accessories which is fitted in the motor vehicle. Hence, the facts of the case in Insulation Electricals Pvt. Limited (supra) and in the present case are entirely different." (emphasis supplied) 18. The Commissioner has, however, not followed the binding decision of the Tribunal for the reason that the said judgment of the Tribunal does not take into consideration various judgments, advance rulings and the principles of Explanatory Notes/Section Notes. It needs to be noted that the Commissioner did not hold that this decision will not be applicable on facts. As noticed above, this decision of the Tribunal in Shiroki Auto Components had attained finality as the appeal filed by the department before the Supreme Court was dismissed. 19. The issue, therefore, that arises for consideration in this appeal is whether the Commissioner acted in breach of judicial discipline in not following the decision of the Tribunal in recording that the Tribunal failed to consider various judgments and advance rulings and the principles of Explanatory Notes. 20. So long as the decision of the Tribu....
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....arding that order. As we have said earlier, such view is destructive of one of the basic principles of the administration of justice. In fairness to him it must be stated that learned counsel for the respondent did not attempt to support the judgment of the Judicial Commissioner on the ground that no manifest injustice resulted from the refusal of the respondent to carry out the directions of a superior tribunal. He conceded that even if the order of the Tribunal was wrong, a subordinate and inferior tribunal could not disregard it; he readily recognised the sanctity and importance of the basic principle that a subordinate tribunal must carry out the directions of a superior tribunal." (emphasis supplied) 22. This principle was also laid down by Supreme Court in Dharma Chand Jain vs. The State of Bihar [AIR 1976 SC 1433] and the observations are: "The State Government being a subordinate authority in the matter of grant of a mining lease, was obliged under the law to carry out the orders of the Central Government as indicated above. But the State Government declined to do so on the ground that it had laid down a policy that the mining leases in respect of the area sh....
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....since that time there have been occasions, of which the instant appeal is one, when alone or in company. I have dissented from a decision of the majority of this House. But the judicial system only works if someone is allowed to have the last word and if that last word, once spoken, is loyally accepted." (emphasis supplied) 24. In this connection it will also be appropriate to refer to the decision of the Supreme Court in Kamlakshi Finance. The order passed by the Assistant Collector not only ignored the order of the Collector (Appeals) remanding the matter, but also distinguished the decision of the Tribunal by observing that the decision of the Tribunal had not been agreed to by the Department as an appeal had been filed in the Supreme Court. The assessee filed a writ petition in the Bombay High Court to challenge the said order of the Assistant Collector. The High Court not only quashed the order passed by the Assistant Collector but also directed the Department to allocate the matter to a competent officer for passing a proper order. It is against this decision of the Bombay High Court that the Union of India preferred an appeal before the Supreme Court. The Supreme Court....
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....essees and chaos in administration of tax laws. ***** 8. We have dealt with this aspect at some length, because it has been suggested by the learned Additional Solicitor General that the observations made by the High Court, have been harsh on the officers. It is clear that the observations of the High Court, seemingly vehement, and apparently unpalatable to the Revenue, are only intended to curb a tendency in revenue matters which, if allowed to become widespread, could result in considerable harassment to the assesses public without any benefit to the Revenue. We would like to say that the department should take these observations in the proper spirit. The observations of the High Court should be kept in mind in future and the utmost regard should be paid by the adjudicating authorities and the appellate authorities to the requirements of judicial discipline and the need for giving effect to the orders of the higher appellate authorities which are binding on them." (emphasis supplied) 25. The aforesaid decisions of the Supreme Court have been referred to by the Supreme Court in Commissioner of Income Tax vs. Ralson Industries Ltd. [(2007) 2 SCC 326] and it ....
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....e car seat and converts it into a complete front seat of the car. The rail assembly is only an accessory of the track assembly and cannot give the final product its identity. Technological innovation often meet with deficiencies or ambiguities within the static statutory and regulatory frameworks. The track assembly before being fitted onto a car is meshed with the car seat and has more utility, than providing a slide function. It provides an identifiable 'front seat mechanism for vehicle' of modern-day cars. This is also clear from the pictorial representation of the two assembly's given in the impugned order and reproduced at para 6.1 above. As seen from the impugned order the Power Track Assembly has a 6-way mechanism (slide, height adjustment and cushion tilt mechanism). A far cry from the days of the fixed car seats. Automobile seats are in close contact with the human body and with their inbuilt mechanisms are primarily designed for passenger safety and to reduce the risk of serious injury while they may also add convenience to the car. The car front seats of modern-day cars are hence not complete in themselves without these mechanisms. They cannot be said to only adds to the....
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....ance ruling has no precedential value for other assessees." 31. The Tribunal also held that the judgment of the Supreme Court in Insulation Electrical will not apply to 'track assembly' and the relevant portions are: "17.2 The goods in Insulation Electrical (supra) consisted mainly of 'rail assembly' and its lock assembly. Rail assembly was essentially in the nature of rails made out of iron and steel on which seats can slide back and forth and were supplied directly to M/s Maruti Udyog Ltd which manufacturers cars and not seats. In the impugned case the goods are 'track assembly' which includes rail assembly and cushion panel assembly along with lock assembly, set bracket, base assembly, cushion panel, link assembly, cross member bracket assembly, pump assembly, spring assembly, cross member bracket assembly etc.. The goods are more evolved from that of a rail assembly and are not identical to it. Unlike the Central Excise classification dispute in Insulation Electrical (supra), in the present Customs classification dispute, the track assembly manufactured by the Appellant is supplied to car seat manufacturers who affix the cushion and other components of the car seat,....