TaxTMI 
TaxTMI 
2026 (4) TMI 1450
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.... under Section 112(a)(ii) of the Customs Act, 1962. 2. The appellant is engaged in the manufacturing of Anti-lock Brake Systems [ABS] /Electronic Accepted Control System [ECS] and brake sensors, which are supplied to automobile manufacturers in India. For manufacturing these systems, the appellant imported the following components during the period 1.4.2021 to 30.09.2022:- 1. ABS Motors CTH85013119 2. MK 100 MAB Motors 3. Pressure Transducers/Sensors CTH 90318000 4. Brake Light Sensors 3. The appellant availed concessional rate of basic customs duty under Sl.No.485A and 581B of Notification No.50/2017-Cus, as amended, on the ground that the imported goods were components used in the manufacture of ABS/MAB/ECS and not directly usable in the motor vehicles. 4. Pursuant to amendment made vide Notification No.21/2021-Cus dated 31.03.2021, the Directorate of Revenue Intelligence (DRI) alleged that the imported goods were "suitable for use" in motor cars and motorcycles and hence excluded from the scope of the exemption. Show cause notice dated 24.03.2023 was issued proposing denial of exemption and recovery of differential duty for 179 Bills of ent....
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....and condition the goods are presented to Customs Authorities. Subsequent use of the imported goods has no bearing on the classification of the duty liability /exemption. Reliance has been placed on the decision in the case of Commissioner of Customs, New Delhi Vs. Stonex India Pvt. Ltd. Vs. CC, Mundra [2024 (25) Centax 359 (Tri.-Ahmd.)], Dunlop India Ltd. & Madras Rubber Factory Ltd. Vs. Union of India [1983 (13) ELT 1566 (SC)]. In nutshell the submission of the appellant is that at the time of import, the goods are "not suitable" for use in motor vehicles/cars. The goods are actually used to manufacture ABS, which are then sold to automobile cars and therefore, the appellant rightly claimed the benefit under the notification. On the issue of classification of Pressure Transducers/Sensors, the learned Counsel submitted that the product imported is classifiable under CTH 90262000. The Department cannot classify the same under CTH 9031, which is a residuary entry for "measuring or checking instruments, appliances or machines not specified or included elsewhere in this Chapter, profile projectors". Also that HSN Entry Notes 9031 excludes articles of 9026. Reliance has been placed on t....
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....rcially fit for the use described. The Bench referred to the decisions of US Customs cases, where it has been held that for an item to be suitable for a particular purpose within meaning of the Tariff Act, the merchandise need not be used for a stated purpose, but there must be evidence of more than a casual, incidental, exceptional, or possible use, the use must be substantial. More plausible reasoning given by the Tribunal in the case of Quick International is that the word "suitable" shall be interpreted to mean "capable of being used" and, therefore, held that when the impugned cassettes are capable of being used in S-VHS type of VCR, it shall be construed that the same are suitable for use with such type of VCR. 10. The basic contention of the appellant is that imported goods are not directly usable in the automobile and cannot function independently as they are incorporated with all other components required to manufacture a complete ABS, MAB and ECS, which are then supplied to the consumers in manufacture of two or four wheelers. We are not convinced with the argument raised by the appellant, firstly for the reason that we are concerned with the interpretation of the phra....
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.... turns, and emergency brakes are applied, the brake pads can get locked with the wheels resulting in the tyres losing grip on the road. Further, the brakes may not apply uniformly on all wheels resulting in wheels rotating at different speeds. During turns, the inner wheels need to travel less distance as compared to outer wheels thereby requiring unequal braking. In all such cases, locking of wheels or unequal braking or wheels running at different speeds can cause the vehicle to skid or swivel thereby resulting in accident accidents ● To minimize human intervention and prevent accidents arising from possible human errors, apart from improvisation in the braking system per se, additional security measures have been developed with advancement in technology to stabilize the vehicle by automatically controlling under/over braking and under/over steering to prevent skidding /swivelling etc. This is achieved through ABS which inter-alia comprises of following main elements: 12. The appellant in their reply dated 17.11.2021 admitted that the imported automotive parts i.e. ABS Motor, Motor MK 100, brake light sensor and pressure sensor are used in the manufacture of aut....
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..... 15. The controversy in the case of Pushpam Forging versus Commissioner of Central Excise, Raigard [2006 (193) ELT 334 (Tri-Bom)] is more identical to the facts of the present dispute. The Tribunal noted that MS Flanges are parts of windmill tower which in turn is part of Wind Operation Electricity Generators and therefore, flanges are part of WOEG and the appellant is entitled to the benefit of Notification No.6/2000-CE. The relevant paragraph of the decision is quoted below:- "2.2 Once tower is accepted and found and held to be part of Wind Operational Electric Generator (WOEG for short) it is to be held that part i.e. flange of this part i.e. tower will be part of the whole i.e. Wind Generated Mill producing electricity from unconventional services. Every devices/systems part in this case having been specifically designed for that purpose in mind. That part of part is part of whole is well settled, relying upon [CCE v. Mahendra Engineering Works - 1993 (67) E.L.T. 134 followed in Bensel Industrial Corporation - 2000 (118) E.L.T. 119]. We find the 'flanges' to be a part of WOEG. 2.2. The restriction being given to the exemption as part of the tower by readin....
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.... capable of being used in motor vehicles in terms of the notification. 18. The decision cited by the learned Counsel for the appellant in case of Hero Electric Vehicles Private Limited versus Commissioner of Customs, Ludhiana [2018 (364) ELT 1090 (Tri.-Chandigarh)] the issue for consideration was whether DC motor imported was classifiable under tariff item 8501 31 19 or under Tariff Item 8714 10 90, and it is in that context, it was concluded that the essential character of the goods was that of a motor and hence same merits classification under Tariff Item 8501 31 19, as classified by the appellant therein. The classification of DC motors is not in issue and the decision, therefore, has no applicability in the present case, which has to be decided with reference to the contents of the notification granting or excluding the benefit of concessional rate of duty. 19. We may now consider the challenge to the classification of the goods, namely pressure transducers/sensors - whether the same would fall under CTH9026 as claimed by the appellant or under CTH9031 as classified by the Revenue. The contesting entries are quoted below:- 9026 INSTRUMENTS AND APPARATUS....