TaxTMI 
TaxTMI 
2026 (5) TMI 779
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....uring the course of adjudication and holds that the goods deserve to be classified under CTI 8511 50 00 and CTI 8511 40 00 respectively. Accordingly, the demand has been confirmed with interest under section 28AA of the Customs Act. The order also imposes penalty upon the appellant under section 114A of the Customs Act. 2. Customs Appeal No. 54697 of 2023 has been filed by C.G. Logistics Pvt. Ltd. [C.G. Logistics] to assail that portion of the order dated 30.01.2023 passed by the Principal Commissioner that imposes a penalty upon it under section 117 of the Customs Act. 3. Customs Appeal No. 50050 of 2023 has been filed by the appellant to assail the order dated 23.09.2022 passed by the Principal Commissioner that has rejected the classification of the imported starter generator under CTI 8502 20 90 and also under CTH 8501 claimed by the appellant during the course of adjudication and classifies it under CTI 8511 50 00. 4. The appellant is a scheduled airline operator engaged in the service of passenger and goods carriage by air across various domestic and international destinations. C.G. Logistics is a Customs House Agent duly licensed under the Customs Broker Licensing R....
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....) To start the engine: It operates as a series wound direct current motor capable of providing torque to rotate the engine; (iii) To function as a generator: Once the engine reaches the self-sustaining speed, it generates a direct current voltage of 30 V and is capable of providing a power of 12kW to various components of the aircraft. (ii) In aircrafts, the turboprop/turbofan engines are started by rotating the high-pressure compressor with the help of the starter. In order to start a turboprop/turbofan, it is necessary to accelerate the compressor to provide sufficient air to support combustion in the combustion section, or burners. Once ignition and fuel have been introduced and the lit-off has occurred, the starter must continue to assist the engine until the engine reaches a self-sustaining speed; (iii) As soon as the starter has accelerated the compressor sufficiently to establish airflow through the engine, the ignition is turned on followed by the fuel. At low engine cranking speeds, the fuel flow rate is not sufficient to enable the engine to accelerate. The starter, therefore, continues to crank the engine until after self-accelerating speed has....
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....tion 117 of the Customs Act. This Show cause notice 1 was adjudicated by an order dated 30.01.2023 confirming the demand of Rs. 14,99,21,553/- with penalty on the appellant under section 114A. Penalty on C.G. Logistics was also confirmed under section 117 of the Customs Act. However, the demand attributable to Heat Sink Assembly was dropped. This order has been assailed in Customs Appeal No. 55094 of 2023 by the appellant and Customs Appeal No. 54697 of 2023 filed by C.G. Logistics; (ii) Show cause notice dated 30.07.2021 [Show cause notice 2] raised a demand of Rs. 2,91,37,075/- under section 28(1) of the Customs Act for mis-classification of starter generator with proposal for penalty under section 114A of the Customs Act. Penalty on the C.G. Logistics was also proposed under section 117 of the Customs Act. This show cause notice 2 was adjudicated by an order dated 23.09.2022. Demand of Rs. 2,91,37,075/- was confirmed but penalties on the appellant and C.G. Logistics were not imposed. This order has been assailed by the appellant in Customs Appeal No. 50050 of 2023. 10. The impugned orders hold that the goods are classifiable under CTH 8511 and not under CTH 8501 for ....
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....the turbines of this heading are, in general, internal combustion engines. This evidently shows that turboprop/turbofan engines are a kind of internal combustion engines only. HSN Explanatory Notes to heading 8511 categorically states that this heading covers electrical starting or ignition equipment and appliance for internal combustion engines of any kind for use in aircrafts. As such IDG and SG are correctly classifiable under heading 8511 as an electrical ignition or starting equipment used for internal combustion engines of the kind used in aircraft. As per the Chapter Note 2, the heading 8501 to 8504 does not apply to goods described in headings 8511, 8512, 8540, 8541 or 8542. Starter generator is specifically covered under CTH 8511 4000 of the Tariff and Generators other than Starter Generator such as IDG gets covered under CTH 8511 5000 of the tariff. 25.12 Thus applying the rules of interpretation of classification i.e. going by the description of the Heading 8511, the Chapter Note 2 to Chapter 85 and the HSN Explanatory Notes, I hold that the products under import i.e. Integrated Drive Generator (IDG) and Starter Generator (SG) are more appropriately classifiable....
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....rators covered under CTH 8511. By applying Note 2 to Chapter 85, Headings 8501 to 8504 do not apply to goods described in Heading 8511. Therefore, CTH 8511 provides the more specific and correct classification; (ii) Goods specifically covered by specialized heading CTH 8511 must be classified there, even if they may otherwise fit under a general heading CTH 8501. The starter generator is defined by the appellant as a dual-purpose unit designed to both start the engines and provide direct current power generation. This functionality aligns perfectly with the statutory definition within CTH 8511 40 00. The classification of starter generator under 8511 40 00 is highly specific due to its dual purpose; (iii) The content of CTH 8511 itself explicitly covers specialized equipment's related to engines for aircraft; (iv) The extended period of limitation was correctly invoked; and (v) Penalty was correctly imposed on the appellant. 14. The submissions advanced by the learned counsel for the appellant and the learned authorised representative appearing for the department have been considered. 15. The dispute in the present appeals is regarding the ....
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.... . . . . . . . u 10% - 8501 32 -- Of an output exceeding 750 W but not exceeding 75 kW : 8501 32 10 --- DC motor u 10% - 8501 32 20 --- DC generators u 10% - xxxx xxxxxxx xx xxx xxxx 8511 Electrical ignition or starting equipment of a kind used for spark-ignition or compression-ignition internal combustion engines (for example, ignition magnetos, magneto-dynamos, ignition coils, sparking plugs and glow plugs, starter motors); generators (for example, dynamos, alternators) and cut-outs of a kind used in conjunction with such engines 8511 10 00 - Sparking plugs u 15% - 8511 20 - Ignition magnetos; magneto-dynamos; magnetic flywheels : 8511 20 10 --- Electronic ignition magnetos u 15% - 8511 20 90 --- Other u 15% - 8511 30 - Distributors; ignition coils : 8511 30 10 --- Distributors u 15% - 8511 30 20 --- Ignition coils u 15% - 8511 40 00 - Starter motor....
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....tion with turboprop/turbofan engines which are gas turbine engines and are different from spark-ignition or compression ignition IC engines. The Principal Commissioner has also in paragraph 25.9 observed that the goods are used in conjunction with turboprop/turbofan engine. 20. Rule 1 of the General Rules of Interpretation [GRI] provides that the goods should be classified in accordance with the terms of the heading of the relevant Section or Chapter Notes. CTH 8501 covers all electric generators, whereas CTH 8511 covers only those generators which are used in conjunctions with spark-ignition or compression ignition IC engines. Since the goods are not used in conjunctions with either spark-ignition or compression ignition IC engines they will be classifiable under CTH 8501 and not CTH 8511 by application of Rule I of GRI. 21. Reference can also be made to the U.S. Cross Ruling NY 842759 dated 06.07.1989 in which the classification of integrated drive generator was determined under CTH 8501 holding that it is designed to be used with jet engines to provide a constant drive speed to the generator. 22. What follows, therefore, is that the goods are classifiable under CTH 8501....
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....gnition IC engines. 27. The finding recorded by the Principal Commissioner that CTH 8511 covers 'IC engines of any kind' and since turboprop/turbofan engines are types of IC engines, the goods are classifiable under CTH 8511 is not correct. It is seen from a perusal of HSN Explanatory Notes to CTH 8511 that the term 'any kind' has been used to refer to the internal design of an IC engines namely that IC engines could be either of 'piston type' or 'other types'. 28. The next issue that arises for consideration is whether the extended period of limitation under section 28(4) of the Customs Act could have been invoked in the facts and circumstances of the present case. In the present case, the show cause notice was issued on 01.07.2020 raising a demand for the period of 14.11.2017 to 01.08.2019. The demand under section 28(1) of the Customs Act for the normal period could have been raised only for two years. Thus, the demand for the period 14.11.2017 to 30.06.2018 is beyond the normal period. 29. The appellant has also provided details of the bifurcation of the demand within the normal period and the demand beyond the normal period: Total Demand Time-barred demand [14.1....