2026 (7) TMI 384

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....fication No. 50/2017-Cus dated 30.06.2017 was availed which exempts entire Basic Customs Duty [BCD] IGST @ 18% was paid under Serial No. 373 of Schedule III of IGST Notification No. 1/2017integrated tax (rate) dated 28.06.2017. The appellant had also cleared goods declared as starter generator under CTH 8501 62 00 availing the benefit of aforesaid both the notifications. During the post audit clearance, it appeared to the department that the goods are correctly covered under CTH 8511. The appellant was alleged to have misclassified the tariff entry. It was alleged that the said misdeclaration has resulted into short levy of duty of Rs. 1,35,76,752/- with respect to Integrated Drive Generator (IDG). With respect to starter generators, the appellant was alleged to have short paid the duty of Rs. 96,09,622/-. 3. These observations resulted into issuance of Show Cause Notice No. 20/Commr./TBA-1/2020 dated 11.11.2020 vide which aforesaid both the amounts of duty were proposed to be recovered from the appellant in terms of section 28(4) of the Customs Act, 1962 alongwith the interest as applicable under section 28AA of the Act. Penalty under section 114A of Customs Act, 1962 was also ....

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.... contentions, it would be appropriate to first refer to the relevant Tariff Heading and Items and these are as follows: Tariff Item   Description of goods Unit Rate of Duty+#         Standard Preferential Areas (1)   (2) (3) (4) (5) 8501   Electric motor and generators (excluding generating sets)       8501 10 - Motors of an output not exceeding 37.5 W:         --- DC motor:       8501 10 11 ---- Micro motor . . . . . . . . . . . . . . . . . . . . . . . . u 10% - 8501 1012 ---- Stepper motor . . . . . . . . . . . . . . . . . . . . . . u 10% - 8501 10 13 ---- Wiper motor . . . . . . . . . . . . . . . . . . . . . . . u 10% - 8501 10 19 ---- Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . u 10% - 8501 10 20 --- AC motor . . . . . . . . . . . . . . . . . . . . . . . . . u 10% - 8501 20 00 - Universal AC or DC motors of an output exceeding 37.5 W . . . . . . . . . . . . . . . . . . . . ....

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.... . . . u 15% - 8511 80 00 - Other equipment . . . . . . . . . . . . . . . . . . . . u 15% - 8511 90 00 - Parts . . . . . . . . . . . . . . . . . . . . . . . . . . . . Kg. 15% - 8. CTH 8501 covers electric motors and generators (excluding generating sets) all electric generators, whereas CTH 8511 covers only those generators which are used in conjunctions with spark-ignition or compression ignition IC engines. 9. The HSN Explanatory Notes to CTH 8501 in paragraph (II) provides that machines that produce electrical power from various energy sources (mechanical, solar, etc.) are classified here, provided they are not more specifically covered by any other heading of the nomenclature. It further provides that the generators covered under CTH 8501 are of two types namely DC generators (dynamos) and AC generators (alternators). 10. The HSN Explanatory Notes to CTH 8501 also provides that the said heading does not cover the electrical generator with prime movers or generators (dynamos and alternators) used in conjunction with IC engines covered under CTH 8511 or for electrical lighting or signalling equipments of a kind used for cycles....

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....bofan engines is entirely different from that of the reciprocating, spark-ignition IC engines and compression ignition IC engines. 15. The fact that a separate tariff heading is created for all gas turbines under CTH 8411 establishes that gas turbines engines are different from spark-ignition and compression ignition combustion engines which are covered under CTH 8407 and CTH 8408, respectively. Since the goods have been imported by the appellant for use in conjunction with gas turbine engines which are covered under CTH 8411, they cannot be classified under CTH 8511, as it covers only those generators which are used in conjunction with spark-ignition and compression ignition IC engines. 16. We do not find any reason to differ from those findings nor department has produced any evidence contrary thereto hence we hold that the goods were rightly classified by the appellant under CTH 8501, the Customs duty has wrongly been confirmed. The order under challenge to that extent is therefore liable to be set aside. 17. While coming to the plea of the Customs Broker, it is observed that penalty on CHA has been imposed holding that the Bills of entry were filed by him with differen....