TaxTMI 
TaxTMI 
2026 (10) TMI 22
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....the provisions of Customs Act, 1962 are sustainable. 2. The brief facts are the appellant imported the impugned goods vide Bill of entries dated 24.09.2012 and 04.12.2012 and bonded the goods in a warehouse and they were ex-bonded and cleared for home consumption. Alleging wrong classification of the impugned goods imported by the appellant, proceedings were initiated and Show Cause Notice (SCN) dated 11.07.2013 was issued for reclassification of the goods under Customs Tariff Item (CTI) 90309010 as opposed to the declared classification under Customs Tariff Item (CTI) 85312000 and the demand of differential duty along with interest and proposal for imposition of penalty. Thereafter, adjudication authority as per the Order-in-Original dated 31.05.2014 confirmed the reclassification of goods under Customs Tariff Item (CTI) 90309010 and confirmed demand of differential duty along with interest and imposed redemption fine and penalties under various provisions of Customs Act, 1962. Further, penalty was also imposed on the appellant-M/s. Schenker India Pvt. Ltd., being the Customs Broker for the goods under section 112 of the Customs Act, 1962. Aggrieved by said order, appeals were ....
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..... 7.5% 9030 90 90 ---Other kg. 7.5% 3.1 From a plain reading of entries under Chapter Sub-heading 8531, it is clear that the items from Customs Tariff sub headings 853110 to 853180 are Electric Sound or Visual Signalling Apparatus. Parts of such Apparatus are covered at Customs Tariff Item (CTI) 85319000. Thus, the items at Customs Tariff Item (CTI) 8531 2000 are apparatus by themselves which carry out sound or visual signalling and are electrically operated. The items imported by the importer are admittedly parts of other equipment and are not apparatus. 4. Learned Counsel also draws our attention to the finding of the first appellant authority, inter alia; 8. I find that the indicator panel, the impugned goods are used in metering products like PM 5350, PM5500, PM5500U, METSEPM5110, METSEPM5111, METSPM5310, METSEPM5311 etc. The appellant manufactured the electric meter which indicate voltage, current, power and Energy. These power meters are of different ranges and higher range meters are meant for export and medium range for domestic market. The appellant is manufacturing these meters since 2009 and prior to it, it was manufactured by M/s. Conserve ....
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....notes to the Harmonized Commodity Description and Coding System (HSN) and submits that there is no dispute that the imported goods are electrical apparatus which are used as signalling apparatus. 5.1 Learned Counsel submits that there is no dispute that the goods transmit that signal using visual indication and that is operated automatically. As per Rule 1 of the GRI, the goods under consideration should be classified in accordance with the terms of the heading or the relevant Section or Chapter Notes. It further states that in the event the goods cannot be classified solely on the basis of said Rule 1, and if the headings and legal notes do not otherwise require, the remaining Rules 2 to 6 may then be applied in a sequential order. 5.2 Learned Counsel submits that as per the HSN Explanatory Notes for a product to be classified under Chapter Heading 85.31, the following conditions need to be satisfied, namely: (a) the product should be an electrical apparatus used for signalling purposes; (b) it should use either sound for the transmission of the signal or using visual indication; and (c) it should be operated either by hand or automatically. 5.3....
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....on behalf of the appellants. In fact, Heading 8531 20 00 comes under the broad category of electric sound or visual signalling apparatus (for example, indicator panels) as specified against the main heading 8531 itself and therefore, we allow the appeal of the appellants in respect of the first three items holding these to be classifiable under Heading 8531 10 20." 7. Learned Counsel submits that it is a settled position of law that once the assessment is re-opened by the Department, the appellant is entitled to claim a classification that is different from the one claimed at the time of import. Learned Counsel relied on the decision of the Hon'ble Tribunal in the matter of Lili Foam Industries (P) Ltd. Vs. Collector of Central Excise, 1990 (46) ELT 462 (Tribunal). 8. Learned Counsel further submits that the classification of goods is a question of law and the same can be raised at any stage. In this regard Learned Counsel relied on the following case laws; a. Shri Rama Machinery Corporation (P) Ltd. Vs. Collector of Customs, 1992 (57) ELT 369 (SC) b. Collector of Central Excise, Kanpur Vs. West Glass Works, Firozabad, 1984 (17) ELT 368 (Tribunal). ....
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....ical appliances and instruments, not specified or included elsewhere in this Chapter 9013.80 Other devices, appliances and instruments; 901380.10 Liquid Crystal Devices (LCD) 9028 Gas, Liquid or electricity supply or production meters, including calibrating meters therefor 9028.90 Parts and accessories 9028.90.10 For electricity meters ---------------------------------- --------------------------------- 10. Ms. Kiran Suri, learned Senior Counsel appearing for the respondent /department, argued, per contra, that in the present case goods were specifically meant for use as parts in electric meters, which is even accepted by the appellant. Therefore, Note 2 would not apply in this case. She submitted that under these circumstances it is the General Rule of Interpretation that would apply and referred to Rule 3 of the said Rules and contended that if the goods are classifiable under two or more headings, on the application of Rule 2(b) of the General Rules of Interpretation, then the classification has to be in the manner stipulated in Rule 3 of the General Rules. Rules ....
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....ding for a more general description. She also referred to the following portion of the assessment order made by the Commissioner of Customs to buttress her aforesaid submission : "Even if we ignore the above definition of device and consider the imported parts, i.e., Liquid Crystal Displays to be "devices", only those liquid crystal devices/ displays which do not constitute article provided for more specifically in other headings will be covered in CTH 90.13. In other words, liquid crystal devices/ displays which do not specifically form part of a specific type of equipment will be classified here. General purpose LCD, for example the one displaying only 0-9 numbers, which can be attached to several devices/ equipments and cannot be specifically covered in any one heading as parts are to be classified here if they are considered as devices. Had the intention been to cover all Liquid Crystal Devices/ displays in CTH 90.13 there was no need for the description - "Liquid Crystal Devices not constituting articles provided for more specifically in other headings." And "Liquid Crystal Device" would have been sufficient instead. The only way to make Liquid Cryst....
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....s, classification "shall be determined according to the terms of the headings and any relevant section or chapter notes". If neither the heading nor the notes suffice to clarify the scope of a heading, then it must be construed according to the other following provisions contained in the Rules. Rule 1 gives primacy to the section and chapter notes along with terms of the headings. They should be first applied. If no clear picture emerges then only can one resort to the subsequent rules. The appellants have relied upon Rule 3. Rule 3 must be understood only in the context of sub-rule (b) of Rule 2 which says inter alia that the classification of goods consisting of more than one material or substance shall be according to the principles contained in Rule 3. Therefore, when goods are prima facie, classifiable under two or more headings, classification shall be effected according to sub-rules (a), (b) and (c) of Rule 3 and in that order. The sub-rules are quoted : "3.(a) The heading which provides the most specific description shall be preferred to heading providing a more general description. However, when two or more headings each refer to part only of the materials or subs....
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....ng, which is specifically provided, is 9013. 16. It was sought to be argued by Ms. Kiran Suri that as per Note 2(b), when these LCDs are used solely for particular instrument, namely, electricity supply meter, it has to be classified with the said meter and, therefore, Chapter Entry 9028 would get attracted. However, this argument loses sight of the fact that Note 2(b) relates to 'other parts and accessories', namely, it would apply to those parts and accessories for which Note 2(a) is inapplicable. Once we find that in the present case Note 2(a) squarely applies, the irresistible conclusion is that the goods will be classified in Tariff Item 9013, which is the specific heading for these goods. 17. In Collector of Central Excise v. Delton Cables Ltd. & Anr. - (2005) 12 SCC 284 = 2005 (181) E.L.T. 373 (S.C.) this Court has held, while interpreting Notes 2(a) and 2(b) of Chapter Heading 85, which is virtually to the same effect, that Note 2(b) would apply only if the items in question were not specifically classifiable under their respective headings. Para 4 of the said judgment, to this effect, reads as under : "4. It is clear from a reading of the two cla....
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....accessories suitable for use with several categories of machines, appliances, instruments or apparatus falling in different headings of this Chapter are classified in Heading 90.33, unless they are in themselves complete instruments, etc., specified in another heading (see paragraph (1) above)." 19. This contains a general explanation to Chapter Note 2 and mentions that where parts or accessories identifiable as suitable for use solely or principally with the machines, appliances, etc., they are to be classified with those machines/appliances. However, what is important is that immediately thereafter it is clarified that this general rule would not apply in certain circumstances. Sub-para of the above takes things beyond the pale of any doubt by making it crystal clear that those parts and accessories which in themselves constitute 'article' falling in any particular heading of this Chapter, the general rule will not apply and said article would fall in that particular heading. To demonstrate this, examples which are given, eminently fit into the case at hand. 20. The aforesaid view of ours gets further cemented on going through Explanatory Notes issued by the Wor....
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....der CTSH 901380. 12. Learned Counsel relied on the decision of Hon'ble Supreme Court in the matter of Commissioner of Central Excise, Aurangabad Vs. Videocon Industries Ltd, 2023 (384) ELT 628 (SC) wherein it is held that imported LCD panels/ display boards are classifiable under Chapter sub-heading 9013 80 of Customs Tariff Act, 1975. It was held that merely because they were used as parts of television sets or audio sets, they could not be classified under Heading 85.29/ 85.19 or 85.55 especially when Note 1(m) in Chapter Heading 85 clearly excludes articles falling in Chapter 90, ibid. 13. Learned Counsel also submits that the decision in Videocon (supra) was followed by the Hon'ble Apex Court in the case of C.C.E. Vs. Samsung India Electronics Pvt. Ltd., 2023 (386) E.L.T. 641 (S.C.) and M/s. Xiaomi Technology India Limited Vs. Commissioner of Customs, Bangalore, 2023 (10) TMI 684 & 2023 (7) TMI 325-CESTAT Bangalore, to hold that that LCD Panels are rightly classifiable under Customs Tariff Item (CTI) 9013 80 10. 14. Learned Counsel further relied on the decision of this Tribunal in the case of CC, Cochin Vs. Amity Technopolis, 2024 (390) E.L.T. 339 (Tri. Bang.), wh....
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....in CCE & S.T, Bhavnagar Vs. Pioneer Industries, 2018 (10) G.S.T.L. J207 (S.C.). iii. Moser Baer India Ltd. Vs. Commissioner of Customs & Central Excise, Noida, 2018 (361) E.L.T. 908 (Tri. - All.) 16. Learned Counsel further submits that the demand confirmed by invoking the extended period of limitation is also unsustainable. The present proceedings were initiated by issuance of Show Cause Notice dated 11.07.2013 which raised duty demand in respect of impugned Bills of Entries filed beyond the normal period of 6 (six) months prescribed under Section 28 of the Customs Act, 1962. It is submitted that the entire demand is barred by limitation as extended period of limitation is not invokable in the present case. The Appellant submits that it is well-settled law that mere claim of a particular classification in the Bill of Entry or an exemption under any customs notification cannot be a cause for alleging wilful mis-statement or suppression of facts. It is submitted that the claim to classification whether admissible or not is a matter of belief of assessee and does not amount to mis-declaration as held in the following cases: i. Northern Plastics Ltd. Vs. Comm....
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....tion and can never be a part. If the claim of the Appellants initially was a part then their claim now, it being an apparatus cannot be accepted. 19. Learned Authorized Representative (AR) further submits that The Three-Member Bench of the Tribunal, in the matter of International Auto Suppliers Vs. Collector of Customs, Bombay, 1994 (70) E.L.T. 645 (Tri.), has held that the Interpretative Rules need not be invoked when an appropriate and specific Tariff Heading is available in the Tariff itself. In the present case, the importer has admitted that the goods in question are parts of energy meters. Accordingly, the appropriate classification available in the Customs Tariff is CTI 9030 9010, and therefore, recourse to the Interpretative Rules is unwarranted. Further Learned AR also relied in the matter of Electrosteel Castings Limited Vs. Collector of Central Excise [1989 (43) ELT 305 (Tribunal)], the Hon'ble Tribunal has held that "A component, whose absence will disable a machine or appliance, must be regarded as part of that machine." In the instant case the impugned goods must be regarded as part of Energy Meters. 20. The Learned AR further submits that without prejudice ....
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....r in effecting such mis-classification. The same Customs Broker had, on behalf of the imported, filed Bills of Entry by classifying the goods under different descriptions and different tariff headings, including the CTH 90309010. The description of the impugned goods was deliberately changed to suit the exact description in the tariff heading, and this was done with the knowledge of the Customs Broker (CB). The Customs Broker was obligated under the CBLR Regulations, to properly guide the importer. However in the impugned case, it is seen that the CB has assisted the importers in the mis-declaration of the goods, with an intention to avail ineligible exemption and hence, they are liable for Penalty as imposed. 23. Heard both sides and perused the records. 24. We find that in this case the appellant declared the goods under Custom Tariff Heading (CTH) 85312000 and the department reclassified the goods under Custom Tariff Heading (CTH) 90309010 as parts of electricity meter, since the appellant is in the manufacture of the electric meters which indicate voltage, current, power and Energy, and confirmed the differential duty along with the interest and imposed redemption fine an....