TaxTMI 
2026 (11) TMI 379
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....n by the Revenue under Customs Tariff Item (CTI) 3926 3090 as 'fittings for furniture, coachwork or the like:---Other' without benefit under Sl. No. 338 of Notification No. 152/2009-Cus dated 31.12.2009. 3. The brief facts of the case are the Appellant imported during November 2019 to January 2020 under twenty-two Bills of Entry goods declared in Bills of Entry and documents as 'Pave-PQG BR (GT-Venti) Polyurethane sheets- used for car seat', 'Pave-PQG BR (GT- Non Venti) Polyurethane sheets-used for car seat' and 'Pave-PG BR (TX- Non Venti) Polyurethane sheets- used for car seat', classified the impugned goods under Customs Tariff Item (CTI) 3926 9099 and claimed benefit of 'nil' BCD under Customs Notification No.152/2009 dated 31.12.2009 (Sl.No.338) issued under Indo-Korean PTA Preferential Trade Agreement. The department issued show cause notice (SCN) proposing to reclassify the goods under Customs Tariff Item (CTI) 3926 3090 considering the impugned goods as 'fittings for furniture, coachwork or the like:---Other'', which attracted BCD @ 15%. The appellant defended the original classification before Adjudicating authority explaining that the importe....
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.... 6. Learned counsel for the appellant in the grounds of appeal and during the hearing submitted the following. a. The impugned polyurethane sheet, as imported, cannot be used as a fitting to car seat and hence, cannot be held to be polyurethane sheet fitting. These goods were imported in sheet form not in the form of a 'fitting', they are only raw materials used to make polyurethane foam seat cover for car seat. The imported goods were subjected to further processing and value addition and some process in their own factory before it is used in the assembly of the car seat. These processes on the imported goods are not done during the assembly of the car seat as assumed by the learned AA whereas they are done prior to the assembly of the car seat, some in the job worker place and some in the appellant's factory, which fact has been accepted by the learned AA (in para of 24 of Order-in-Original). b. Goods cannot be classified based on the future use of the goods. An item has to be assessed to duty in the form and condition in which they are imported and not based on the form to which it will be modified after importation. Whereas the learned AA has class....
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....Sanghi Polyesters Ltd. 2003 (155) ELT 381 (Tri. Bang) 8. The appellant in the Appeal Memorandum has also submitted the process-flow diagram of the processes involved in the assembly of the car seat using the impugned imported goods i.e., 'Polyurethane sheets' along with the pictures, which are reproduced below. 9. The learned Authorised Representative (AR) for the Revenue filed inter alia the following written submissions on behalf of the RespondentDepartment. 9.1 The present appeal is against the Order-in-Original No. 989/2020 dated 28.12.2020 passed by the learned Principal Commissioner of Customs, whereby the imported goods described as "Polyurethane Sheets for Car Seats" were reclassified from Customs Tariff Item (CTI) 3926 9099 to Customs Tariff Item (CTI) 3926 3090 as "Fittings for furniture, coachwork or the like" denying the benefit of Notification No.152/2009-Cus dated 31.12.2009, claimed under the India-Korea Comprehensive Economic Partnership Agreement. Investigation by the Special Intelligence and Investigation Branch, however, revealed that the imported goods were not 'generic polyurethane sheets' but specially engineered composite articles man....
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....haracteristics at the time of importation, namely their composite construction, model-specific engineering, predetermined dimensions, lamination, perforation, stitching and exclusive manufacture to Hyundai's specifications. The appellant's attempt to equate "raw material" with "anything requiring further processing" is contrary to settled principles of tariff classification. Numerous industrial components require trimming, fastening or integration before their final use, yet they continue to be classified according to their own objective characteristics and commercial identity. The imported goods had already crossed the stage of generic polyurethane material before importation and had acquired the identity of dedicated plastic fittings for motor vehicle seats. 9.5 Classification is governed primarily by Rule 1 of the General Rules for Interpretation (GRI). The present dispute is one of tariff classification governed by the Customs Tariff Act, 1975, the General Rules for Interpretation ("GRI"), the relevant Section Notes, Chapter Notes and the Harmonised System of Nomenclature ("HSN"), on which the Indian Customs Tariff is based. The General Rules are applied sequentially....
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....place either in the tariff or in the HSN. 9.8 The appellant seeks to introduce restrictions not found in the tariff. A submission in the appeal is that Heading 392630 applies only to articles that are fully finished and capable of immediate installation. Parliament has used the expression "Fittings for furniture, coachwork or the like" without qualifying it by words such as "finished", "ready-to-use" or "requiring no further processing". It is a settled principle of statutory interpretation that courts cannot read into a tariff entry words which the legislature has deliberately omitted. Many commercially recognised fittings require minor operations such as trimming, fastening or stitching before final installation, yet they do not lose their identity as fittings. The relevant enquiry is whether the article has acquired the commercial identity of a fitting, not whether every manufacturing operation has been completed. 9.9 The issue is one of commercial identity, not manufacturing stage. The appellant describes the imported goods as "raw materials". The Customs Tariff classifies goods according to their objective characteristics and commercial identity at the time of importatio....
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....s during adjudication. The Order-in-Original records that the goods were imported in predetermined dimensions, comprised laminated layers of polyurethane sheet, polyurethane foam and poly fabric, were already perforated for ventilation and stitched in specified patterns, and exhibited the appearance of dedicated seat-cover components rather than ordinary polyurethane sheets. These objective findings, based on direct examination of the imported goods, further reinforce the commercial identity established by the appellant's own admissions under Section 108. 9.12 Subsequent processing does not alter the identity of the imported goods. The appellant relies upon the post-import operations undertaken in its factory to contend that the imported goods are merely raw materials. The subsequent operations of trimming, stitching, mounting or assembly do not alter the commercial identity of the imported articles. They merely facilitate the integration of an already identifiable component into the completed seat assembly. It is well settled that the requirement of further processing does not deprive an article of its existing commercial identity for the purposes of tariff classification. ....
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....goods cannot fall under Tariff Item 3926 3090 because they are not fully finished articles capable of immediate installation. This contention has no basis either in the Customs Tariff, the HSN Explanatory Notes or any binding judicial precedent. The tariff simply describes the goods as "Fittings for furniture, coachwork or the like" and does not qualify the expression by using words such as "finished", "ready for installation" or "requiring no further processing". The expression "fittings" must be understood in its ordinary commercial sense in the absence of a statutory definition, the expression "fittings" must be understood in its ordinary commercial parlance. A fitting is ordinarily understood as an article specially designed to be attached to or incorporated into another article for a specific purpose. Its identity depends upon its dedicated design and function rather than upon whether every operation necessary for final installation has already been completed. In commercial practice, numerous automotive and furniture fittings require fastening, trimming or minor assembly before installation, yet they are recognised throughout as fittings. The decisive consideration is the comm....
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....ocessing. The appellant places considerable reliance on the fact that, after importation, the goods undergo certain operations such as trimming, stitching, mounting and integration with other materials before being incorporated into completed motor vehicle seats. The relevant enquiry is not whether further manufacturing operations remain, but whether the imported goods had already acquired a distinct commercial identity at the time of importation. It is well settled that Customs classification is determined according to the objective characteristics and commercial identity of the goods as presented for assessment, and not by reference to subsequent manufacturing operations. The evidence on record conclusively establishes that the imported goods had ceased to be generic polyurethane material long before importation. 9.19 The goods are correctly classifiable under tariff item 3926 3090 by application of Rule 1 of GRI. Once the true nature and commercial identity of the imported goods are appreciated, the classification follows under Rule 1 of the General Rules for Interpretation itself. The goods are dedicated plastic components manufactured exclusively for incorporation into moto....
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....ate installability as a condition for classification under Heading 392630. The appellant has also not produced any HSN Explanatory Note, WCO Classification Opinion, judicial precedent, technical literature or trade material supporting such a restrictive interpretation. In the absence of any such authority, the appellant cannot bypass the specific tariff entry and seek classification under the residuary heading. The appellant's interpretation would also substantially diminish the scope of Heading 392630. In modern manufacturing, specialised furniture and automotive components frequently require minor operations such as fastening, trimming or integration before final installation. If every such component were excluded from Heading 392630 merely because some further processing remained, the specific tariff entry would be deprived of much of its practical operation and a large class of dedicated fittings would be pushed into the residuary entry. Such a construction is contrary to the settled principle that statutory provisions must be interpreted so as to give meaningful effect to every tariff entry rather than render a specific entry redundant. The Department's primary case is....
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....ly to Hyundai's specifications for use in particular motor vehicle seat models. Like the goods in Select Foam Products, they possess no independent commercial identity apart from their dedicated function as seat components. The appellant's attempt to distinguish the decision on the ground that the goods there were polyurethane cushions whereas the present goods are polyurethane seat cover assemblies is misconceived. The principle laid down by the Tribunal is not confined to a particular form of polyurethane article, rather, it is that articles specifically manufactured for fitting on furniture or coach seats are more specifically covered by Heading 392630 than by a competing or more general entry. Indeed, the Department's case stands on an even stronger footing than in Select Foam Products. The Order-in-Original records that the imported goods were visually examined and found to be pre-cut to specific dimensions, perforated for ventilation, stitched to a predetermined design and composed of integrated layers of polyurethane sheet, polyurethane foam and poly fabric. These findings, coupled with the appellant's own admissions under Section 108 of the Customs Act regar....
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....mmercial identity of the goods as dedicated plastic seat fittings. The appellant has relied upon the decision in Glaxo Laboratories Ltd. to contend that goods must be classified in the form and condition in which they are imported.. The appellant has also relied upon CCE vs. Sanghi Polyesters Ltd., 2003 (155) E.L.T. 381 (Tri.-Bang.), wherein the Tribunal observed that goods are to be classified in the condition in which they are presented for assessment. Indeed, the present classification is founded entirely on the condition and identity of the goods as imported. However, Sanghi Polyesters neither interprets Heading 392630 nor concerns specially engineered automotive seat components. It merely reiterates the general principle governing tariff classification and does not address the scope of the expression "fittings for furniture, coachwork or the like" or the interplay between a specific tariff entry and a residuary entry. Consequently, it does not assist the appellant and cannot detract from the application of GRI 1, the settled principles governing specific and residuary entries, or the directly applicable ratio of Select Foam Products. 9.24 The appellant's alternative ple....
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.... Heading 9401 appears to be motivated principally by the availability of the benefit under the India-Korea Preferential Trade Agreement. This approach reverses the settled legal sequence. Classification must first be determined independently on the basis of the Customs Tariff, the relevant Chapter Notes and the General Rules for Interpretation. Only after the correct tariff classification has been determined can the applicability of any exemption or preferential notification be examined. A notification cannot dictate or alter the proper tariff classification. Accordingly, the appellant's alternative plea under Heading 9401 is legally unsustainable. 9.27 The notification operates strictly with reference to tariff classification. Notification No. 152/2009-Cus. dated 31.12.2009 grants preferential tariff treatment to specified goods originating in the Republic of Korea under the India-Korea Comprehensive Economic Partnership Agreement. The notification does not determine tariff classification; it merely extends the prescribed concessional rate to goods falling under the tariff entries specified therein. While the benefit is available to goods classifiable under Heading 392690, ....
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....ds under the Customs Tariff Item (CTI) 3926 9099 of the First Schedule of the Customs Tariff Act, 1975 and availed benefit of 'Nil' rate of Basic Customs Duty under Sl. No. 338 of Notification No. 152/2009-Cus, dated 31.12.2009, issued in the context of the India-Korea Preferential Trade Agreement. The Department, on investigation, proposed classification under Customs Tariff Item(CTI) 3926 3090, as "Fittings for furniture, coach work or the like;---Other" and consequently proposed denial of the preferential benefit under Notification No. 152/2009-Cus, dated 31.12.2009 and recovery of differential customs duty. The adjudicating authority accepted the Department's classification, rejected the Appellant's classification under Customs Tariff Item (CTI) 3926 9099, re-classified the goods under Customs Tariff Item (CTI) 3926 3090, denied benefit under Sl. No. 338 of Notification No. 152/2009-Cus dated 31.12.2009, confirmed differential customs duty of Rs. 2,50,33,781/- under Section 28(1) of the Customs Act, 1962, together with applicable interest under Section 28AA, and refrained from imposing penalty under Section 117 of the Customs Act, 1962. 13. We find that it is....
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....ssories (including gloves, mittens and mitts) : ---Gloves: 3926 20 11 ---- Disposable kg. [15%] - 3926 20 19 ---- Non-disposable ---Aprons: kg. [15%] - 3926 20 21 ---- Of polyurethane foam kg. [15%] - 3926 20 29 ---- Other ---Plastic stickers for garments: kg. [15%] - 3926 20 31 ---- Of polyurethane foam kg. [15%] - 3926 20 39 ---- Other ---Collar stays, patties, butterfly, shoulder-pads and other stays: kg. [15%] - 3926 20 41 ---- Of polyurethane foam kg. [15%] - 3926 20 49 ---- Other ---Other: kg. [15%] - 3926 20 91 ---- Of polyurethane foam kg. [15%] - 3926 20 99 ---- Other kg. [15%] - 3926 30 - Fittings for furniture, coach work or the like 39....
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....wear, leather garments and leather goods: kg. [15%] - 3926 90 41 ---- Of polyurethane foam kg. [15%] - 3926 90 49 ---- Other ---Retroreflective sheeting of other than of heading 3920: kg. [15%] - 3926 90 51 ---- Of polyurethane foam kg. [15%] - 3926 90 59 ---- Other --- Hangers: kg. [15%] - Tariff item Description of goods Unit Standard Preferential 3926 90 61 ---- Of polyurethane foam kg. [15%] - 3926 90 69 ---- Other --- Plastic or nylon tipped hammers; insulating liner of nylon, HDPE: kg. [15%] - 3926 90 71 ---- Of polyurethane foam kg. [15%] - 3926 90 79 ---- Other kg. [15%] - 3926 90 80 --- Polypropylene articles, not elsewhere specified or included ---Other: kg. [15%] - 3926 90 91 ---- Of polyurethane foam ....
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....spatch. We find that only upon lay-and-cut/ die cutting operation on the 'Polyurethane Sheets' as per to required dimensions of the car seat of a particular car model the subsequent operations to complete the 'covering sub assembly' are taken up. The process at Hyundai Transys-Appellant begins with receipt of 'covering sub-assembly' from the vendor, inspection, assembly of PU foam pads with the covering, cushion/ back assembly, assembly of plastic parts, head-rest and safety-buckle assembly, ironing, inspection and final seat assembly. 17. The process-flow is relevant as it demonstrates what the imported goods were in commercial and manufacturing terms at the time of import. It shows a manufacturing chain in which the imported material is an input into the production of a 'covering sub-assembly' and not, in the condition imported, a finished fitting ready for attachment to a seat frame. 18. As per the Appellant's statement of facts the imported goods underwent substantial further processing through its vendor, followed by further processing at the Appellant's factory before the resulting finished article was fitted to the car-seat frame. It is the contention o....
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.... description "Fittings for furniture, coach work or the like" under Customs Tariff Heading (CTH) 3926 30; iii. whether Rule 2(a) can independently sustain classification of the impugned imported goods under Customs Tariff Item(CTI) 3926 3090; iv. whether Rule 3(a) can be invoked to prefer classification of the impugned goods 'Polyurethane Sheets for Car Seats' under Customs Tariff Item(CTI) 3926 3090 over Customs Tariff Item(CTI) 3926 9099; v. whether the decision in the case of M/s. Select Foam Products covers the impugned goods; vi. whether the alternative claim under Customs Tariff Item (CTI) 9401 90 00 can be accepted; and vii. whether the impugned goods are eligible for the benefit of Notification No. 152/2009-Cus., and whether the demand of differential duty along with interest is sustainable. 21. We find that it is settled law that classification begins with Rule 1 of the General Rules of Interpretation (GRI) and the terms of the headings, read with the relevant Section and Chapter Notes. Rules 2 and 3 are applied in the circumstances specified therein. The classification must therefore first be determined by examining ....
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....terial used in manufacturing a car seat is a "Fittings for furniture, coach work or the like". The expression "fitting" has to be applied to the goods actually imported. The ordinary and commercial understanding of a fitting is an identifiable article intended to be attached to, incorporated into, equip or complete another article. The question therefore is whether the imported polyurethane sheet/ composite material had already acquired that identity at the time of import. 24. We find that Revenue has classified the impugned goods "Polyurethane sheet' under Customs Tariff sub-heading (CTSH) 392690 under 'fittings for furniture, coachwork or like' and further under Customs Tariff Item (CTI) 3926 9030 as 'other'. Customs Tariff Item (CTI) 3926 9010 covers 'fittings for furniture, coachwork or like' of Polyurethane foam. Therefore, Customs Tariff Heading (CTH) 392690 covers 'fittings for furniture', 'fittings for coachwork' and 'fittings for the like'. The fittings meant for motor cars are covered under 'fittings for coach work'. The examples of coachwork fittings for car/bus body are: Grab handles for car roof, Coat hooks....
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....hich they are imported. As per these decisions, it leads to the inference that the classification declared by the appellant is justifiable. The material imported "polyurethane" is the actual sheet/ composite material as presented to Customs. The fact that the samples were cut to approximately 60 cm x 50 cm, perforated and stitched cannot by itself make them fittings. Those features are relevant evidence of their intended engineering application, but they do not answer the separate legal question as to whether they had already become a finished fitting. The process-flow shows that cutting, shaping, sewing and other operations continued to be performed after receipt of the raw material and before the covering part was produced. We find that revenue has not adduced any evidence to show that the impugned imported material, 'Polyurethane sheets for car seats' cannot be used by other car manufacturers and that it is exclusively used as fittings for car seats of the cars manufactured by M/s. Hyundai. 27. The Department contended that the subsequent operations were merely supplementary. The distinction between a minor operation and a manufacturing operation is material, where an importe....
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....c fitting claimed. Here the imported goods were not the completed seat-cover/ covering assembly. The process-flow shows that the material was still to undergo many processes before the finished covering parts emerged. The subsequent processes at Hyundai Transys further combine those covering sub-assemblies with polyurethane (PU) foam pads and seat frames. On these facts, the imported goods cannot be said to possess the essential character of the finished fitting merely because their ultimate use is in a car seat. As per the Hon'ble Supreme Court decision in Sony India Ltd., 2008 (231) E.L.T. 385 (S.C.), treating a collection or incomplete state as the finished article where the essential character is not present is not proper. In the present case, the essential-character test is not satisfied because many manufacturing operations are necessary to convert the sheet into the covering sub-assembly/ component. The imported goods had characteristics designed for car-seat use, but "designed for use is not synonymous with "already possessing the essential character of the finished fitting". The distinction is particularly important where the remaining process creates the shape, config....
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....ts. The Tribunal found that the articles were not seats by themselves but were polyurethane articles specifically made as fitting for seats. The Tribunal preferred the fitting description under Customs Tariff Item(CTI) 3926 3010 over the heading parts of seats under Customs Tariff Heading (CTH) 9401. The impugned goods, however, are materially different. The dispute in Select Foam concerned the choice between a specific polyurethane article/ fitting entry and a heading for parts of seats. The goods in that case were 'moulded polyurethane' articles having the shape and identity of seat cushions and requiring attachment to a frame and upholstery. In the present case, the goods are composite sheets/ raw material that enter a manufacturing sequence involving cutting, sewing, airbag stitching, final stitching, trimming and inspection before the finished covering sub assembly emerge. The distinction is therefore not merely one of degree of processing, it goes to the identity of the imported goods. In Select Foam, the article was itself polyurethane cushion article made specifically for fitting. In the present case, the imported sheet is an input from which the 'covering sub-assembly' is ....
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....ion. The goods were not generic polyurethane sheets capable of general use. This evidence is relevant and it demonstrates the commercial purpose and explains why the goods were manufactured to particular specifications. However it does not, by itself, determine the tariff classification. Dunlop India and Mannampalakkal Rubber make clear that where the tariff entry does not make end-use the criterion, use cannot be substituted for the statutory description. In the present case, the Department's approach gives weight to the words "for car seats" in the description and to the eventual assembly of the goods into seats. One has to first identify the article as imported and then determine whether its objective characteristics answer the tariff description. The present goods are therefore best understood as specially specified plastic/ polyurethane composite sheets or material used as an input in manufacture of car-seat 'covering sub-assembly'. The fact that they are meant for a particular manufacturing application does not convert them into finished fittings. 36. The Appellant has alternatively contended that, if the goods are treated as parts of car seats, they should fall under ....
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....nd strip (other than those of Chapter 54) and to blocks of regular geometric shape, whether or not printed or otherwise surface-worked, uncut or cut into rectangles (including squares) but not further worked (even if when so cut they become articles ready for use)'. 39. The Hon'ble Tribunal Chennai vide Final Order No. 40805/2025 dated 08.08.2025 held that; "10. For the reasons discussed, we set aside the impugned order as it was based on a SCN which was barred by limitation. The appellant is eligible for consequential relief, if any, as per law. We clarify that we have not examined the issue of classification and the eligibility or otherwise of the goods for duty exemption as proposed in the impugned order since it has been set aside on limitation itself. The appeal is disposed of accordingly." 40. Therefore, the issue of classification involved in the above appeal has not been adjudicated/ decided on merits but on limitation. We find that in that case the department has adopted classification under Customs Tariff Item (CTI) 3921 1390, since this tariff heading is not covered by Notification No. 152/2009 dated 31.12.2009 the benefit of notification was also denied. ....
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....edly the impugned goods are not made of any of these material nor they are made exclusively out of polyurethane material. Therefore, I find the classification of the impugned goods under Customs Tariff sub Heading (CTSH) 3629 30 is not appropriate since they are not covered either under Customs Tariff Item(CTI) 3629 3010 or under Customs Tariff Item(CTI) 3926 3090. 42. In view of the above discussion the classification of the impugned goods as confirmed by the Revenue under the Customs Tariff Item(CTI) 3629 3090 is not appropriate and therefore the classification confirmed by the department is unsustainable. Now coming to the actual classification of the impugned imported goods, we find that the Chennai Customs have classified the same goods imported at Chennai by the appellant under Customs Tariff Item (CTI) 3921 1390 as 'Other plates, sheets, film, foil and strip of plastics --- other', which points out to the fact that the department has considered the imported goods, which are imported at Chennai Customs as sheets. However, for the imports at Bangalore, Revenue has classified the same goods under Customs Tariff Item(CTI) 3629 3090. Therefore we find that there is a different....