2013 (11) TMI 1015 - AT - Customs

Classification under CTH 7308 or 8503 - Whether the tower sections imported by the appellant for Wind Operated Electricity Generator should be classified under CTH 7308 or 8503 of the Customs Tariff Act, 1975 - Held that - As per Rule 1 of General Rules of interpretation to the Customs Tariff Act, the classification of imported goods is required to be done as per the relevant Section notes and Chapter notes. Section Note 2(b) of Section XVI is the relevant Section note for deciding the parts solely or principally used in a particular kind of machine - Commissioner has considered the parts imported goods and held the imported goods to be towers for classification under Heading 7308 20 19. It is observed that 7308 will cover those towers which are not parts of any machine as per C.B.E. & C. Telex/Circular No. 924/2/97-Cus. (TU), dated 9-8-1997. This Circular has clearly opined in the conference of the Commissioners of the Customs on Tariff and Allied matters that WOEG tower parts constitute essential components of WOEG and that in the absence of tower parts imported for the manufacture of WOEG, WOEG cannot be said to be presented in an unassembled/disassembled condition. It was also clarified that these parts will be classifiable as components and will be liable to duty as applicable to the components - Prima facie case in favour of assessee - Stay granted.

Summary

Issues: Classification of tower sections imported for Wind Operated Electricity Generator (WOEG) under CTH 7308 or 8503 of the Customs Tariff Act, 1975.

Analysis:
The issue at hand revolves around the classification of tower sections imported for WOEG under the Customs Tariff Act. The appellants argued that as per Section Note XVI 1(g), parts exclusively required for use in a specific machine should be classified under the main machine's chapter heading. They contended that CTH 73.08 only covers towers and not machine parts. Additionally, they cited a C.B.E. & C. Telex clarifying that WOEG towers are essential components. On the contrary, the A.R. argued that the imported goods were correctly classified under Chapter Heading 7308, emphasizing the Commissioner's decision to confirm the demand and impose penalties.

The Tribunal delved into the legal framework, citing Rule 1 of the General Rules of interpretation to the Customs Tariff Act, which mandates classification based on relevant Section notes and Chapter notes. Specifically, Section Note 2(b) of Section XVI was examined to determine parts solely or mainly used in a particular type of machine. The Commissioner's assessment categorized the imported goods as towers under Heading 7308 20 19. Notably, it was highlighted that towers falling under 7308 are distinct from machine parts, as per the C.B.E. & C. Telex/Circular, which underscored the importance of WOEG tower parts as essential components necessary for the assembly of WOEG.

Considering the legal position and arguments presented, the Tribunal found that the appellants established a strong prima facie case for a complete waiver of the pre-deposit of duties and penalties. Consequently, the applications for the waiver were granted, with the recovery of amounts stayed pending the appeal's disposal. This decision reflects a nuanced analysis of the classification issue and the significance of the imported tower sections in the context of WOEG assembly.