2008 (9) TMI 130 - AT - Central Excise

CNG conversion kits (Kits) - kits are parts of IC engines of Heading 8407 and 8408. Therefore the impugned goods are classifiable under Heading 8409 - kits in question provide an alternative fuel charging system to the one inbuilt in the IC engine. Therefore, they are IC engine parts. Moreover ITC (HS) covers imported kits under Entry 8409 for Exim Policy purposes - impugned order confirming classification of these parts under Heading 8708 as parts of motor vehicle , is not sustainable

Summary

Issues: Classification of CNG conversion kits under Central Excise Tariff Heading 8409 or 8708.

In this judgment by the Appellate Tribunal CESTAT CHENNAI, the issue revolved around the classification of CNG conversion kits manufactured and cleared by the appellant. The kits were designed to enable motor vehicles originally running on petrol or diesel to run on CNG by providing an alternate fuel charging system. The appellant had initially classified these kits under Heading 8409 of the Central Excise Tariff, which covers IC engine parts. However, the impugned order reclassified the kits under Heading 8708, leading to a demand of differential duty against the appellant. The impugned order of the Commissioner affirmed this reclassification.

Upon hearing the parties, the Tribunal referred to interpretative Rules governing the classification of goods for excise duty. Rule 1 stipulates that goods should be classified based on the description in the entries, Section notes, and Chapter notes. Rule 3(a) states that when goods are prima facie classifiable under multiple headings, the heading providing the most specific description should be preferred. In this case, although IC engine parts are parts of motor vehicles falling under Heading 8708, the Tribunal found that Heading 8409 was more specific for the CNG conversion kits. The kits were considered IC engine parts as they provided an alternative fuel charging system to the inbuilt one. Additionally, the Import-Export Policy covered imported kits under Entry 8409, which includes parts suitable for use with engines under Heading 8407 or 8408.

Further analysis revealed that the kits in question were parts of IC engines falling under Heading 8407 and 8408, making their correct classification under Heading 8409. The Tribunal concluded that the impugned order lacked a legal basis and was unsustainable. Consequently, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant.

This detailed judgment provides a comprehensive analysis of the classification issue concerning CNG conversion kits under the Central Excise Tariff, emphasizing the importance of specific descriptions and legal principles governing the classification of goods for excise duty purposes.