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2018 (6) TMI 141 - AT - CustomsClassification of imported goods - DC Motor which is performing dual function i.e. of DC Motor and of rear wheel - main principal and dominant function of the imported goods - Whether the DC motor imported classifiable under tariff item 8501 3119 as claimed by appellant or under tariff item 8714 1090, as held by Revenue? - Whether appellant entitled for benefit of N/N. 21/2012-Cus (Serial No. 7), N/N. 06/2006-CE (Serial No. 35A) or N/N. 12/2012-CE (Serial No. 274, 296)? Held that - The main principal and dominant function of the imported goods shall be classifiable as per essential character of the said goods - As the impugned goods, having the essential character of motor, the same has the principal function of electric motor as rotor is fixed on the electric motor. It become rear wheel only after mounting the tyre and without tyre, it cannot perform as part of e-bike. In that circumstances, the main dominant and principal function of the impugned goods is electric motor. Therefore, the same merits classification in tariff item 8501 3119 as classified by the appellant. Benefit of N/N. 21/2012-Cus (Serial No. 7), N/N. 06/2006-CE (Serial No. 35A) and N/N. 12/2012-CE (Serial No. 274, 296) - Held that - As per the description of excisable goods, DC Motor is covered under the said notifications and exempted from payment of duty on following the procedure laid down in the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001. Admittedly, the appellant has complied with the conditions and goods were allowed to be cleared by giving benefit of the said notifications - benefit of notifications allowed. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Classification of the DC motor: Whether it is classifiable under tariff item 8501 3119 as claimed by the appellant or under tariff item 8714 1090 as held by the Revenue. 2. Admissibility of exemption under various notifications: Whether the benefit of exemption notifications (Notification No. 12/2012-Cus (Serial No. 439), Notification No. 21/2012-Cus (Serial No. 7), Notification No. 06/2006-CE (Serial No. 35A), or Notification No. 12/2012-CE (Serial No. 274, 296)) is applicable to the impugned goods. Detailed Analysis: 1. Classification of the DC Motor: The primary issue revolves around the classification of the imported DC motor, which performs dual functions as both a DC motor and a rear wheel. The appellant argued that the essential character and principal function of the imported goods are that of an electric motor, and thus, they should be classified under tariff item 8501 3119. The appellant emphasized that the rotor, which acts as the rear wheel, only performs this function after a tire is mounted, making its primary function that of a motor. The adjudicating authority, however, classified the goods under tariff item 8714 1090 as parts of electrically operated motorcycles. The tribunal analyzed the tariff entries and the general rules for interpretation, specifically Rule 2 and Rule 3, which state that goods should be classified based on their essential character and principal function. The tribunal concluded that the goods, having the essential character of a motor, should be classified under tariff item 8501 3119. The tribunal also noted that the goods were cleared after physical verification, and the adjudication order had attained finality without being challenged, making the proceedings against the appellant unsustainable as per the Hon'ble Apex Court's decisions in Priya Blue Industries Limited vs. Commissioner and CCE, Kanpur vs. Flock (India) Pvt. Limited. 2. Admissibility of Exemption under Various Notifications: The appellant claimed exemptions under several notifications, asserting that the imported DC motors were covered under these notifications and exempted from payment of duty. The tribunal examined the relevant notifications, including Notification Nos. 12/2012-Cus (Serial No. 439), 21/2012-Cus (Serial No. 7), 06/2006-CE (Serial No. 35A), and 12/2012-CE (Serial No. 274, 296), which provide exemptions for goods used in the manufacture of electrically operated vehicles. The tribunal noted that the appellant had complied with the conditions set out in the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001, and the goods were allowed clearance by customs after due verification. The tribunal emphasized that the essential character of the goods as a motor qualified them for the exemptions under the cited notifications, as the primary function of the goods was that of a DC motor rather than a part of an e-bike. Conclusion: The tribunal held that the imported goods merit classification under tariff item 8501 3119 as sought by the appellant, based on their essential character and principal function as electric motors. Consequently, the tribunal set aside the impugned order and allowed the appeal with consequential relief, if any. The decision underscores the importance of the essential character and principal function of goods in determining their classification and eligibility for exemptions under relevant notifications.
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