2021 (12) TMI 1242 - AT - Customs

Classification of imported goods - Hankook off the road mining tyres 31 x 10.5 R 15 - to be classified under CTH 40118080 or under CTH 40111010? - restricted item or not - DGFT Notification No.12/2015-2020 dated 12.06.2020 - crux of the Department s argument is that the impugned tyres are not a kind used in mining etc. and are usable in on-road conditions - HELD THAT - The impugned tyres are not normal tyres. This fact is also not disputed by the Department. It is the contention of the Department that the tyres are claimed to be used in in vehicles like Gorkha Force Thar etc. which are vehicles for on-road use only and moreover vehicles used for racing etc. are also classified under motor vehicles and therefore, the impugned tyres are rightly classifiable under CTH 40111010. On perusal of the literature made available on record and the clarifications given by some purchasers, it is clear that the impugned tyres are of a different kind from normal tyres notwithstanding the fact that they are also usable for on-road purposes. The impugned tyres are used for replacing the existing tyres whenever the vehicle is used in muddy or off terrain. It can be seen that even Tractors, Dumpers etc. which are primarily designated for off the road used also travel some distances on the road till they reach the place of their use. By no stretch of imagination such vehicles and the tyres thereof can be regarded to be for on-road purposes. The Department opines that the impugned tyres are not of a kind used in vehicles which are used for mining etc - Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Classification of imported tyres.
2. Requirement of a license for import.
3. Applicability of DGFT Notification No.12/2015-2020.
4. Confiscation and penalty imposed by the Deputy Commissioner.
5. Reliance on evidence and clarifications provided by the manufacturer and other parties.

Detailed Analysis:

1. Classification of Imported Tyres:
The appellant, M/s The Tyre Mark, imported 220 "Hankook off the road mining tyres 31 x 10.5 R 15" and classified them under CTH 40118080, claiming they are primarily off-road tyres used in mining vehicles and off-roading vehicles. The revenue argued that these tyres should be classified under CTH 40111010 as tyres meant for motor cars, requiring a license for import as per DGFT Notification No.12/2015-2020. The Tribunal found that the tyres are designed for off-road use, as established by the technical service team of M/s Hankook and the literature from Best Drive, which states that HT tyres are not intended for off-road performance. The Tribunal concluded that the tyres are not normal on-road tyres and should not be classified under CTH 40111010.

2. Requirement of a License for Import:
The revenue contended that the tyres are restricted for import under DGFT Notification No.12/2015-2020 and require a license. The Tribunal found that the tyres are specialized for off-road use, and the classification under CTH 40118080 does not necessitate a license. The Tribunal rejected the revenue's argument, stating that the tyres' dominant use is for off-road purposes, and they should not be considered restricted goods requiring a license.

3. Applicability of DGFT Notification No.12/2015-2020:
The revenue argued that the tyres fall under the restricted category as per DGFT Notification No.12/2015-2020. The Tribunal, however, determined that the tyres are primarily for off-road use and do not fall under the restricted category specified in the notification. The Tribunal emphasized the principle of "dominant use" and concluded that the tyres are not designed for normal on-road purposes, thus making the notification inapplicable.

4. Confiscation and Penalty Imposed by the Deputy Commissioner:
The Deputy Commissioner had confirmed the reclassification of the tyres under CTH 40111010 and imposed confiscation and penalty. The Tribunal found that the lower authorities relied on insufficient evidence, including an email from a competitor, which cannot be considered clinching evidence. The Tribunal set aside the confiscation and penalty, stating that the tyres are special purpose tyres for off-road use and should not be subject to the penalties imposed.

5. Reliance on Evidence and Clarifications Provided by the Manufacturer and Other Parties:
The revenue relied on clarifications from M/s Hankook Tyres India LLP, which stated that the tyres are generally used in SUVs like Mahindra Thar. The Tribunal found that this evidence was not sufficient to classify the tyres under CTH 40111010. The Tribunal noted that the evidence provided by the appellants, including technical specifications and certificates from purchasers, demonstrated that the tyres are designed for off-road use. The Tribunal rejected the reliance on the competitor's email and concluded that the tyres should be classified under CTH 40118080.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeal with consequential relief as per law. The Tribunal concluded that the tyres are special purpose tyres for off-road use and should be classified under CTH 40118080, not requiring a license for import under DGFT Notification No.12/2015-2020. The confiscation and penalty imposed by the Deputy Commissioner were also set aside.