2023 (12) TMI 386 - AT - Customs

Classification of imported goods - Smartra Immobilisers - to be classified under Chapter Heading 8536 5090 as automatic regulating and controlling instrument and apparatus or under chapter heading 8708 9900 as accessories of vehicles? - HELD THAT - The Hon ble Supreme Court of India in the case of WESTINGHOUSE SAXBY FARMER LTD. VERSUS COMMR. OF CENTRAL EXCISE CALCUTTA 2021 (3) TMI 291 - SUPREME COURT was dealing with the question Whether the Relays manufactured by the appellant used only as Railway signaling equipment would fall under Chapter 86, Tariff Item 8608 as claimed by the appellant or under Chapter 85 Tariff Item No. 8536.90 as claimed by the Department - Hon ble Supreme Court allowed the appeal classifying the product under Chapter Heading 8608 and not under 8536 as claimed by the Revenue. In the present case, the facts are similar to the above case and therefore, since admittedly the sole and principal use of smartra immobiliser is only as an accessory to the vehicle as an antitheft device, adding value to the vehicle in terms of security, the question of classifying the same under Chapter Heading 8536 does not arise. Moreover, it is to be classified as part of motor vehicle unless excluded by the Section or Chapter Notes or if there is a specific entry in the Tariff as per the General Explanatory Notes. As already discussed, it is rightly classifiable under Chapter Heading 8708 as there is no specific entry elsewhere. Therefore, since the smartra immobiliser is only a security device to prevent a vehicle from being stolen it is rightly classifiable under Chapter Heading 8708 as parts of motor vehicle. When the primary evidences and criteria for classification do not allow classifying the items under Chapter Heading 8536, the question of following the Tariff Advice which is only a persuasive value does not arise. The impugned order is set aside - Appeal allowed.

Summary

Issues Involved:
1. Classification of Smartra Immobilisers under Chapter Heading 8536 or 8708.
2. Applicability of HSN Explanatory Notes and relevant case laws.

Summary:

Issue 1: Classification of Smartra Immobilisers under Chapter Heading 8536 or 8708

The respondent, M/s. Bosch Limited, imported Smartra Immobilisers and classified them under Chapter Heading 8536 5090 as automatic regulating and controlling instruments. The original authority reclassified them under Chapter Heading 8708 9900 as vehicle accessories. The Commissioner (Appeals) reverted to the classification under 8536 5090, aligning with the Australian Customs Authority's classification. The department appealed against this order.

Issue 2: Applicability of HSN Explanatory Notes and relevant case laws

The Revenue argued that Smartra Immobilisers, being antitheft devices, should be classified under Chapter Heading 8708 9900, as they do not function as switches. The respondent contended that the devices are electronic chips that switch on the EMS upon receiving the correct signal, thus fitting under Chapter Heading 8536. They relied on HSN Explanatory Notes and several case laws to support their classification.

Judgment:

1. Technical Function and Classification:
The Tribunal noted no dispute on the technical aspects and function of the Smartra Immobiliser as an antitheft device. It emphasized that the device is used solely in vehicles for security purposes and does not fit the description of electrical apparatus under Chapter Heading 8536.

2. HSN Explanatory Notes:
The Tribunal referred to HSN Explanatory Notes, which state that Chapter Heading 8536 covers electrical apparatus for a voltage not exceeding 1000 volts, generally used for dwellings or industrial equipment. The Smartra Immobiliser, being a vehicle security device, does not fit this description.

3. Relevant Case Laws:
The Tribunal cited the Supreme Court judgments in C. EX, Delhi Versus Insulation Electrical (P) Ltd. and Westinghouse Saxby Farmer Ltd. Versus Commissioner of C. EX., Calcutta, which emphasized the principal use test for classification. The Tribunal concluded that the Smartra Immobiliser's principal use as a vehicle accessory for security purposes justifies its classification under Chapter Heading 8708.

4. Final Classification:
The Tribunal ruled that the Smartra Immobiliser is rightly classifiable under Chapter Heading 8708 as parts and accessories of motor vehicles, satisfying both conditions prescribed under HSN Explanatory Notes for this heading. The appeal was allowed, and the impugned order was set aside.

Conclusion:

The Tribunal concluded that the Smartra Immobiliser, being a security device used solely in vehicles, should be classified under Chapter Heading 8708 as parts and accessories of motor vehicles. The appeal was allowed, and the impugned order was set aside.