2024 (6) TMI 852 - AT - Customs

Classification of imported goods - Parts for Ball Pen Tips (Blank for Ball Pen Tips) NM6 Alloy 1.60MM 7.10MM - to be classified under the sub-heading 96089990 of the Customs Tariff Act or not - CBIC (TRU) vide Circular No. 113/32/2019- GST dated October 11, 2019 - HELD THAT - The appellant imported certain goods and declared them as 'Parts of Ball Point Pen Tips Blank Ball Pen Tips made of NM6 alloy' classifying the same under HSN 960899990 of the First Schedule of Customs Tariff Act, 1975, chargeable to Basic Customs Duty @5% under Notification 50/2017-Cus dated 30.06.2017. For the purpose of IGST, the appellant claimed benefit of Sl. No.232 of Notification 01/2017-Cus dated 28.06.2017. As per the Sl. No. 232 of the Schedule II of the Notification No. 01/2017, the appellant claimed IGST @12% for the goods imported. On examination of the goods imported by the appellant, the officers opined that the items imported are liable to pay IGST @18% as per Sl. No.453 of the Schedule III of the Notification 01/2017. Thus, the dispute in these appeals is with respect to eligibility of Sl. No. 232 of Notification No 1/2017-IGST(Rate) to the goods imported by the appellant. It is observed that CBIC Circular No. 113/32/2019-GST dated October 11, 2019 also supports this view. The said Circular clarifies the applicability of GST on the parts and accessories suitable for use solely or principally with a medical device. By the said Circular No. 113/32/2019-GST, it was clarified that same rate of GST would be applicable on the parts and accessories suitable for use solely or principally with a medical device as the rate of GST on the medical device and such parts would not be classified under residuary entry. It is observed that the impugned goods are suitable for use solely or principally with the ball point pens only, thus, should be classifiable with ball point pens. The impugned goods are eligible for availment of IGST @12% as provided under S.No. 232 of Schedule II under the IGST Goods Rate Notification 01/2017 dated 28.06.2017 - the demand of IGST confirmed in the impugned orders is not sustainable and hence the same is set aside. Since the demand of IGST is not sustained, fine and penalty imposed in the impugned orders is also set aside. The impugned orders are set aside - appeal allowed.

Summary

Issues Involved:
1. Classification of imported goods under the Customs Tariff Act.
2. Applicability of IGST rate on imported goods.
3. Interpretation of relevant notifications and circulars.
4. Validity of fine and penalty imposed.

Issue-wise Detailed Analysis:

1. Classification of Imported Goods under the Customs Tariff Act:
The appellant imported parts/tips of ball pens from China and classified them under HSN 960899990, chargeable to Basic Customs Duty @5% under Notification 50/2017-Cus dated 30.06.2017. The classification was contested by the Department, which argued that the goods should be classified under the residuary heading 96089990 as 'others'. The appellant contended that the goods should be classified under Heading 9608 as parts of ball point pens, supported by Chapter Note 1(d) of Chapter 96, which excludes parts of general use from this Chapter. The Tribunal accepted the appellant's classification, noting that the Department had already accepted the classification of the goods as 'parts of ball point pens' under heading 9608.

2. Applicability of IGST Rate on Imported Goods:
The appellant claimed an IGST rate of 12% under Sl. No. 232 of Notification 01/2017-Cus dated 28.06.2017. The Department, however, argued for an 18% IGST rate under Sl. No. 453 of Schedule III of the same notification. The Tribunal observed that Entry No. 232 specifically covers parts of pens, whereas Entry No. 453 is a residuary entry. Since the goods were classified under Heading 9608, they are eligible for the 12% IGST rate.

3. Interpretation of Relevant Notifications and Circulars:
The appellant referred to Circular No. 113/32/2019-GST and Circular No. 155/11/2021-GST, which clarify that parts suitable for use solely or principally with a specific device should attract the same GST rate as the device itself. The Tribunal agreed with this interpretation, noting that the impugned goods are parts of ball point pens and should be classified under Heading 9608, thus eligible for the 12% IGST rate. The Tribunal also referenced the decision in M/s. Camlin Limited, which supports the classification of parts along with the main item.

4. Validity of Fine and Penalty Imposed:
Since the demand for IGST was not sustained, the fine of Rs. 5,00,000/- and penalty of Rs. 25,000/- imposed in the impugned orders were also set aside. The Tribunal held that the impugned orders were not sustainable and allowed the appeals filed by the appellant.

Conclusion:
The Tribunal set aside the impugned orders and allowed the appeals, holding that the imported goods are eligible for the 12% IGST rate under Sl. No. 232 of Schedule II of Notification 01/2017-Cus. The fine and penalty imposed were also set aside. The judgment emphasized the importance of interpreting notifications and circulars in line with the classification principles under the Customs Tariff Act.