2016 (10) TMI 665 - AT - Customs

Classification of goods - Air Conditioner Resistors - classified under Chapter 85334090 or classifed under Chapter heading 84159000 - benefit of N/N. 24/2005-Cus, dated 01.03.2005 - HSN Notes - Held that - when the item in question is specific part of air conditioning system , there is no scope for classification of the product under Chapter 8533 as mere Resistor . Consequently, appropriate classification for the subject item is Chapter sub-Heading 84159000. Confiscation of goods with redemption option on payment of fine - imposition of penalty - Held that - reliance placed on the decision of Prince Marine Transport Services Pvt. Ltd. vs C.C. 2014 (12) TMI 772 - CESTAT MUMBAI where it was held that the confiscation of the goods under Section 111 (m) and penalty under Section 112(a) of Customs Act are not warranted. Consequently, confiscation, redemption fine and penalty imposed by the impugned orders are hereby set aside. Appeal disposed off - decided partly in favor of appellant.

Summary

Issues Involved:
Classification of goods as Air Conditioner Resistors under Chapter 8533 or Chapter heading 84159000.

Analysis:

Issue 1: Classification of Goods
The appellant argued for classification under Chapter 8533 based on the Tariff Entry 8533, which covers Resistors. They cited HSN Notes and Section Note 2(a) to support their claim. The appellant also referenced previous judgments to assert that the responsibility of classification lies with the Revenue. On the other hand, the Revenue contended that the goods should be classified under Chapter heading 84159000, as they are sub-assemblies used in auto air conditioning systems, not mere Resistors. The Revenue highlighted discrepancies in classification mentioned in the Bill of Lading and the appellant's claims. The goods were described as safety devices controlling blower motor functions in the air conditioning system. The Tribunal considered the arguments and examined the nature and use of the goods.

Issue 2: Interpretation of Section XVI Notes
The Tribunal analyzed Section Note 2(a) and 2(b) of Section XVI of the Customs Tariff to determine the classification of parts of machines. While Note 2(a) directs parts to be classified in their respective headings unless excluded, Note 2(b) specifies that parts suitable for a particular machine are to be classified with that machine. The Tribunal compared these provisions with the nature of the goods in question to ascertain the correct classification.

Issue 3: Examination of HSN Notes
The Tribunal referred to the HSN Notes for Chapter 8533, which cover Electrical Resistors. The notes describe resistors as conductors providing electrical resistance in a circuit. The Tribunal noted that while the HSN Notes generally include electrical resistors under Chapter 8533, the specific use of the goods as Auto Air Conditioner Resistors required a detailed analysis. The Tribunal reviewed the documents provided by both parties, including descriptions of the goods as part of an Auto Air Conditioning System.

Conclusion:
After thorough examination and consideration of arguments, case laws, and relevant provisions, the Tribunal concluded that the goods in question, being specific parts of an air conditioning system, should be classified under Chapter sub-Heading 84159000. The Tribunal set aside the confiscation, redemption fine, and penalty imposed by the impugned orders based on the genuine dispute over classification. The appeals were partly allowed based on the principles established in previous judgments and the specific nature of the goods as sub-assemblies for auto air conditioning systems.