2017 (9) TMI 1510 - AT - Customs

Classification of imported goods - Titanium Pipes and Fittings of various sizes and dimensions - Appellants had sought to clear the items as parts of Bi Polar Membrane Electrolyser - Revenue claimed that goods were classified under CTH 81089090 - whether the impugned items can be considered as parts of the Membrane Electrolyser imported separately by the appellants, or otherwise? - Benefit of N/N. 21/2002-Cus. Sl. No. 285, as amended - Held that - entry No. 285, as amended, does indicate that the exemption thereat extends to parts thereof including secondary brine purification components, jumper switches, filtering elements for hydrogen filters etc. Evidently, parts of Membrane Electrolyser will also get notification benefit - Admittedly, the imported titanium pipes and fittings are not specially designed or created to work as integral part of the Membrane Electrolyser. They are only generic items which have been obtained to complete the functioning of the imported Membrane Electrolyser. At the most, it can be brought within the ambit of accessory, but certainly not as a part or a component. The Hon ble Apex Court in the cases of Commissioner of Central Excise, Delhi Vs. Insulation Electrical (P) Ltd. 2008 (3) TMI 22 - Supreme court has elucidated the meaning and scope of part and held that manufacturing of Rail Assembly Frost Seat Adjuster and Assembly Slider Seat is classifiable as accessories to the motor vehicle under 8708.00. It can not be classified as parts of seats, as claimed by the revenue - Applying the ratio laid down by the Hon ble Apex court, we are not able to appreciate how the titanium pipes and fittings which are generic products made in standard sizes obtained from another supplier and another country can be considered as a specifically designed for the Membrane Electrolyser part which is essential and integrated with the Membrane Electrolyser separately imported. Appeal dismissed - decided against appellant.

Summary

Issues: Classification of imported Titanium Pipes and Fittings as parts of Bi Polar Membrane Electrolyser for duty benefit under Notification No. 21/2002-Cus.

Analysis:
1. Facts and Background: The appellants imported Titanium Pipes and Fittings from Italy to be used with the Bi Polar Membrane Electrolyser. The claim for duty benefit under Notification No. 21/2002-Cus was rejected, leading to an appeal before the Tribunal.

2. Appellant's Arguments: The appellant argued that the Titanium Pipes and Fittings were essential for handling brine in the Membrane Electrolyser, as advised by the supplier from Japan. They cited various case laws to support their contention.

3. Respondent's Arguments: The respondent contended that the imported Titanium Pipes and Fittings were not specifically made for the Membrane Electrolyser and were separately imported from Italy. They argued that these items were not integral components of the Membrane Electrolyser.

4. Core Issue: The main issue was whether the imported Titanium Pipes and Fittings could be considered as parts of the Membrane Electrolyser, thus qualifying for duty benefit under the relevant notification.

5. Legal Provisions: The Tribunal examined the relevant Notification No. 21/2002-Cus and its subsequent amendment, which provided duty exemption for parts of Membrane Electrolysers. The amendment clarified the scope of parts eligible for the benefit.

6. Precedent and Interpretation: The Tribunal referred to a Supreme Court judgment regarding the definition of "parts" as essential components without which the whole cannot function. Applying this definition, the Tribunal found that the generic Titanium Pipes and Fittings were not specifically designed for integration with the Membrane Electrolyser.

7. Decision: The Tribunal dismissed the appeals, concluding that the imported Titanium Pipes and Fittings were not specialized or essential parts of the Membrane Electrolyser but rather generic items obtained to complete its functioning. Therefore, they did not qualify for duty benefit as parts under the notification.

8. Final Verdict: The Tribunal upheld the rejection of the appellant's claim for duty benefit on the grounds that the imported Titanium Pipes and Fittings did not meet the criteria of being essential, specially designed parts of the Membrane Electrolyser. The appeals were dismissed accordingly.