2023 (5) TMI 618 - AT - Customs

Classification of imported goods - imported goods used as components in manufacture of motor vehicle - to be classified under the heading of 8708 as parts of the motor vehicle or not - HELD THAT - The matter involving identical dispute in respect of same appellant had been decided by the Tribunal in SUZUKI MOROTS GUJARAT PRIVATE LIMITED VERSUS C.C. -AHMEDABAD 2022 (6) TMI 1089 - CESTAT AHMEDABAD where it was held that lower authorities have not examined the legal aspects properly to come to conclusion for correct classification of the goods in question. Hence in our considered view the matter needs to be remitted back to the Commissioner (Appeals). Learned AR is relied on the two decision of Hon ble Apex Court in OK. PLAY (INDIA) LTD. VERSUS COMMISSIONER OF C. EX., DELHI-III, GURGAON 2005 (2) TMI 114 - SUPREME COURT and M/S CAST METAL INDUSTRIES (P) LTD. VERSUS COMMR. OF CENTRAL EXCISE-IV, KOLKATA 2015 (11) TMI 833 - SUPREME COURT . The crux of both the decisions of Hon ble Apex Court is that the functional utility, design shape and predominant use have to be taken into account while classifications of goods. The test of predominant use is incorporated in the set of test to be exercise before classification. In view of above, there are no conflict in the decision of Hon ble Apex Court cited by the Learned AR and the decision of the Tribunal in the appellant s own case. The matter remanded to the Commissioner (Appeals) to decide in identical manner as the earlier remand order - appeal allowed by way of remand.

Summary

Issues involved: Change of classification of imported items, application of three layer test for classification, reliance on previous tribunal decision, interpretation of HSN explanatory notes, examination of legal aspects for correct classification.

The appeal was filed against the change of classification of items imported by the appellant, a motor vehicle manufacturer. The appellant sought classification of components imported for vehicle manufacture under a specific heading, while the revenue sought to classify them as parts of motor vehicles under a different heading. The appellant cited a previous tribunal decision applying a three-layer test for classification and pointed out that subsequent assessments were done following that order.

The appellant argued for classification based on the specific use of the goods, while the revenue relied on the predominant use and commercial identity of the items, referencing decisions of the Hon'ble Apex Court. The tribunal noted that a previous decision involving the same appellant had set out conditions for classifying parts and accessories of motor vehicles, emphasizing the need to fulfill specific criteria for classification under heading 8708.

The tribunal found that the Commissioner (Appeals) had not properly examined whether the conditions for classification under heading 8708 were met for the disputed goods. It was observed that the lower authorities had not adequately considered the legal aspects for determining the correct classification. Therefore, the tribunal set aside the impugned order and remanded the matter back to the Commissioner (Appeals) for further examination and decision in line with the previous tribunal order.

The tribunal emphasized the importance of considering functional utility, design, shape, and predominant use in the classification of goods, aligning with the decisions of the Hon'ble Apex Court. The test of predominant use was deemed essential in the classification process, and there was no conflict identified between the decisions of the Hon'ble Apex Court and the tribunal's previous ruling in the appellant's case.

In conclusion, the tribunal followed its previous decision in the appellant's case and directed the matter to be remanded to the Commissioner (Appeals) for a decision consistent with the earlier remand order, highlighting the significance of fulfilling the conditions for classification under the relevant heading.