2022 (7) TMI 1520 - AT - Customs

Classification of imported goods - linear accelerator with IMRT for radiological use in the detection of cancerous turnovers - whether the goods imported are parts of the machinery or accessories to the machineries earlier imported? - HELD THAT - The Respondent, imported from M/s Varian Medical Systems International AG Switzerland various items in two (2) separate identifiable lots described in the commercial invoice no. 320585725-A dated 07.08.2012 as Lot I Upgrade to IGRT and Lot 2 Upgrade to Rapid Arc. The import goods were declared in Bill of Entry No. 7665281 dated 14.08.2012 with benefit of concessional duty under then prevalent Notification No. 12/2012-Cus dated 17.03.2012 S. No. 474 (ii) and Notification No. 21/2012-Cus dated 17.03.2012 S. No. 93 as accessories of medical linear accelerator, classifiable under Heading 9022.90 of CTA75 and allowed clearance for home consumption after physical examination and on satisfaction of the proper officer of customs about proper and correct declaration of import items made on the bill of entry and payment of correct and appropriate duty assessed thereon. Hon ble Supreme Court has in case MEHRA BROS. VERSUS JOINT COMMERCIAL OFFICER 1990 (11) TMI 144 - SUPREME COURT has held accessories to be adjuncts, accompaniments for enhancing functional capability, efficiency of the machine/equipment - In the case of COMMISSIONER OF CENTRAL EXCISE, DELHI VERSUS INSULATION ELECTRICAL (P) LTD. 2008 (3) TMI 22 - SUPREME COURT , Hon ble Apex Court held a part of machine/equipment to be the item/component that is indispensible for functioning of the machine/equipment, i.e., in absence of which the machine/equipment is non-operational. From ratio of judgment as mentioned above, clear distinction has been made between the parts and accessories. Applying the ratio, it is found that as the Linac was already operational since 2010, the goods imported is 2012 were nothing other than accessories for that machinery as they enhanced the functional capabilities. Having held that these goods were accessories to enhance the capabilities of functional machine, there are no merits in the appeal filed by the Revenue - appeal dismissed.

Summary

Issues involved:
1. Re-consideration of the issue on remand by the Hon'ble High Court regarding classification of imported goods.
2. Appeal by the revenue challenging the classification of goods as accessories.
3. Show Cause Notice issued by the Department regarding the classification and duty payment.
4. Adjudication of the Show Cause Notice by the Assistant Commissioner of Customs.
5. Appeal by the revenue against the order of the Ld. Commissioner (Appeals).
6. Challenge of the order before the Hon'ble High Court.
7. Determination of whether the imported goods are parts or accessories of the machinery.

Issue 1 - Re-consideration of the issue on remand by the Hon'ble High Court:
The Hon'ble High Court remanded the matter back to the tribunal for fresh consideration. The Commissioner of Customs (Appeals) had classified the imported goods as accessories, enhancing the efficiency of the linear accelerator, leading to a concessional rate of duty. The tribunal's order was found lacking in analysis, prompting the appeal to be admitted by condoning the delay. The tribunal was directed to make a fresh pronouncement with reasons within three months.

Issue 2 - Appeal by the revenue challenging the classification of goods:
The Tribunal, in its previous order, upheld the classification of the imported items as accessories, as declared in the bills of entry. The Commissioner (Appeals) found the items were correctly declared, leading to the rejection of the revenue's appeal. The Tribunal found no reason to interfere with the impugned order and upheld it based on the correct declaration of the goods.

Issue 3 - Show Cause Notice and Adjudication:
A Show Cause Notice was issued by the Department regarding the denial of concessional rates claimed for the imported goods. The Assistant Commissioner confirmed the demands and imposed penalties. However, the Ld. Commissioner (Appeals) set aside the Assistant Commissioner's order, leading to an appeal by the revenue before the Tribunal.

Issue 4 - Determination of parts or accessories of the machinery:
The matter revolved around whether the imported goods were parts or accessories of the machinery. The goods were identified as upgrades to the existing linear accelerator, enhancing its capabilities. The distinction between parts and accessories was crucial, with legal precedents highlighting accessories as items that enhance functional capabilities. The Tribunal concluded that the imported goods were accessories, dismissing the appeal by the revenue.

This comprehensive analysis covers the key issues involved in the legal judgment, addressing the classification of imported goods, the appeal process, the Show Cause Notice, and the determination of whether the goods were parts or accessories of the machinery.