2024 (9) TMI 1181 - AT - Customs

Classification of imported goods - Fork/Yoke 5th and reverse gear shift (parts of motor vehicles) - to be classified under CTH 84831099 considering the goods as Transmission Shafts or to be classified under CTH 8708400 as parts of motor vehicle like gear boxes and parts thereof - HELD THAT - Admittedly the good imported by the appellant is Fork and Yoke 5th which in itself is neither the transmission shaft nor the gear box. However it has been judicially noticed that Fork and Yoke are the assembly components located inside the gear box assembly. Since the parts/components of gearboxes are covered under 8708 precisely 87084000, that the impugned goods are not used as an integral part of engines or motors but are solely and principally used as part of transmission assembly only as claimed by the appellant which are parts of motor vehicles of HSN 8701 to 8705 because only those parts which are which constitute integral parts of engines or motors of heading 8483 are excluded from Section XVII as per Note 2(e). The above provisions of the explanations as provided by the chapter Note 8708 is an important material evidence to support the findings of the Adjudicating authority as the appellant himself has accepted that the impugned goods are transmission shafts which are further used in automobiles. In the present case, Transmission Shaft is a general classification for the goods in question. The goods since are meant to be embodied under the gear box, these are the parts of gear box for motor vehicles more specifically defined under 8708400. Also as per sub rule (c) of GRI 3 when goods cannot be classified by any of the other rules then those should be classified under heading which occurs last in numerical order among those which equally merit consideration - there are no equal merit consideration in the two contesting tariff entries however still 8708 is later in the numerical order. Seen from this perspectives also the impugned goods (Fork and Yoke 5th) are rightly classifiable under 87084000 which attract BCD at the rate of 10%. The appellant has wrongly classified the imported goods under CTH 84831099 and that due to said mis-declaration the appellant has evaded BCD to the extent of 2.5% thereof - there are no infirmity in the order under challenge - appeal dismissed.

Summary

Issues Involved:
1. Classification of imported goods (Fork/Yoke 5th and reverse gear shift).
2. Alleged mis-declaration and evasion of customs duty.
3. Applicability of Basic Customs Duty (BCD) rates.
4. Interpretation of relevant tariff headings and classification rules.

Detailed Analysis:

1. Classification of Imported Goods:
The primary issue is whether the imported goods, specifically Fork/Yoke 5th and reverse gear shift, should be classified under CTH 8483 (Transmission Shafts) or CTH 8708 (Gear Boxes and parts thereof). The appellant classified these goods under CTH 84831099, arguing they are parts of the transmission system/shaft and qualify as "separately presented transmission elements." The appellant contended that the goods are internal parts of automotive engines/transmission shafts, thus should fall under Heading 8483.

2. Alleged Mis-declaration and Evasion of Customs Duty:
The department argued that the goods are parts of motor vehicles, specifically gearboxes, and should be classified under CTH 87084000. This classification attracts a higher BCD rate of 10%, compared to 7.5% under CTH 8483. The department alleged that the appellant mis-declared the goods to evade the differential customs duty of 2.5%.

3. Applicability of Basic Customs Duty (BCD) Rates:
The appellant paid BCD at the rate of 7.5% under CTH 84831099. The department contended that the correct classification under CTH 87084000 attracts a BCD rate of 10%. The differential duty demand of Rs. 56,91,216/- was confirmed by the Order-in-Original.

4. Interpretation of Relevant Tariff Headings and Classification Rules:
The tribunal examined the relevant tariff headings and classification rules. CTH 8483 includes transmission shafts, gears, and gearing but excludes gearboxes and their parts. CTH 8708 covers parts and accessories of motor vehicles, including gearboxes and parts thereof. The tribunal referred to the General Rules for Interpretation (GRI) of the harmonized system, which guide the classification of goods based on specific descriptions and predominant use.

Tribunal's Observations and Decision:

Classification:
The tribunal observed that the goods in question are not transmission shafts but components located inside the gearbox assembly. Therefore, they should be classified as parts of gearboxes under CTH 87084000, which specifically covers gearboxes and their parts for motor vehicles.

Mis-declaration:
The tribunal held that the appellant's classification under CTH 84831099 was incorrect and amounted to a mis-declaration with the intent to evade customs duty. The goods are more specifically described under CTH 8708, which pertains to parts and accessories of motor vehicles.

BCD Rates:
The tribunal confirmed that the correct BCD rate for the goods under CTH 87084000 is 10%, and the appellant had evaded the differential duty of 2.5%.

Application of GRI:
The tribunal applied GRI rules, emphasizing that the heading with the most specific description should be preferred. Since CTH 8708 is more specific to gearboxes and their parts, it takes precedence over the more general classification under CTH 8483.

Conclusion:
The tribunal upheld the Order-in-Original, confirming the demand for differential duty and interest. The appeal was dismissed, and the classification of the goods under CTH 87084000 was affirmed, along with the corresponding BCD rate of 10%.

Order:
The order was pronounced in the open court on 19.09.2024, dismissing the appeal and upholding the differential duty demand.