Same Item;Different Classifications, Goods and Services Tax - GST

[mohan sehgal]

Bicycle frame Lock;which is solely and only could be used as a wheel lock for Bicycles;It has no any other use or application;It is designed and made exclusively for fitment on Bicycle Frame.Karnataka High Court vide its Judgement Order Kumar Agencies and others Vs Commisioner of Commercial Taxes(1989 1988 (9) TMI 332 - KARNATAKA HIGH COURT )have taken the view that Bicycle Frame Locks cannot be classified along with "all kinds of Padlocks and Locks"nor can they be understood as padlocks and Locks;the use of which is altogether different.

Some are classifying the same under Tarrif Chapter 8301..Locks and Padlocks for General use and others are classifying the same under 8714..Parts and accessories of Bicycles..8301 is taxed at 18% while 8714 at 12%..under GST

Please guide.

Posts / Replies

[KASTURI SETHI]

Classification depends upon usage/function of the product. The following judgement of Supreme Court clears the air:-

Car locking system combined with alarm - Classifiable under Customs Tariff sub-heading 8301.20 (2) Classification of goods - Combination of two products - Classification to be determined by main part of combination (3) Classification of goods - Precedent - Goods being combination of two products, decision which is on only one of those products cannot be cited as precedent

The Supreme Court Bench comprising Hon’ble Mr. Justice N. Santosh Hegde and Hon’ble Mr. Justice B.P. Singh on 8-10-2002 after condoning the delay dismissed the Civil Appeal No. 6604 of 2002 (C.A. No. D17339 of 2002) filed by Commissioner of Customs, New Delhi, against CEGAT Order Nos. 110/2002-B, dated 26-2-2002 and reported in 2002 (142) E.L.T. 98 (Tri. - Del.) =  2002 (2) TMI 174 - CEGAT, COURT NO. II, NEW DELHI (Future Innovations Pvt. Ltd. v. Commissioner). While dismissing the Appeal, the Supreme Court passed following order :-

“Delay condoned.

The appeal is dismissed.”

The Appellate Tribunal in its impugned order had held that, car locking system combined with alarm is classifiable under sub-heading 8301.20 of Customs Tariff Act, 1975 and not under sub-heading 8531.20 ibid. It was also held that classification is to be determined by the main part of the combination.

The Tribunal further held that in case of classification of combined products, classification is to be determined by the main part of combination.

The Tribunal also held that, impugned goods being combination of two products, decision which is on only one of those products cannot be cited as precedent.

[Commissioner v. Future Innovations Pvt. Ltd.- 2003 (153) E.L.T. A297 (S.C.) = 2002 (10) TMI 799 - SUPREME COURT ]

[mohan sehgal]

Sir,

Bicycle Frame Lock is one item and is not combination of two items.It is EXCLUSIVELY used as a device to lock the Frame of the Bicycle to the wheel of Bicycle.

The Central Government in the year 1979 vide notification no.238/79-C.E .dt. 30.7.1979 has exempted locking devices for cycles from whole of the duty of excise leviable thereon.

All major Cycle manufacturers are exporting these Frame Locks with their Bicycles under the HSN 87149990.

[CASusheel Gupta]

Dear Mr. Mohan

Heading of Chapter 83 is - "Miscellaneous articles of base metal"

Heading of Chapter 87 is - "Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof"

Chapter 87 is more specific and should be applicable.

Please note that I have limited knowledge of HSN study. Others comments are invited.

Regards

CA Susheel Gupta

8510081001, 9811004443

[KASTURI SETHI]

Dear Querist,

I concur with the views of C.A. Sh.Sushil Gupta Sir. How I agree with him is explained as under:-

HSN 8714 is meant for, "Parts and accessories of vehicles of headings 8711 to 8713 ". Thus parts and accessories of bicycles are covered under these headings i.e 8712 and HSN 8712 pertains to various types of bicycle and cycles and these are non-motorised vehicles . Bicycle is also a vehicle (non-motorised) as per dictionary meaning. HSN is general classification list and 8714 is specific classification which covers parts and accessories of 8712 (Bicycle and cycles). It is well settled Central Excise law (otherwise also) if specific classification of any product is available, a manufacturer is not to take shelter of general classification. Moreover, usage of padlock/lock is for bicycle/cycle and not motorised vehicle in the situation explained by you. HSN 8714 covers motorised and non-motorised both. HSN 8301 is also for motorised, movable/immovable, embedded property etc. HSN 8301 is not meant for bicycle/cycle or their parts and accessories. If anybody is classifying under 8301 that is legally wrong. CA Sh.Sushil Gupta Sir has perfectly replied that your product is classifiable under HSN 8714.

This is my analysis and hope you will be satisfied now. I also welcome the views of other experts on this issue.

[YAGAY and SUN]

It is settle legal position that specific entry would be applicable over general entry in tariff. You may also check the General Rules of interpretation on Classification Matters.

[YAGAY and SUN]

THE FIRST SCHEDULE–IMPORT TARIFF

(See section 2)

General rules for the interpretation of this Schedule