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TMI Blog2021 (12) TMI 490X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1,65,788 in the first two bills. Learned Counsel for appellant did make submissions on the correctness of the classification claimed for these but we are not inclined to appropriate the statutory responsibility that devolves on the original authority and, more so, as it is not the case of the appellant that there was a reasoned finding against them. We, therefore, restrict ourselves to the goods on which differential duty of Rs. 12,73,723, Rs. 6,50,013 and Rs. 4,86,486 in the three bills of entry was upheld. 2. The appellant, having imported the impugned goods for use in the manufacture of components and systems for assembly in 'motorcycles', sought clearance at the rate of duty applicable to 'toothed wheels, chain sprockets and other transmission elements presented separately' corresponding to tariff item 8483 9000 of First Schedule to Customs Tariff Act, 1975. The customs authorities did not find this acceptable and, in view of the undisputed use for which the goods had been procured, the description as 'Parts and accessories of vehicles of heading 8711 to 8713' which covered 'motorcycles' corresponding to heading 8714 of First Schedule to Customs Tariff Act, 1975, the absence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, the goods imported were directly used in the manufacture of motor vehicle parts whereas, in the present case, child parts were admittedly used in the vehicle seat parts. Therefore, the appellant's case is on the better footing. In identical issue, in the case of Uni Products India Limited (supra) the Hon'ble Supreme Court, after considering various provisions of HSN and explanatory notes, General Rules for interpretation held that car mating which is used in the motor vehicle is classifiable under Chapter 57 and not under Chapter 87. In this case, the assessee was manufacturing car mating which was directly used in the motor vehicle and despite this the Hon'ble Supreme Court held the classification under Chapter 57 whereas in the present case, child parts were not used in the motor vehicle but were used in the manufacture of another parts i.e. Round Recliner which is an integral part of motor vehicle seats. Therefore, Apex Court judgment is applicable in the facts of the present case. The Hon'ble Supreme Court, in Commissioner of Central Excise, Mumbai-III v. Uni Products India Ltd [2020-VIL-17-SC-CE], had held that '25. We do not find any error in such reasoning. Chapter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Circular relied upon by the assessee is not relevant. 5. As per the Explanatory Notes to HSN the parts falling under Chapter Heading 8710 would be covered under the said chapter, provided they fulfill both the conditions i.e. they must be identifiable as being suitable for use solely or principally for such vehicles and that they must not be excluded by the provisions of Notes to Section XVII. The identifiable parts under the said heading bodies of armoured vehicles and parts thereof, cover special road wheels for armoured cars, propulsion wheels for tanks, tracts etc. As per this requirement, the goods should not only be identifiable to be armoured vehicles, but it should so not have been excluded by Notes to Section XVII. The Chapter note 2(f) excludes electrical machinery and equipment falling under Chapter 85. Explanatory Notes to HSN relating to the parts and accessories excluded by Note 2 specify items with reference to specific Chapter Heading as per (7) (a), (k) which excludes photographs and other current collectors for electric traction vehicles, fuses, switches and other electric apparatus of Heading No. 85.35 or 85.36. The items, therefore, manufactured by the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LT 151 (Tri.- Mumbai) considered the very same issue and held that gears, shafts and gearboxes are classifiable under Chapter 87 applying Section Note 2(e) of Section XVII and Section Note l(k) of Section XVI and not under Heading 8483. In paragraph 2 of the said order, the Hon'ble Tribunal categorically held that gears, shafts and gear-boxes are not integral parts of engines or motors but are parts of motor vehicles. I further observe that the HSN Explanatory Notes of Heading 8714 specifically mention that parts & accessories of Heading 8714 includes gears, gear boxes, clutches and other transmission equipment, and parts thereof, for motor vehicles. Thus, the HSN Explanatory Notes of Heading 8714 are in line with the decision of Hon'ble Tribunal in case of Telco Ltd. supra. It is settled law that HSN Explanatory Notes are useful guide in deciding disputed issues of classification. In these circumstances, in the face of clear HSN Explanatory Notes and decision of Hon'ble Tribunal in case of Telco. Ltd, no weightage can be given to the opinions of the so called three experts mentioned by the appellant.' 6. The resolution of adversarial conflict in classification of imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appellants, the appeal should, nonetheless, have been allowed. 7. Accordingly, we proceed to this task with a perusal of the two tariff items. The bills of entry claim coverage within 'toothed wheels, chain sprockets and other transmission elements presented separately;...' corresponding to tariff item 8483 90 00 within 'Transmission shafts (including cam shafts and crank shafts) and cranks; bearing housings and plain shaft bearings; gears and gearing; ball or roller screws; gearboxes and other speed change as, including torque converters; flywheels and pulleys, including pulley blocks; clutches and shaft couplings (including universal joints)' corresponding to heading 8483 of First Schedule to Customs Tariff Act, 1975. There is no allegation that this is not an eyeball perception of the impugned goods. On the other hand, the notice issued to the appellant proposes that 'other' corresponding to tariff item 8714 10 90 under 'of motorcycles (including mopeds) as sub-heading within 'Parts and accessories of vehicles of headings 8711 to 8713' corresponding to heading 8714 of First Schedule to Customs Tariff Act, 1975 is the appropriate classification. 8. At first b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded for 'Parts suitable for use solely or principally with engines of heading 8407 or 8408' and those not solely or principally used with such engines under other headings in the same chapter. There is no separate heading for 'transmission systems' which enables power to be transferred to the wheels; 'transmission system' would also be covered within the description of heading for engines. That is clear from '4. Where a machine (including a combination of machines) consists of individual components (whether separate or interconnected by piping, by transmission devices, by electric cables or by other devices) intended to contribute together to a clearly defined function covered by one of the headings in Chapter 84 or Chapter 85, then the whole falls to be classified in the heading appropriate to that function.' in section XVI which, in the light of heading 8409 of First Schedule to Customs Tariff Act, 1975, renders superfluous a separate heading for what is essentially a means of transferring momentum generated in the engine to the wheels. 11. 'Gears', which are the goods impugned in this proceeding, are described in the Explanatory Notes to the Harmonised System of Nomenclat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assembled into 'transmission system' is the consummation that the customs authorities seek. The premise of blanket exclusion, by the authority of note 1 (l) in section XVI of the First Schedule to Customs Tariff Act, 1975, of 'articles of Section XVII' of First Schedule to Customs Tariff Act, 1975 and the admitted usage in production of 'motorcycles' as sufficing to substitute the declared classification with the one pertaining to 'vehicles' appears to have influenced the adjudicating authority. 13. Though the exclusion on which the disputed demand has been confirmed appears to be absolute, the reference to another section of the First Schedule to Customs Tariff Act, 1975, with potential for classification in chapter 87 of the First Schedule to Customs Tariff Act, 1975, is an implied condition that must be attended to; conformity with the description corresponding to heading 8714 of First Schedule to Customs Tariff Act, 1975 is a necessary prerequisite for the exclusion in note 1 of section XVI of First Schedule to Customs Tariff Act, 1975 to be made applicable. The impugned order, and that of the original authority, have not ventured in that direction at all. 14. The effect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principle that 'parts' or 'parts and accessories', intended by the note relied upon in the impugned order, is restricted to those which are exclusively designed for fitment on vehicles. The submissions made before us on the relevant portions of the Explanatory Notes to the Harmonised System of Nomenclature (HSN) lead to the same conclusion. Thus, the impugned goods, when assembled as 'gears', are required for 'transmission systems' that, for the purposes of classification, are 'engines' and, by the exclusion in section XVII of First Schedule to Customs Tariff Act, 1975, is to be discarded from the exclusion in section XVI of First Schedule to Customs Tariff Act, 1975. 17. It, therefore, only remains to ascertain the relevance of the decisions relied upon by Learned Authorized Representative as binding precedent in contradistinction with our conclusion supra. In re Telco Ltd, the finding of 'gears, shafts and the gearboxes' as classifiable under heading 87.08 of Schedule to Central Excise Tariff Act, 1985, against the claim that heading 84.83 is applicable, is a consequence of the interpretation of note 2(e) in section XVII of the Schedule to Central Excise Tariff Act, 1985 corresp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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