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TMI Blog2024 (10) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... to a metal plate provided with circular cavities or similar fittings for disc brakes, these are classified as parts of the machines or vehicles for which they are designed. In the present case, the product consists of a friction material (made up of organic and inorganic chemicals and minerals, graphite) which is bonded with a steel backing plate forming an integrated component. It is used in automotive vehicle brakes to stop or slow down the vehicle. From a perusal of the Tariff sub-heading 6813 we observe that friction materials and articles thereof (e.g. sheets, rolls, strips, segments, discs, washers, pads) not mounted for brakes or for clutches or the like is mentioned in the said heading. It is, therefore, clear that the friction material alone without any steel plate backing would fall under Tariff Heading 6813. The claim of the Appellant that the friction material is only in powder form and not in a particular shape necessitating its classification not under CTH 6813 is rejected as we find that such a condition is not a requirement for such classification. Further Chapter subheading 6813 reads as friction material and article thereof . The chapter heading 6813 includes bot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extended period is decided in favour of the Respondent importer - Appeal of Revenue is partly allowed. - MS. SULEKHA BEEVI C.S., MEMBER (JUDICIAL) AND MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) For the Appellant : Ms. O.M. Reena, Authorised Representative For the Respondent : Mr. Hari Radhakrishnan, Advocate ORDER Customs Appeal No. C/41689/2013 has been filed by the Department, assailing the impugned Order-in-Original No. 69743/2019 dated 26.06.2019 passed by the Commissioner of Customs (Imports) dropping the proposals put forth in the Show Cause Notice dated 30.11.2018. 2. Brief facts are that the Respondent M/s. K.B. Autosys India Pvt. Ltd., engaged in the manufacture of brake pads for automobile sector, have been importing a prepared mixture in powder form comprising various organic and inorganic materials such as aramid fibres, butyl rubber, nitrile rubber, phenolic resin, declaring it as Binding Material, Parts for Brake, disc brake pads, tool for mould, etc ., under CTH 38249090 / 38247900, availing the benefit of Notification No. 152/2009-Cus. dated 31.12.2009 and also Notification No. 50/2017-Cus. dated 30.06.2017 which attracted basic Customs duty @7.5%. Based on the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... more appropriate to Tariff heading 6813. The Department was of the view that the imported chemical mixture do not merit classification under CTH 3824 and so, consequently the FTA benefit of Notification No. 152/2009 cannot be extended. It was further stressed that the Respondent, being an Accredited Client Programme suppressed the facts by mis-declaration in imports with an intention to avail the benefits of the said Notification and therefore invocation of extended period under Section 28(4) of Customs Act, 1962 was justified. 4.1 The Ld. Counsel Shri Hari Radhakrishnan for the Respondent submitted that at the time of import, the goods are not a friction material as understood in terms of the CTH 6813. It was submitted that classification under CTH 6813 was clearly ruled out as the HSN explanatory notes to the heading 6813 categorically states that friction material of the heading 6813 to be in the form of sheets, roles, strips, disks, rings, washers, pads or cut to any other shape. Therefore, the friction material, as understood from HSN explanatory notes, are in a specific shape or form and it is an admitted position that the goods in the present case are in a powder form, as pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se for decision in this appeal are: - i. Whether imported Materials (Binding material for manufacture of Automobile Brakes) is classifiable under CTH 38249090 / 38247900 as declared/self-assessed by the Respondent or under CTH 68138900 as re-classified/re-assessed by the Appellant-Department? and ii. Whether Extended Period is invokable or not considering the evidence as available in the appeal? 7. The Respondent is engaged in the manufacture of brake pads for supply to automobile industries in and around Chennai. For the purpose of manufacture of brake pads, the Respondent regularly imports a prepared mixture in powder form, which consists of various organic and inorganic materials including metal fibres such as Aramid Fibre, Barium Sulphate Zirconium, Chromium, Copper, Iron, Tin, Butyl Rubber, Nitrile Rubber, Phenolic Resin etc. After importation, these mixtures are further processed by feeding it to a mould after compacting it and subjecting it to heat process at a temperature of 150 Celsius to manufacture brake pads. As per the importer's submissions, the processes they undertake to manufacture Brake Pads from the imported materials are after remixing the materials undergoe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation in that heading, that heading would apply to the said goods. If such headings or notes do not otherwise require then the classification is to be determined in accordance with Rule 2 to 6 of said Rules. Rule 2(b) of GRI stipulates that the classification of goods consisting of more than one material or substance shall be according to the principle laid down in Rule 3 of GRI. Rule 3(a) stipulates that the heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to a part only of the materials or substances contained in mixture or composite goods, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a precise or complete description of the goods. Rule 3(b) stipulates that mixtures, composite goods consisting of different materials which cannot be classified under Rule 3(a) shall be classified as if they consisted of the material or component which gives them essential character. 10. The main allegation of the Department is that the imported item is a friction material in powder form which is formed by high level of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atory Notes to the Chapter Heading 6813, the importer has vehemently contended that friction materials to be classified under Chapter 6813 should be in some form or shape or size. The imported item being in powder form, could not be classifiable under Chapter 6813 as it is only a raw material and requires further processing to manufacture lining of brake pads. However, the Structure of Chapter Heading 6813 indicates that the friction materials and articles are classifiable as containing asbestos or not and also as to whether these are brake linings / pads or friction materials. Friction materials containing asbestos has to be classified under 68132090, whereas brake lining / pads containing asbestos are to be classified under CTH 6813 2010. Brake linings and pads not containing asbestos are classifiable under CTH 6813 8100 whereas friction material not containing asbestos are to be classified under CTH 6813 8900. The imported materials are not containing asbestos and being in powder form has not attained the form of brake lining or pads. So, the imported materials are more appropriately classifiable as friction material not containing asbestos under 6813 8900. 12. The importer vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entry under consideration had linked the taxable object with its use, the goods can be classified according to the user test. Further, in the case of New Prasanthi Automobiles Company Vs. State of Kerala (1993(91)STC565), Hon ble Kerala High Court has held as follows on the classification of Automobile Jack : 13. A person seeing an automobile jack is not likely to understand it as a mere iron and steel article. He is likely to understand it only as an adjunct to the automobile necessary for its proper and effective use. He will view it as something which is sold by an automobile delaer and as something which every user of an automobile should necessarily possess. Being so, we find it difficult to accept the contention of the assessee that the jack is a mere iron and steel article and not an accessory to a motor vehicle. The statutory authorities were right in holding that the jack was an accessory falling under entries 138 and 125 respectively of the First Schedule before and after July 1, 1987 liable to tax at 15 per cent. Though the above case laws have been rendered in the context of Sales Tax issues, the same are relevant and equally applicable to the facts of this appeal. 13. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is used in automotive vehicle brakes to stop or slow down the vehicle. From a perusal of the Tariff sub-heading 6813 we observe that friction materials and articles thereof (e.g. sheets, rolls, strips, segments, discs, washers, pads) not mounted for brakes or for clutches or the like .is mentioned in the said heading. It is, therefore, clear that the friction material alone without any steel plate backing would fall under Tariff Heading 6813. The claim of the Appellant that the friction material is only in powder form and not in a particular shape necessitating its classification not under CTH6813 is rejected as we find that such a condition is not a requirement for such classification. Further Chapter subheading 6813 reads as friction material and article thereof . The Respondent s argument that only articles of friction materials like sheets, rolls, strips, segments, discs, washers, pads, etc., are classifiable under Chapter Heading 6813 and not the friction materials in powder form is not legally acceptable. In Para No. 11 above, it has been discussed that friction powder containing asbestos is to be classified under CTH 68138100 whereas without asbestos in classifiable under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that only those chemical preparations are included in this part which are not included elsewhere. However, in this case the item is a friction material for which there appears to be a specific heading under chapter 68. Therefore, this part also does not apply in the case of impugned goods. 16.1 In support of his contention that imported material could not be classified under 68138900 of Customs Tariff Act, importer-respondent has relied upon the decision of the Advance Ruling Authority for GST, Maharashtra in the case of Compo Advice India Pvt. Ltd. [2019 (20) GSTL 188 (AAR-GST)] . The question that was answered in the above argument is: - Whether under which HSN code (Disc Brake Pads) are to be classified under 6813 or under 8708 as different GST rates are applicable to the product depending upon its classification . The Advance Ruling Authority of GST, Maharashtra has ruled that the Disc Brake Pads would fall under Chapter Heading No. 8708 and rate applicable rate was 28% under GST Law. 16.2 Similarly, in another decision by the Advance Ruling Authority of GST, Tamil Nadu it was ruled that Disc Brake Pads consists of friction material which is made up of organic fibers and min ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the benefit of Country-of-Origin Certificate cannot be legally denied, if all the conditions in terms of Customs Tariff (Determination of Origin of Goods Under the Preferential Trade Agreement Between the Governments the Republic of India and Republic of Korea) Rules, 2009 are satisfied. We also note that exporting country can mention on the Country-of-Origin Certificate the HSN Code of the importing country thus indicating that the HSN Code of the commodity in exporting country cannot be the sole basis for its classification under the Indian Customs Tarriff Act, 1975. As such, we hold that classification of any imported goods has to be determined in terms of the provisions of Customs Tariff Act, 1975 including Section Notes and Chapter Notes read with the General Rules for Interpretation of Tariff (GIR). In the case of Sharp India Ltd. Vs. Commissioner of Customs (Imports), Nhava Sheva, Raigad [2019 (366) ELT 153 (Tri.-Bom.)], the Tribunal Bombay has held that the classification of imported goods to be determined in accordance with Indian Customs Tariff and not solely on the basis of code mentioned in Certificate-of-Origin. In the context of import of RBD Palmolein mixture u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the issue is regarding classification which was a question of interpretation and there was no allegation that the Respondent had mis-declared the goods. Hence it was averred that invocation of extended period by alleging misclassification and suppression, on the same issue of classification, is not legally tenable. We find that in the case of Nizam Sugar Factory Vs. Collector of central Excise, Andhrapradesh [2006(197) ELT 465 (SC)] the Hon ble Supreme Court held as follows: 8 . Without going into the question regarding Classification and marketability and leaving the same open, we intend to dispose of the appeals on the point of limitation only. This Court in the case of P B Pharmaceuticals (P) Ltd. v. Collector of Central Excise reported in (2003) 3 SCC 599 = 2003 (153) E.L.T. 14 (S.C.) has taken the view that in a case in which a show cause notice has been issued for the earlier period on certain set of facts, then, on the same set of facts another SCN based on the same/similar set of facts invoking the extended period of limitation on the plea of suppression of facts by the assessee cannot be issued as the facts were already in the knowledge of the department. It was ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs (P) Ltd. v. Commissioner of Central Excise, Hyderabad reported in [2004 (166) E.L.T. 151 (S.C.)]. It was observed in para 6 : .......... On the ratio laid down in this judgment it must be held that once the earlier Show Cause Notice, on similar issue has been dropped, it can no longer be said that there is any suppression. The extended period of limitation would thus not be available. We are unable to accept the submission that earlier Show Cause Notice was for a subsequent period and/or it cannot be taken into consideration as it is not known when that Show Cause Notice was dropped. If the Department wanted to take up such contentions it is for them to show that that Show Cause Notice was not relevant and was not applicable. The Department has not brought any of those facts on record. Therefore, the Department cannot now urge that findings of the Collector that that Show Cause Notice was on a similar issue and for an identical amount is not correct. 9 . Allegation of suppression of facts against the appellant cannot be sustained. When the first SCN was issued all the relevant facts were in the knowledge of the authorities. Later on, while issuing the second and third show cause ..... X X X X Extracts X X X X X X X X Extracts X X X X
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