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TMI Blog2025 (2) TMI 691X X X X Extracts X X X X X X X X Extracts X X X X ..... commercially identifiable as such, forming part of the body of the car. The Supreme Court in M/s Thermax Ltd Vs Commissioner of Central Excise, Pune [2022 (10) TMI 468 - SUPREME COURT] has reiterated the view that the HSN code is the bedrock of custom controls and procedures. It has also been held that as per the HSN, classification is done by placing the goods under the most apt and fitting sub-heading. The Appellant had declared goods as "RR door outside handle or FR door handle or outside door handle". The CTH 87082900-other parts and accessories of bodies-is a specific description for the imported goods. The door handles are part of door as per Section note 3 of section XVII and HSN Explanatory note B of CTH 87.08 and Rule 3(a) of the GIR. When the appellant has specifically given the description of the goods as door handles at the time of import, mere addition of a plastic material to affix the imported goods on doors does not change its principal use. As per rule 2(a) of GIR, the incomplete/ unfinished door handles has the essential character of the complete or finished door handles. Therefore, the same can be considered as 'finished door handle' and accordingly is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cified products from Thailand. Notification No. 46/2011 covered products falling under Customs Tariff Heading 8708 99 00. On scrutiny of imports made by the appellant, the Department noticed that they were importing parts and accessories of bodies of automotive vehicles like Cap Sub-Assy Fr Door Outside Handle 423205-11480-Coh (Parts for Automobile) by classifying the same under CTH 87089900. On completion of investigation, show cause notice dated 12.03.2021 was issued to the appellant. Vide the impugned order, the Commissioner confirmed the differential duty of Rs. 1,33,82,357/- along with interest under Section 28AA of the Customs Act, 1962. Aggrieved by the said order, the appellant has filed the present appeal. 3. The Learned counsel for the appellant submitted that the appellant had all throughout been classifying the product under Customs Tariff Heading 8708 99 00. The appellant while importing the said item had filed the requisite Bills of Entry which had been accepted by the Customs Department. The Customs Department while clearing the goods never questioned the classification being adopted by the appellant. Ld. Counsel further submitted that it is a settled principle of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hrough its circumference and subsequently, a door handle cames into existence. It is not the case that the said product could perform the function of the door handle on a standalone basis. It is only when the product is moulded in a specific manner and under controlled circumstances, does a door handle come into existence. In support of his submissions, ld. Counsel relied upon the following decisions:- * Sony India Ltd. v Commissioner of Customs, New Delhi [2002 (143) ELT 411 (Tri-LB)] * Commissioner of Customs, New Delhi vs. Sony India Limited [2008 (321) ELT 385 (SC)] * LG Electronics India Private Limited vs. Commissioner of Customs, Mumbai [2006 (204) ELT 450 (Tri.-Mum)] He also submitted that the aspect of applicability of Rule 2(a) has been held in the following cases: * Texla Enterprises v Commissioner of Customs, New Delhi [2002 (145) ELT 537 (Tri-Del)] * B.E. Office Automation Products v Commissioner [2000 (122) ELT 908 (Tri)] * Space Ace Engg. Projects (P) Ltd v Collector of Central Excise, Pune [1995 (78) ELT 544 (Tribunal)] 3.3 The Learned counsel further stated that one of the reasons to classify the product under CTH 8708 29 00 was that the principal use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te 3 and Note B to HSN Explanatory Notes. 3.5 The ld. Counsel also submitted that Customs Tariff Heading 8708 covers 'Parts and Accessories of the Motor Vehicles of Headings 8701 to 8705'. The sub-classifications envisaged thereunder has to be interpreted keeping in mind the Customs Tariff Heading, i.e., 8708 even in terms of Note 1 of General Explanatory Notes, the entries carrying single dash are to be treated equally and same refers to a sub-set of the heading, which in the present case is heading 8708 "Parts and Accessories of the Motor Vehicles of Headings 8701 to 8705." All parts are to be given equal treatment and one heading cannot exclude the other, other than the exclusions as per the Section Notes, Chapter Notes and General Rules of Interpretation. In support of his submission, ld. Counsel relied upon the decision of Hon'ble Supreme Court in the case of Bhavnagar University vs. Palitana Sugar Mills Private Limited and Ors. [AIR 2003 SC 511]. Therefore, the impugned order is liable to be set-aside on this ground alone. 3.6 The ld. counsel submitted that entry 1478 of the Notification No. 46/ 2011 as amended vide Notification No. 82/2018 envisages that when goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or more of the headings of those chapters is to be classified under that heading which corresponds to the principal use of that part or accessory. Therefore, the correct CTH will remain as 8708 which is supported by HSN Explanatory Note B of section XVII. 4.1 Learned AR submitted that as per Rule 2(a) of General Rules of Interpretation that any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this Rule), presented unassembled or disassembled. He further stated Rule 3 states that when by application of Rule 2 (b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as per 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 part only of the materials o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly covered under CTH 8708.20 as parts of bodies, these are not to be covered under CTH 8708.99. The entry 8708.99 is a residual entry and covers goods not covered in previous entries of CTH 8708. It is very clear that that the imported item is a special purpose item and it cannot be treated as parts of general use and accordingly its classification should be decided. In the light of above submissions, ld. AR prayed that the present appeal may be dismissed and the impugned order may please be upheld. 5. We have heard the Ld Counsel for the appellant and the Ld Authorised Representative for the Department. We have also perused the case records. The issue before us is the classification of Cap Sub Assembly for Door Outside Handle 423205-11480 as to whether the said item is classifiable under CTH 87089900 as claimed by the appellant or 8708 2900 as alleged by the Department. 6. We note that the Rule 1 of General Rules of Interpretation provides for a thumb rule for all classification matters. The basic principle provided in Rule 1 is that classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes. We also note that Section Note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andle. In this context we note that the product imported by the appellant are door handles that are to be attached to the motor car door. The said door handles are attached using a plastic piece around its circumference. Rule 2(a) of the General Rules for Interpretation states that any reference in a subheading to an article shall be taken to include a reference that article as presented in incomplete or unfinished form has the essential character of the complete or finished article. The relevant rules are reproduced below:- RULE 2. (a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this Rule), presented unassembled or disassembled. RULE 3 When by application of Rule 2 (b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows : (a) The heading which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lassification is broadly based on the system of classification derived from the International Convention on the Harmonised Commodity Description and Coding System (Harmonised System) with such contraction or modification thereto as are necessary, to fall within the scope of the levy of Central Excise duty. The tariff so suggested for the levy under the Indian Tariff Act is based on an internationally accepted nomenclature, in the formulation of which, all considerations, technical and legal, have been taken into account. This was done to reduce avoidable disputes on tariff classification. Besides, the tariff would be on the lines of the harmonized system. It was also borne in mind that the tariff on the lines of the harmonized system would bring about considerable alignment, between the Customs and Central Excise Tariffs, which in turn, would facilitate charging of additional customs duty on imports, equivalent of excise duty. It was therefore expressly stated in the Statement of Objects and Reasons that the Central Excise Tariff are based on the HSN and the internationally accepted nomenclature was as such taken into account, to reduce tariff classification disputes. Thus, it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e importance of taking guidance from HSN Classification and how a taxing statute should be construed in consonance with their commonly accepted meanings in the trade and popular sense, Justice Sanjiv Khanna in D.L. Steels (supra) also so correctly observed as follows :- "9. The Harmonised System of Nomenclature, developed by the World Customs Organisation, has been adopted in India by way of the Customs Tariff Act, 1975, though there are certain entries in the Schedules to this Act which have not been assigned HSN codes. The Harmonised System is governed by the International Convention on Harmonised Commodity Description and Coding System, which was adopted in 1983, and enforced in January, 1988. This multipurpose international product nomenclature harmonises description, classification, and coding of goods. While the primary objective of the HSN is to facilitate and aid trade, the Code is also extensively used by governments, international organisations, and the private sector for other diverse purposes like internal taxes, monitoring import tariffs, quota controls, rules of origin, transport statistics, freight tariffs, compilation of national accounts, and economic research an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... classification is done by placing the goods under the most apt and fitting sub-heading. In this context, we also note that the Supreme Court in the judgement in Commissioner of Central Excise, Delhi vs. Uni Products Limited [2020-TIOL-91-SC-CX] had laid some guidelines for classification. 1) Section notes, Chapter notes are of utmost importance to determine classification. ACC to HSN Explanatory notes to Section XVII, all the 3 conditions must be fulfilled to classify product as par or accessory. In addition, the Hon'ble Court highlighted the persuasive value of the HSN Explanatory notes, specific headings should be preferred to general headings. 11. We now examine whether the said product satisfies the criteria of Rule 2 (a) of General Interpretation Rules. As per the facts of this case, there is no doubt that the imported goods i.e. Cap FR door outside handle, Cap RR door outside handle or handle door were designed for specific purpose and is admitted by the appellant. Consequently, as per Section Note 3 of Section XVII "Reference in Chapters 86 to 88 to 'parts' or 'accessories' do not apply to parts of accessories which are not suitable for use solely or princi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... headings within Chapter 87, like small hardware components, non-standard vehicle parts, or specialized accessories not commonly listed elsewhere; essentially, any vehicle part not falling under the other 8701 to 8705 categories that are considered "parts and accessories of motor vehicles.". Door handles are to be classified under the Customs Tariff Heading 87082900 if they are parts or accessories of motor vehicles for the following reasons:- * The HSN code 87082900 is for parts and accessories of motor vehicles, including cabs. * The classification of door handles depends on whether they are designed for use primarily with motor vehicles. * If the door handles are designed for use with specific models of motor vehicles, they are classifiable under the customs tariff heading 87082900. 14. In this context, we also rely on the Supreme Court's decision in Westinghouse Saxby Farmer Ltd. vs. Commissionerof Central Excise, Calcutta [2021(376)E.L.T. 14(S.C.)] wherein, the Hon'ble Court held as follows:- "34. Though at first blush, Note 2(f) seems to apply to the case on hand, it may not, upon a deeper scrutiny. 35. Note 3 of Section XVII reads as follows: "References in Chap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lows:- "5. On the face of it, this note would not be applicable as it is HSN Note which has diversion with the relevant entry and as the very first line thereof mentions that it covers those goods which are meant for "general purpose". In the instant case, as already pointed out above, the goods in question are meant for specific purpose viz. in the motor vehicles that too for specific model of the motor vehicles as its parts. 6. We also find that the issue is squarely covered by the judgment of this Court in the case of G.S. Auto International Limited v. CC Excise, Chandigarh [2003 (2) SCC 371 = 2003 (152) E.L.T. 3 (S.C.)]. In the said judgment, following the earlier decisions of this Court, the Court specifically held that to determine the applicability of the item under particular head, the test of commercial identity of the goods would be the relevant test and not the functional test. It was also held that the expression "parts of general use" would not apply to parts or accessories which are not suitable for use solely or primarily with articles of Chapter Heading 87.08 which pertains to parts and accessories of motor vehicles of Chapter Headings 87.01 to 87.05. The Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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