The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held the 5% basic customs duty is payable on Fork and Yoke 5th, which are the parts of motor vehicles.
The bench of Rachna Gupta (Judicial Member) and Hemambika R. Priya (Technical Member) has observed that the appellant/assessee 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%.
Background
The appellant/assessee has imported Fork/Yoke 5th and reverse gear shift (parts of motor vehicles) by various Bills of Entry during the period from July 2017 to May 2018 for the composite assessable value of Rs.839.84 Lakh.
The imported goods have been classified by the appellant under CTH 84831099 considering the goods as ‘Transmission Shafts’.
However, during scrutiny of imported goods by the department, those were observed to be parts of motor vehicles like gearboxes and parts thereof. Hence were proposed to be classified under CTH 8708400. Since this tariff entry attracts Basic Customs Duty (BCD) at the rate of 10%/15% w.e.f. 02.02.2018 instead of duty at the rate of 7.5% under CTH 84831099 that mis-declaration has been alleged against the appellant with an intent to evade the differential 2.5% of customs duty.
A pre consultation notice was served upon the appellant calling them to admit and pay the differential duty demand along with the applicable interest else to be served with a demand notice under Section 28(1).
The appellant did not pay the differential duty, as was demanded, hence the Show Cause Notice was served upon the appellant proposing the recovery of the short paid duty along with the interest in terms of section 28 AA. Penalty was also proposed to be imposed. The said proposal was confirmed. Though the penalty has not been imposed upon the appellant but the appellant still being aggrieved of the confirmation of differential duty demand with interest has filed the present appeal.
Arguments
The appellant contended that it had imported 63 consignments of automotive parts, namely- ‘Fork/Yoke 5th and ‘Reverse Gear Shift’ and classified them under Tariff Item 84831099 of the Customs Tariff Act, 1975 where the applicable rate of BCD was at the rate of 7.5%. In addition, Education cess at the rate of 3% or Social Welfare Surcharge at the rate of 10% and IGST at the rate of 28% were also paid by the appellant. Heading 8483 where the appellant has classified the items in question clearly covers various kinds of transmission elements which are presented separately. The goods in question i.e., Fork/Yoke 5th and reverse gear shift are parts of transmission system/shaft of the motor vehicles and thus, qualify as ‘separately presented transmission elements’. The goods in question are completely different from gear boxes and their parts, hence, the impugned order classifying the goods under CTH 8708 and confirming the differential demand of BCD is incorrect.
The department contended that there is no denial for the imported goods to be the parts of motor vehicles. The parts and accessories of motor vehicles are classified under 8708 i.e. gearboxes and parts thereof. There is also no denial that the impugned goods are parts of transmission shafts but different from camshafts and crankshafts or flywheels. However, the appellant declared these goods to be covered under CTH 8483.
The department argued that the goods are gear boxes and parts thereof motor vehicles and thus are correctly classifiable under CTH 87084000. It is also impressed upon that what is excluded specifically by Note-2(e) of Section XVII (further explained in heading III-A-c of Section-XVII) is “integral parts of engines or motors (crank shafts, cam shafts, flywheels etc.) falling in heading 84.83” and not the gear boxes and parts thereof as has been claimed by the importer in this case. Thus the appellant has committed an act of mis-declaration. Since under CTH 8708 the customs duty is to be paid at a higher rate of 10% as compared to at the rate of 7.5% for CTH 8483, it has rightly been held that the wrong classification has been done with the sole intention to evade the customs duty.
Conclusion
The tribunal while dismissing the appeal held that when the goods are prima facie classifiable under two or more headings, the heading with most specific description must be preferred to the heading providing a more general description.
Case Title: M/s. Best Koki Automotive Pvt. Ltd. v/s Principal Commissioner of Customs (Import), New Delhi
Citation: Customs Appeal No. 51065 of 2022 [DB]
Date: 19/09/2024
Counsel For Appellant: Dr. B.L. Garg
Counsel For Respondent: Shri Rakesh Kumar, Authorized Representative
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