2003(08)LCX0068

IN THE CESTAT, SOUTH ZONAL BENCH, BANGALORE

S/Shri G.A. Brahma Deva, Member (J) and S.S. Sekhon, Member (T)

DENSO KIRLOSKAR INDUS. PVT. LTD.

Versus

COMMR. OF CUS. (APPEALS), CHENNAI

Final Order No. 1096/2003, dated 22-8-2003 in Appeal No. C/28/2003

CASES QUOTED

Sanden Vikas (I) Ltd. v. Collector — 1997(08)LCX0188 Eq 1998 (098) ELT 0696 (Tribunal) — Distinguished......... [Para 3(e)]

Tamil Nadu Electricity Board v. Collector — 1991(07)LCX0031 Eq 1992 (058) ELT 0101 (Tribunal) — Distinguished [Para 3(c)]

Tamil Nadu Electricity Board v. Collector — 1997(07)LCX0293 Eq 1998 (102) ELT 0724 (Tribunal) — Distinguished [Para 3(c)]

Tamil Nadu Electricity Board v. Collector — 1992(09)LCX0014 Eq 1998 (097) ELT A065 (S.C.) — Distinguished. [Para 3(c)]

DEPARTMENTAL CLARIFICATION QUOTED

C.B.E. & C. Circular No. 6/90, dated 4-5-1990................................................................................... [Para 3(d)]

Advocated By : Shri G. Shivadass, Advocate, for the Appellant.

Shri L. Narasimha Murthy, JDR, for the Respondent.

[Order per : S.S. Sekhon, Member (T)]. - (a) The appellants herein, are manufacturers of Car air-conditioners, Aluminium radiators, ventilators and parts thereof for Automotive applications. They imported a consignment consisting of 289 types of parts from M/s. Denso Corporation, Japan, at the port of Chennai and filed a Bill of Entry No. 293800, dated 22-9-2000 for clearance of the same.

(b) They claim assessments :

(a)      for items figuring against Sl. Nos. 181-208 and 244-267 of the Bill of Entry as Aluminium Tubes, Aluminium Profiles, Aluminium Pipes, heat exchangers, parts of condensers and parts of general use.

(b)      The items, which included side plates, plate separator, cap accumulator, core sub-assembly, bracket, cap header, body accumulator and plate header, to be classified as heat exchange unit parts and items such as connectors, nuts, etc., as parts of general use. The items described as tube condenser main, tube water pipes which are made of aluminium were claimed as pipes/profiles under the first schedule to the Customs Tariff Act, 1975.

2(a). The original lower authority passed an Order No. 1033/2000, dtd. 6-11-2000 holding that all the parts imported have part numbers and they do not have any alternate use and they are meant specifically for use in manufacture of air-conditioners for automobiles. Accordingly, he upheld the classification under Heading 8415.90 of the goods under dispute. Aggrieved by the aforesaid order of the original lower authority, the appellants filed an appeal. After hearing the appellants, CC (Appeals) passed an order-in-appeal dtd. 8-5-2001 holding that items against Sl. Nos. 244-267 though meant for use in condensers, which in turn are used for air-conditioners, the appropriate classification will be only under Heading 8415 since there is no separate classification or heading for condenser. With regard to items falling under Sl. Nos. 181-209, it was held that these are used in radiators and therefore, the lower authority’s classification holding them as parts of the air-conditioners classifying them under 8415 is not correct. Accordingly, it was held that since radiators are parts of motor vehicles fall under Chapter 87 of the schedule to the Customs Tariff Act and these items being parts of such radiators are also to be classifiable under Chapter 87. Accordingly, the appeal filed was rejected and the order of the original lower authority modified to the extent of re-classification of some of the parts meant for use in radiators.

(b) This Tribunal on 12-7-2002 remanded the matter to the Commissioner (Appeals) to decide the case afresh and after taking into consideration the Board’s circular on the subject as no finding was given by the Commissioner in that regard. Consequent to the above decision of this Tribunal and after hearing the appellants, the classifications, as follows, was confirmed for the 16 entities as :

Aggrieved by the aforesaid classification arrived by the respondents, the appellants have filed this appeal.

3. After hearing both sides and considering the material on record, it is found :-

(a)         Before proceeding for classification of an entity, it is absolutely essential to determine, ‘what is the entity under classification dispute?’. After such determination, a suitable heading or sub-heading in the tariff is to be located and then the same has to be considered, in light of Statutory Rules for Interpretation, the Section Notes and the Chapter Notes in the Tariff to establish the proposed heading for classifying the entity would be appropriate or not. The HSN notes, the non-Statutory Rules for Classification e.g. end use, etc. could be applied, only as aids to the Statutory Rules, of classification. The non-Statutory Rule for Classification i.e., the end use Rule cannot be applied, as a stand alone Rule, as resorted to by the lower authorities.

(b)         Proceeding on the above lines, it is found that the goods under dispute are as follows :-

(i)       The items figuring against Sl. Nos. 183-186 of the Bill of Entry are tubes made of aluminium and which are used in radiators. These are also only cut to size and have not been worked after made cutting the tubes. These are in the form of cut tubes with rectangular cross-section. The water coolant passes through these tubes and taking into account the condition, in which these are imported, they are claimed to be classified only as tubes made of aluminium falling under 7608.20 of the schedule to the Customs Tariff Act. In this regard, reliance is placed on Note (e) to Chapter 76, which is reproduced below for the sake of convenience.

            “Tubes and Pipes : Hollow products, coiled or not, which have a uniform cross-section with only one enclosed void along with their whole length in the shape of circles, ovals, rectangles (including squares), equilateral triangular or regular convex polygonal cross-section, which may have corners rounded along their whole length, are also to be considered as tubes and pipes provided the inner and outer cross-sections are concentric and have the same form and orientation. Tubes and pipes of the foregoing cross-sections may be polished, coated, bent, threaded, drilled, waisted, expanded, cone-shaped or fitted with flanges, collars or rings.”

(ii)      The items figuring against Sl. Nos. 187-190 of the Bill of Entry are again pipes made of aluminium for core assembly, which is a heat exchange device. As mentioned in the previous para, they also are hollow pipes for transmission of engine coolant and by specification these are extruded, bent pipes. Such pipes made of aluminium and bent across the cross section are also claimed to be classified under 7608.20 and not under Heading 8409.99.

(iii)    The items against Sl. Nos. 191, 193, 194 and 196 of the Bill of Entry described as “connectors” made of aluminium, they are nothing but pipe fittings. Photographs confirm that. In terms of the Note 2 to Sec. XV, they are claimed to be parts of general use. These fittings are claimed to be falling under 7307, if made of steel and under other chapters if made of  other base metals. By operation of Note 1(g) to Sec. XVI and Note 1(b) of Sec. XVII, parts of general use are excluded from Chapter 84 as well as 87, even if these items are specifically meant for use with the items falling under Chapter 84 or 87.

(iv)    Similarly, items against Sl. Nos. 192 and 195 are nothing but pipe fittings described as “union half” and therefore claimed to be excluded from Chapter 84 and 87 in terms of the Section Notes referred to above. Both these fittings i.e., unions as well as connectors are claimed to be classified as aluminium pipe fittings under Heading 7609.00.

(v)      Sl. Nos. 203 and 206 of the Bill of Entry cover “nuts”. These are claimed to come within the definition of parts of general use and therefore, even though specifically meant for use in the car air-conditioner these are correctly classifiable under 7616.10. There is no material on record of any special specific design feature on these items.

(vi)    Plate core figuring against Sl. Nos. 197-202 of the Bill of Entry and inserts figuring against Sl. Nos. 204, 205, 207 and 208 are said to be parts meant for use in radiators for automotive applications. Taking into consideration their function and purpose they are claimed, under Heading 8419.90 and therefore, the classification made by the lower authority as well as the revision made by the appellate authority are not in order. In fact, there is no Explanatory Note 5(d) of the HSN under Chapter 87 as mentioned by the Commissioner (Appeals).

(vii)   The other items figuring between Sl. Nos. 244 to 267, except 246 and 251, as mentioned below are all used as parts of condensers. The details of these items are as follows :

(i)          Side plate, condenser (Sl. Nos. 244, 245, 247 & 248)

(ii)         Brackets, condenser (249, 250, 254, 255, 262 & 263)

(iii)       Plate separator, condenser (252 & 260)

(iv)       Cap header, condenser (253 & 261)

(v)         Body accumulator (256, 257, 264 & 265)

(vi)       Cap accumulator (258 & 266)

(vii)      Plate header, condenser (259 & 267)

               All these items are specific identifiable parts not excluded by any chapter note or section note and therefore, appropriately classifiable as parts of condensers in terms of Section Note 2(b) of Sec. XVI of the schedule to the Customs Tariff Act, which is reproduced below for the sake of convenience.

“Other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading No. 84.79 or 85.43) are to be classified with the machines of that kind or in heading No. 84.09, 84.31, 84.48, 84.66, 84.73, 85.03, 85.22, 85.29 or 85.38 as appropriate. However, parts which are equally suitable for use principally with the goods of heading Nos. 85.17 and 85.25 to 85.28 are to be classified in heading No. 85.17.”

(c)          The classification of the entities in question, used to make up a radiator and whether they would continue to be classified as tube/ pipes under Heading 7608.20 of the Customs Tariff has to be considered and it is found that merely because pipes and tubes are cut to size, they would not make any difference to the classification of the entity under Chapter Heading 7608.20, since Note (e) of Chapter 76 specifically covers tubes and pipes of aluminium that may be polished, coated, bent, threaded, expanded and cut to size. Infact, in the case of Tamil Nadu Electricity Board v. CC reported in 1992 (058) ELT 101 and 1998 (102) ELT 724, it was the case of the Revenue that such cut to size tubes or pipes would continue to fall under respective Chapter i.e. 76 and would not go to Chapter 84 and this contention was upheld by the Tribunal. The decision in the case reported at 1992 (058) ELT 101 has been held by the Supreme Court as reported in 1998 (097) ELT A65. Therefore, classification of the entities in the form of tubes and or pipes has to be made under Heading 7608.20. The classification of the other products has to be considered as profiles under 7604, however it is found that if the profiles are further worked, they would result in an article or products of other headings then they cease to remain under Chapter 76. Their classification under 7604 cannot be therefore upheld, since they are further worked, as admittedly, they are caulked, fluted walled, etc.

(d)         CBEC vide its Circular No. 6/90, dtd. 4-5-90 has clarified that heat exchanger is classifiable only under 84.19. In the Alphabetical Index to HSN notes, the same classification under Heading 8419.50 has been given and it is required to be classified as part of air conditioning machine vide Note 2(b) to Sec. XVI of the Tariff. However, even though condensers would fall under Heading 8415.50 as parts of air conditioning machine, their parts would be classified under Heading 8419.90. In view of Note 2(a) to Sec. XVI of the Tariff and the classification of the entities hereunder which relate to radiator, condenser and heat exchanger and items of general use to be classified as per the Section notes.

(e)         The reliance of the lower authorities on the case of Sanden Vikas (I) Ltd. [1998 (098) ELT 696] is not appropriate in the facts of this case. From Para 3 of that decision, it is apparent that the entities in that case :

“3...........was a hollow product of rectangle cross-section. It has got a very large number of fins, which appeared to be integrally attached. They have been specifically bent at an angle of almost 180°, 30 times in the sample. The product had four angle voids along with a whole length.......”

               and does not match the entities in the case before us.

(f)          Since the classification as arrived at is based on the Interpretative Rule for the Classification of the goods under the Customs Tariff, along with Section Note and Chapter Notes and in terms of the respective headings, the reliance of the lower authority on Rule 2 of the Interpretative Rules to the Tariff is uncalled for and not applicable.

(g)         In view of the admitted description of the entity, the Chapter Notes and Section Notes, the classification of the disputed items is arrived at as follows :-

4. In view of our findings, the classification is confirmed as per Para 3(g). Appeal disposed off in above terms with consequential relief, as per law.

Equivalent 2003 (158) ELT 0187 (Tri. - Bang.)