2011(10)LCX0231

IN THE CESTAT, WEST ZONAL BENCH, MUMBAI [COURT NO. II]

S/Shri Ashok Jindal, Member (J) and P.R. Chandrasekharan, Member (T)

King Kaveri Trading Co.

Versus

Commissioner of Customs, (Import), Nhava Sheva, Mumbai-II

Final Order No. A/461/2011-WZB/C-I(CSTB), dated 20-10-2011 in Appeal No. C/380/2008-MUM

Cases Quoted -

Adani Exports Ltd. v. Commissioner - 2004(07)LCX0140 Eq 2004 (171) ELT 0169 (Tribunal) - Referred [Para 3]

Commissioner v. Vicco Laboratories - 2004(12)LCX0069 Eq 2005 (179) ELT 0017 (S.C.) - Referred [Paras 3.2,6]

H.P.L. Chemicals Ltd. v. Commissioner - 2006(04)LCX0009 Eq 2006 (197) ELT 0324 (S.C.) - Referred [Paras 3.2,6]

Harish International v. Commissioner - 2007(08)LCX0058 Eq 2007 (217) ELT 0528 (Tribunal) - Referred [Para 3]

Jagriti Plastics Ltd. v. Union of India - 2003(12)LCX0536 Eq 2009 (246) ELT 0053 (Guj.) - Referred [Para 3]

Advocated By -

Shri T. Vishwanathan, Advocate, for the Appellant.
Shri R.K. Mahajan, Jt. CDR,for the Respondent.

[Order per : P.R. Chandrasekharan, Member (T)]. -

This appeal is directed against the order-in-original No. 204/2007-08, dated 1-4-2008 passed by the Commissioner of Customs (Imports), Jawaharlal Nehru Customs House, Nhava Sheva.


2. The facts arising for consideration in this case are that M/s. King Kaveri Trading Company, had imported consignments of goods declared as "Trailer Parts Steel Wheels Size 7.5 x 20" at Jawaharlal Nehru Customs House, during the period April, 2007 to November, 2007. The bills of entry were assessed at the applicable rate of duty under Customs Tariff Heading No. 8716 90 10/8708 70 00 of the Customs Tariff Act. It was observed that the impugned goods were principally used as the wheels for buses and trucks and they were interchangeable wheels, which could be used in buses, trucks and trailers. Therefore, it ap-peared that in view of Section Note 3 to Section XVIII of the Customs Tariff, such goods were classifiable under Customs Tariff Heading No. 8708 70 00 on the basis of its principal use as "Road Wheels". In terms of Notification No. 61/2007, dated 29-3-2007 steel wheels of nominal diameter 16" x 20" classifiable under Chapter 87 attracted anti-dumping duty @ US $ 368.18 per MT. Since the nominal diameter of the goods in the impugned case was 7.5" x 20" the duty was applicable, whereas at the time of the assessment of the goods, the said duty was not levied. Accordingly, a show-cause notice dated 30-1-2008 was issued proposing to levy anti-dumping duty on the impugned goods amounting to Rs. 1,37,41,280/- and interest thereon under Section 28 of the Customs Act, 1962. The said show-cause notice was adjudicated vide the impugned order wherein the classification was held to be under CET Heading 8708 70 00 of the Customs Tariff. The demand for differential duty of Rs. 1,45,58,530/- being duty short levied and interest thereon was confirmed under Section 28 of the Customs Act, 1962. The appellants are before us against the impugned order.


3. The Ld. Counsel for the appellant submits that the show-cause notice proposed demand of duty of Rs. 1,37,41,280/- whereas the impugned order confirms the demand of Rs. 1,45,58,530/-, which is more than the duty proposed in the show-cause notice. This may be due to the fact that Notification No. 124/07-Cus., dated 31-12-2007 imposed final duty on the goods falling under Heading 8708 at a higher rate than the rate proposed under Notification No. 51/2007, dated 29-3-2007, which was the provisional duty Notification. As per Rule 21(1) of the Customs Tariff (Identification, Assessment and Collection of duty on Dumped Articles and Determination of Injury) Rules, 1995, if the Duty levied on the basis of final notification is higher than the duty imposed by the provisional Notification, then the differential duty cannot be demanded from the importer. This Tribunal in the following cases namely; (i) Harish International v. C.C, 2007(08)LCX0058 Eq 2007 (217) ELT 0528 (Tri.-Mum.); (ii) Jagriti Plastics Ltd. v. C.C. - 2003(12)LCX0536 Eq 2009 (246) ELT 0053 (Guj.); (hi) Adani Exports Ltd. v. C.C.,'2004(07)LCX0140 Eq 2004 (171) ELT 0169 (Tri.-Mum.) had held that if the final duty is determined more than the provisional duty imposed then in terms of Rule 21 of the said Rules, 1995 differential duty cannot be demanded.

3.1 The Ld. Counsel further submits that the demand of duty for the period beyond six months is time-barred as no misdeclaration or suppression of facts on the part of the appellant has been alleged in the show-cause notice. The Ld. Counsel also submits that the appellants during the period 21-7-2007 to 17-8-2007 had classified the goods under Heading No. 8708 due to oversight, even though the goods in the bill of entry were declared as "trailer parts - steel wheels". They had submitted a representation dated 15-12-2007 and 16-12-2007 wherein they had pointed out the mistake made by them in classifying the goods under tariff 8708 and requested for amendment of classification from Heading Nos. 8708 to 8716. Therefore, the demand of duty for the period from 7-4-2007 to 30-7-2007 is hit by limitation.

3.2 The Ld. Counsel for the appellant further submits that on classification matter, the onus is on the department to prove that the goods are classifiable under heading proposed by it and placed reliance on the judgment of the Apex Court in the case of HPL Chemicals Ltd. v. C.C.E., Chandigarh reported in 2006(04)LCX0009 Eq 2006 (197) ELT 0324 (S.C.) and C.C.E., Nagpur v. Vicco Laboratories, 2004(12)LCX0069 Eq 2005 (179) ELT 0017 (S.C.). In the present case while the department alleges that the principal use of the imported wheel is for buses and trucks and, therefore, the wheels are classifiable under Heading 87.08, there is no material evidence adduced by the department to support this proposition. The appellants in their written submission dated 15-2-2008 filed before the Ld. Commissioner gave the technical specifications of their products and how it is different from the wheel used for trucks. However, these submissions have not been rebutted or controverted in the impugned order. The appellant also submitted that they have been selling the im-ported wheels only to trailer manufacturers and in all the documents relating to import and domestic sales, the goods are described as parts of trailers only.

3.3 The Ld. Counsel further submits that Heading 87.16 covers trailers and parts thereof and as per HSN explanatory note at page XVII-8716-1, this position has been indicated. To classify under Heading 87.08 it should be parts of goods falling under Heading Nos. 8701 to 8705. Trailers do not fall under Headings 87.01 to 87.05 and trailers fall under Heading 87.16 and, therefore, wheels for trailer will not fall under Heading 87.08. According to Explanatory note to Section XVIII "where certain parts and accessories are suitable for use on more than one type of vehicle, such parts and accessories are to be classified in the heading relating to the parts and accessories of the vehicles with which they are principally used". The principal use of imported wheel is with the trailers and, therefore, the goods imported by them are classifiable under heading No. 87.16.

3.4 The Ld. Counsel further submits that anti-dumping duty is leviable under Section 9A of the Customs Tariff Act, 1975 read with Notification issued thereunder. In the case under consideration, the Notification No. 51/2007-Cus. or 124/2007-Cus. levies duty on steel wheels falling under Heading 87.08. The charging section has to be construed very strictly. Therefore, if Heading 87.16 is not specified in the notifications, levying anti-dumping duty, then no such duty can be levied on such wheels, by referring to the findings given by the desig-nated authority, recommending levy of anti-dumping duty. On the basis of above submission, the Ld. Counsel prays for setting aside the impugned order and allowing their appeal.


4. The Ld. Commissioner (AR) appearing for the Revenue submits as follows :-

4.1 During the period April, 2007 to November, 2007, the appellant filed 21 bills of entry for import of steel wheel rims size 7.5" x 20" from China. During 7-4-2007 to 31-7-2007 they classified the goods under Customs Tariff Heading 8708 70 00, while during August and September, 2007 they classified the goods under Customs Tariff Heading 8716 90 10 and again from 1-10-2007 to 31-10-2007 they classified these goods under CTH 8708 70 00 except in one bill of entry of 6-10-2007. In November, 2007, they classified the goods again under CTH 8716 90 10. The show-cause notice dated 30-1-2008 has been issued for classification of the subject goods under CTH 8708 70 00 as their principal use as the wheels for buses and trucks. They can also be used as wheel for trailers interchangeably. Since the principal use is for the buses and trucks, in terms of Section Note 3 to Section XVII, the goods are rightly classifiable under Heading 8708.70 00 and it is for this reason that anti-dumping duty has been demanded on steel wheels of nominal diameter of 16" x 20", when imported from China under Section 28 of the Customs Act. In the Central Excise invoices issued by the party, it is not clear whether the goods sold by them are the same are those imported. Further, the description given in the Excise invoice reads as "wheel disc or wheel rims" as against the description in the bill of entry, which mentioned the goods as "Trailer parts - wheel rims". Words "trailer parts" are missing from all the Central Excise invoices submitted by them. As regards the claim of the appellant that the classification under CTH 8708 70 00 during the part of the period was a clerical error committed by the CHA, the Ld. Jt. CDR disputes the same. The It. Jt. CDR referred to the preliminary findings of the anti-dumping authority wherein it is stated that the investigation covered steel wheel for trailers also for considering imposition of anti-dumping duty, from which it is very clear that steel wheels for trailers are leviable to anti-dumping duty, inasmuch as such steel wheels are principally used for buses and trucks. It is contended, therefore, that the product under importation merits classification under Heading 8708 70 00. The Ld. Jt. DR also relies upon the judgment in the case reported in 2004 (174) ELT 83 wherein it has been held that anti-dumping Notification must not be interpreted in a way which results in circumvention or defeats its purpose.


5. We have carefully considered the rival submissions.


6. Both in the show-cause notice as also in the order-in-original, the adjudicating authority has observed that the goods under importation was principally used as the wheels for buses and trucks and it could also be used as wheel for trailers. However, the basis for such observation nor any evidence relating to thereto have been adduced either in the notice or in the order. In other words, it is only a mere observation without any supporting evidence. On the contrary, commercial invoices submitted by the appellant in respect of the imports made indicates the goods as "Trailer parts, wheel rims size 7.5" x 20". The description was the same even in respect of imports made prior to the imposition of antidumping duty as also after the imposition of anti-dumping duty. In the invoice dated 16th August, 2006, the goods are described as "parts or accessories of trailers wheel rim size 7.25 x 20" in respect of bill of entry no. 891065, dated 6-9-2006; so is the case in respect of invoice dated 16-9-2006 relating to imports vide bill of entry No. 92072, dated 5-10-2006. The said description remained unchanged even after the imposition of anti-dumping duty and all these goods were supplied by the same foreign supplier. In other words both before as well as after the imposition of anti-dumping duty, the invoices depicted the goods under importation as trailer parts - wheel rims size 7.25 x 20". Therefore, the goods under importation were commercially known as trailer parts as reflected in the invoices submitted by the party both prior to and after imposition of anti-dumping duty. As regards the contention of the Revenue that findings relating to imposition of antidumping duty covers in its scope wheels for trailers also, the notification imposing the anti-dumping duty restricts the levy to goods falling under sub-heading 8708 70 00, namely, steel wheels of nominal diameter 16 x 20" originating and exported from China. Both the Notifications No. 51/07-Cus., dated 29-3-2007 imposing the provisional duty as also Notification No. 124/07-Cus., dated 31-12-2007 imposing final duty describe the goods subject to the anti-dumping duty as those falling under Tariff Item 8708 70 00 of the First Schedule to the Customs Tariff Act. In other words, only those wheels falling under 8708.70 00 attracts anti-dumping duty levy. CTH 8708 covers parts and accessories of motor vehicles of Heading Nos. 8701 to 8705. These vehicles are tractors, motor vehicle for transport of persons, motor cars including station wagon and racing cars, motor vehicle for transport of goods, such as lorries and trucks, dumpers and special purpose motor Vehicles, such as crane lorries, fire fighting vehicles, etc. Trailers and semi-trailers fall under Heading No. 87.16 of the Customs Tariff and parts and accessories of trailer fall under 8716.90. As per the HSN explanatory Note to 8716.90 dealing with parts, it includes (i) chassis and component parts thereof (ii) axles (iii) bodies and parts thereof (iv) wooden or steel wheels and parts thereof in-cluding wheels fitted with their tyres (v) coupling devices (vi) brakes and parts thereof (viii) shafts, swingle-bars and similar parts. In other words, from the HSN explanatory note, it is very clear that steel wheel and parts thereof of trailers will come under the heading No. 8716.90 and not under Heading No. 87.08. Therefore, from the documentary evidence available on record, it is clear that the goods under importation merit classification under Heading 87.16 and not under Heading 87.08 as alleged with the notice. It is seen that during the material period, the appellant had misclassified the goods under importation under Heading 87.08 for part of the period. However, they have brought this to the notice of the Customs department and sought reclassification of the goods under Heading 87.16. This request for reclassification was done much before the issue of show-cause notice and, therefore, it cannot be alleged to be an after-thought on the part of the appellant/importer. Further, the description in the commercial invoices concerned remained as, parts of trailers only even in such cases. There is no evidence led/adduced by the department to prove that the goods under importation were principally used for buses and trucks. The show-cause notice and the order-in-original merely states that it was observed that the impugned goods are principally used as the wheel for buses and trucks. However, no evidence, either by way of technical experts' opinion or by way of commercial invoices or averments by traders who deal in such goods, have been adduced by the department to substantiate the observation. In the absence of such evidence, the department's case falls flat. Since anti-dumping duty, though imposed under a notification, is a levy, it is the responsibility of the Revenue to substantiate that the goods under importation attracts the levy. In the absence of any evidence to that effect, the department's case has no legs to stand. The Apex Court in the HPL Chemicals Ltd. and Vicco Laboratories case cited supra held that in matters of classification the onus is on the department to prove that the imported/manufactured goods are classifiable under the heading proposed by them. In the absence of any such evidence it is very difficult to accept the contention of the department that the goods under importation merits classification under Heading 87.08 and attracts antidumping duty. In the result, the appeal succeeds and is allowed.

(Pronounced in Court on 20-10-2011)

Equivalent 2012 (276) ELT 0371 (Tri. - Mumbai)

Equivalent 2012 (190) ECR 0328 (Tri. - Mumbai)