Commissioner Of Customs (Import), ... vs M/S. Maschio Gaspardo India Pvt Ltd

[Arising out of Order-in- Appeal No. 475(Gr. V)/2014 (JNCH)/IMP-452 dtd. 13/2/2014 and OIO No. 476(Gr. V)/2014 (JNCH)/IMP-452 dtd. 13/2/2014 passed by the Commissioner of Customs(Appeals), JNCH, Sheva Mumbai-II]

For approval and signature:

Honble Mr. P.S. Pruthi, Member(Technical) Honble Mr Ramesh Nair, Member(Judicial)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : seen of the Order?

4. Whether Order is to be circulated to the Departmental: Yes authorities? =======================================================

Commissioner of Customs (Import), Mumbai Zone-II : Appellant

VS

M/s. Maschio Gaspardo India Pvt Ltd. : Respondent

M/s. Maschio Gaspardo India Pvt Ltd. : Appellant

VS

Commissioner of Customs (Import), Mumbai Zone-II : Respondent Appearance

Shri. Pradeep Korde, Consultant for the Assessee Shri. S.J. Sahu, Asstt. Commissioner(A.R.) for the Revenue

CORAM:

Honble Mr. P.S. Pruthi, Member (Technical) Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 1/9/2015 Date of decision /2015

ORDER NO.

Per : Ramesh Nair

These two appeals and one Cross objection by the Assessee and one appeal by the Revenue are directed against Order-in- Appeal No. 475(Gr. V)/2014 (JNCH)/IMP-452 dtd. 13/2/2014 and OIA No. 476(Gr. V)/2014 (JNCH)/IMP-452 dtd. 13/2/2014 passed by the Commissioner of Customs(Appeals), JNCH, Sheva Mumbai-II.

2. The fact of the case is that assessee company imported parts of agricultural machinery which includes gear boxes, transmission/drive shaft and other items under Bill of Entry No. 5481 dated 13/12/2012 and Bill of Entry No. 8729556 dated 11/12/2012. The assessee in the Bill of Entry declared these various items under Chapter Heading 84329090 as parts of other agriculture machineries. The adjudicating authority considered the note 2(a) of Section XVI of Customs Tariff Act and also HSN Note to Section XVI and held that even though imported items are parts of agricultural machinery but by virtue of Section Note 2(a) of Section XVI, if individual items are classifiable under its specific Tariff Entry the same shall be classified under respective Tariff items instead of parts of agriculture machinery. Accordingly, the adjudicating authority has reclassified the imported items as under Table Item Sr. No. Description CHT Code Ass. Value Duty as per BOE Total duty

As the goods classifiable under parts of machinery classifiable under Chapter 8432 attracts duty rate (7.5% + 0%+2%+1%+4%) whereas on change of classification as per the Adjudicating Authority the differential duty of Rs. 8,82,133/- was found short paid and the demand of the same was confirmed.

In another proceedings related to appeal No. C/86545/14 the Adjudicating Authority held that the goods namely transmission shaft classifiable under CTH 8483 as against assssees claim under CTH 8432. Both the cases against original order the assessee filed appeal before the Commissioner (Appeals) who vide impugned order upheld classification as well as taken of differential duty as decided by the adjudicating authority. However he dropped the penalty and fine against the assessee therefore the assessee is in appeal before us and Revenue is also filed an appeal against setting aside the penalty and fine.

3. Shri. Pradeep Korde, Consultant for the assessee submits that all the parts assessee submits that all the parts are solely and principally are used in the manufacture of agricultural machines and these parts cannot be used in any other purpose. He submitted that various pictures of the final product and parts and shown that the final product were in imported parts are used as agricultural equipment namely Rotavator, Tiller which is fitted on the back of the Tractor for leveling the agriculture field. Therefore there is not dispute that final product is the agricultural equipment and all these imported parts are specifically designed for manufacture/assembly of agricultural equipment therefore it merit classification as part of agricultural machinery. He further submits that as regard the departments appeal, since the matter is highly contentious and involved grave interpretation of interpretative rules of Central Excise Tariff, suppression of fact and misdeclaration could not be invoked and therefore it is clear case of appellants bonafide in declaring the goods as parts of agricultural machinery. Therefore the lower authorities have correctly dropped the proceedings as regard penalty and fine. Therefore the departments appeal is not maintainable. In support of his submission he relied upon the judgment of Saint Gobain Glass India Ltd. Vs. Commr. of Cus. (AIR), Chennai[2014 (313) E.L.T. 680 (Tri. - Chennai)].

4. Shri. S.J. Sahu, Ld. Asstt. Commissioner(A.R.) appearing for the Revenue reiterates the findings of the impugned order as regard the confirmation of demand. He further submits that even though it is accepted that the parts imported by importer is exclusively for use as parts of agricultural machinery but by virtue of Note 2(a) of Section XVI as well as Note 2 of Section XV if the parts are having independent tariff entry such as gear box, transmission shaft etc. The same shall merit classification for the respective head irrespective of the facts that parts are use for a specific machinery. He also submits that as per Section XV, Note 2 the parts of general use as defined in the said note shall merit classification in the respective heads. In view of this clear statutory provision the parts imported by assessee have been correctly classified in various chapters and accordingly demand was rightly confirmed. He further submits that as regard Revenues appeal the assesseee when despite clear statutory provisions for classification of goods as provided in Section XV and XVI they wrongly declared classification therefore there is clear cut malafide on the part of the assessee with intention to evade custom duty.

5. We have carefully considered the submissions made by both sides.

6. There is no dispute that parts imported by the assessee are meant for assembling of agricultural equipment. However even though the parts are solely and principally to be used for assembling of agricultural equipment but certain parts which have placed in their respective tariff entry would merit classification in the respective head. In this regard relevant Section Note are reproduced below:-

Section XV Note 2: Through out this Schedule, the expression parts of General use means:

(a) Articles of headings 7307, 7312, 7315, 7317 or 7318 and similar articles of other base metal;

(b) springs and leaves for springs

From the above two Section Note, it is clear that if any of the part are either having independent entry in Chapter 84 or 85 and if the goods are of chapter 73 are of general use covered under chapter heading 7307, 7312, 7315, 7317 or 7318 these parts will not be classified as part of equipment where it is going to be assembled however the same will be classified in their respective tariff heads. We find that the assessee have made their submission mainly on the ground that all the parts imported by them are designed as parts of agricultural machinery and use in the said agricultural machinery i.e. Rotavator, Tiller and therefore they claim that all the parts merit classification as parts of agricultural machinery. However, the appellant have not challenged the reclassification under different Chapter heading held by Adjudicating authority. Therefore considering the chapter heading as correct in the adjudication order, we find that out of all 32 items only following three items namely, Bar Connection, Square Pipe and Mechanical Ram mentioned at Sr. No. 6, 7 and 20 respectively are falling under CTH 7308 and 7320 therefore considering both the note of Section XV and XVI these items are of general use therefore it will be properly classified as parts of agricultural machinery and will fall under chapter heading 8432 therefore demand of these three items are not sustainable and require to be dropped. As regard the departments appeal, we find that the Ld. Commissioner (Appeals) applied judicious mind dropped the penalty and find for the reason that issue involved is highly debatable and contentious and interpretation of various Section Note of Central Excise Tariff. It is also observed that there is no dispute that parts imported by the assessee are exclusively meant for manufacture of agricultural machinery therefore the assesees bonafide belief that goods imported by them are classifiable as parts of agricultural machinery. We therefore do not find any infirmity in the Commissioner(Appeals) setting aside penalty and fine, we therefore upheld the same, Revenues appeal dismissed. The assessees appeals are partly allowed in the above terms. CO is also disposed of.

(Order pronounced in Court on ________________)

P.S. Pruthi Member (Technical) Ramesh Nair Member (Judicial)

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