CUSTOMS APPEAL NO. 51748 OF 2021 (Hanon Climate Systems India Pvt. Ltd. vs. Commissioner of Customs, ICD Delhi)
Table of Contents
The CESTAT allowed the appeal of Hanon Climate Systems India Pvt. Ltd., set aside the re-classification of imported aluminum tubes, pipes, profiles and RD tanks under CTH 8708, restored the original classification under CTH 7604/7608/7616, and quashed the duty demand under section 28(4), interest and penalties under sections 114A/114AA.
Background
- Hanon imported aluminium tubes (rectangular and dimpled), pipes (RD pipes), RD tanks and profiles from Korea/Thailand during 2015-2019 for manufacturing engine cooling modules (ECM), radiators, condensers and charge air coolers used in motor vehicles.
- These were self-assessed under CTI 7604 21 00 (hollow profiles), 7608 20 00 (alloy tubes/pipes) and 7616 99 90 (other aluminium articles), claiming BCD exemption under Notif. 152/2009-Cus (S.No. 610) and 46/2011-Cus (S.No. 992).
- Department audit objected, proposing re-classification under CTI 8708 91 00/8708 99 00 as “parts and accessories of motor vehicles” (radiators/parts thereof), leading to SCN under section 28(4) for differential duty with interest/penalties.
- Commissioner confirmed re-classification, duty demand, interest and penalties u/s 114A/114AA but dropped confiscation u/s 111(m)/(o) as no suppression of end-use facts.
Classification Dispute
| Goods | Appellant’s Classification | Department’s Classification |
|---|---|---|
| Aluminium Tubes/Pipes | CTI 7608 20 00 (alloy tubes/pipes) | CTI 8708 91 00 (radiator parts) |
| Aluminium Profiles | CTI 7604 21 00 (hollow profiles) | CTI 8708 91 00 (radiator parts) |
| RD Tanks | CTI 7616 99 90 (other Al articles) | CTI 8708 91 00 (radiator parts) |
Department’s Case
- Goods bear specific part numbers tied to vehicle drawings, are custom-shaped/cut-to-size exclusively for captive use in motor vehicle radiators/condensers/ECMs, hence classifiable under CTH 8708 per GIR 1, Section Note 1(g) to Section XV (excluding Ch.76 goods if covered by Section XVII) and HSN Explanatory Notes to CTH 7608.
- Common parlance treats them as identifiable auto parts; end-use and captive consumption justify Section XVII over material-based Chapter 76 classification.
Assessee’s Case
- Goods in “as-imported” state are plain aluminium raw inputs (uniform cross-section tubes/profiles per Ch.76 Note 1(b)/(e); RD tank is simple cut-out structure), requiring further processes (drilling, fin insertion, crimping, brazing, assembly) before becoming identifiable radiator/condenser parts.
- Cannot be classified under CTH 8708 as they fail Section XVII Explanatory Notes’ three cumulative tests: (i) not excluded by Note 2; (ii) not suitable solely/principally for motor vehicles (wide applications); (iii) more specifically covered under Ch.76 headings.
- End-use irrelevant for classification (Dunlop India Ltd., Vareli Weaves, Secure Meters); specific entries (Ch.76) prevail over generic “parts” (CTH 8708); own prior case Visteon Climate Systems (same entity) and Shiroki/Denso precedents support Ch.76.
Tribunal’s Reasoning
Classification under Chapter 76 upheld:
- Imported goods match Ch.76 definitions: uniform cross-section profiles (Note 1(b)), tubes/pipes (Note 1(e)); RD tank as “other” Al article (CTH 7616). They do not assume character of CTH 8708 products at import stage.
- Not excluded from Ch.76 by Section XV Note 1(g)/HSN to 7608, as they retain identity as basic Al shapes despite part numbers/captive use.
- Reject end-use basis (Dunlop India SC: “end use irrelevant if no reference in entry”); goods need substantial working (drilling, brazing etc.) before fitting vehicles; not “solely/principally” for motor vehicles (wide utility).
CTH 8708 inapplicable:
- Fails Section XVII tests: not solely/principally vehicle-specific; more specifically described in Ch.76 than residuary “parts”. Follows Visteon (own case), Secure Meters, Denso (Al tubes/profiles stay in 7608 even cut-to-size).
Exemptions restored:
- Goods originate from Korea/Thailand (certificates match); eligible under cited notifications for Ch.76 entries.
No extended limitation/penalties:
- Pure classification dispute (interpretation issue), not mis-declaration/suppression; appellant disclosed end-use, informed of Visteon precedent at audit; Commissioner dropped confiscation for lack of suppression.
- Extended period u/s 28(4) and penalties u/s 114A/114AA invalid (Aglowmed, Midas Fertchem etc.); no interest liability.
Outcome
Impugned order set aside; original classification, exemptions and clearances upheld.
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