In a recent ruling, the Chennai bench of the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) has provided relief to Ford India Pvt Ltd by ruling that air compressors for car AC equipment are correctly classified under Heading CTI 8414 8011 of the Customs Tariff Act, 1985, resulting in no differential duty demand.
The appellant, Ford India Pvt. Ltd filed several Bills of Entry for the clearance of imported goods classified as ‘COMPR & CL ASY A/C (Motor vehicle components)’. These were initially classified under Chapter Headings 8421 9900, 8409 9990, and 8414 9090, attracting a Basic Customs Duty (BCD) of 7.5%, Central Value Duty (CVD) of 10%, and Special Additional Duty (SAD) of 4%. Post-clearance, it was determined that the correct classification should be under CTH 84159000. The lower authority classified the goods as parts of air-conditioning machines and confirmed a demand for differential duties totaling ₹2, 07,850. The appellant’s subsequent appeal to the Commissioner (Appeals) was rejected, leading to the current appeal.
Mr. Rohan Muralidharan appeared for the appellant, while Mr. M. Selvakumar represented the respondent.
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Rohan Muralidharan contended that the imported goods, compressors for air conditioners in the ‘B299 New Fiesta Model Car’, should be classified under CTH 8414, which covers air and vacuum pumps and compressors. He argued that the classification is valid as these compressors serve both to compress refrigerants and to facilitate their circulation, thereby meeting the criteria for the specified heading. He further asserted that prior classifications do not limit future classifications and that the impugned order incorrectly mandates industrial use for classification under CTH 8414.
Conversely, M. Selvakumar maintained that the goods are parts specifically used in car air-conditioning systems. He referenced CTH 84159000 as the appropriate classification for components of air-conditioning machines used in motor vehicles, asserting that this heading is specifically designed for such applications. He cited the need for adherence to the ‘predominant use’ principle in classification, supporting his argument with reference to relevant legal precedents.
The bench reviewed the classifications under Heading 8414 and 8415. Further the two member bench of the tribunal comprising M. Ajith Kumar (Technical member) and P. Dinesha (Judicial member) noted that while both headings could apply, Heading 8414 pertains to compressors and pumps, while Heading 8415 addresses air-conditioning machines specifically. The bench determined that the subject goods are rightly classified under CTH 8414 8011 as gas compressors used in air-conditioning equipment, referencing Note 2(a) to Section XVII of the Customs Tariff Act, 1985.
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The CESTAT set aside the impugned order, allowing the appeal and granting the appellant eligibility for consequential relief under the law. The case was disposed of accordingly.
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