Relief to Hyundai: CESTAT holds Department unable to discharge Burden of Proof on Merits of Classification of Imported Oil Control Valves [Read Order]
The issue arose following the Customs’ allegations that Hyundai had wilfully misclassified numerous imported goods to avail Duty Exemptions
![Relief to Hyundai: CESTAT holds Department unable to discharge Burden of Proof on Merits of Classification of Imported Oil Control Valves [Read Order]](https://www.taxscan.in/wp-content/uploads/2024/11/CESTAT-Customs-Department-Oil-Control-Valves-Hyundai-Case-Hyundai-Oil-Valve-Case-Taxscan.jpg "Relief to Hyundai: CESTAT holds Department unable to discharge Burden of Proof on Merits of Classification of Imported Oil Control Valves [Read Order]")
In a notable ruling, the Customs, Excise & Service Tax Appellate Tribunal, Chennai ( CESTAT ) provided relief to Hyundai, holding that the Customs Department had been unable to discharge their Burden of Proof on the merits of classification of imported Oil Control Valves. The decision was rendered by CESTAT while hearing multiple Customs Appeals filed by Hyundai Motors India Ltd....
In a notable ruling, the Customs, Excise & Service Tax Appellate Tribunal, Chennai ( CESTAT ) provided relief to Hyundai, holding that the Customs Department had been unable to discharge their Burden of Proof on the merits of classification of imported Oil Control Valves.
The decision was rendered by CESTAT while hearing multiple Customs Appeals filed by Hyundai Motors India Ltd. ( Hyundai ), Kanchipuram, a prominent manufacturer of passenger motor cars, against the Commissioner of Customs and vice versa. Hyundai imports various parts and accessories for use in their passenger motor cars and is involved in a number of taxation processes to facilitate their business.
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The Directorate of Revenue Intelligence ( DRI ), on the basis of intelligence received by them, alleged that Hyundai had misclassified various goods imported by them to illicitly avail Basic Customs Duty ( BCD ) exemption in light of exemption Notification No. 152/2009-Customs dated 31.12.2009. The Notification provides Exemption of Customs duty on certain goods when imported into India from the Republic of Korea.
Among the numerous imported goods whose classification had been contested by the Customs Department, the Oil Control Valve Assembly ( OCV ) imported by Hyundai was one of them.
Hyundai submitted that the OCV is a critical engine component assisting in regulating the supply of engine oil to other components of the engine machinery, and is classified under the category of valves under Custom Tariff Heading ( CTH ) 8481.
The two-member Bench of CESTAT, Chennai comprising P. Dinesha, Judicial Member and M. Ajit Kumar, Technical Member laid reference to the decision of the Supreme Court in O.K.Play (India) Ltd. v. CCE, Delhi (2005) that classification of an item is to be determined on the basis of the HSN Explanatory Notes, Rules of Interpretation, functional utility, design, shape and predominant usage of the item.
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With regards to the decision in O.K.Play, CESTAT held that the HSN explanatory notes towards CTH 8481 als includes “devices designed to regulate the pressure or the flow velocity of a liquid or a gas. Valves remain in this heading even if specialized for use on a particular machine or apparatus, or on a vehicle or aircraft.”
Concludingly, the Customs, Excise & Service Tax Appellate Tribunal, Chennai averred that the burden of proof on the merits of classification of the impugned goods under a different Tariff Heading lies with the Customs and that they have not been able to discharge the same, upholding the classification already made by Hyundai.
To Read the full text of the Order CLICK HERE
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