The Bangalore bench of the Customs, Excise & Service Tax Appellate Tribunal(CESTAT) has held that Smarta Immobiliser Is only a security device to prevent vehicle theft and are classifiable as a part and accessories of motor vehicle.
The respondent, M/s. Bosch Limited imported Smartra Immobilisers classifying the same under Chapter Heading 8536 5090 as automatic regulating and controlling instrument and apparatus. From the catalogue submitted by the respondent, the imported item vehicle immobiliser system consisted of key head with transponder, antenna, Smartra, and engine management system.
From the various features of the imported items, it was found that it was an optional item to be fitted to vehicle engine for better security. The engine of the vehicle would not start if any improper starting of the vehicle was attempted and thus, prevented theft. It was an antitheft device and accordingly, the item was classified under chapter heading 8708 9900 as accessories of vehicles by the original authority.
On appeal, the Commissioner (Appeals) observed that smartra components are made up of digital circuit with the character interface and the device directs electronic signals between the engine management system and the transponder and once the car engine is stopped the EMS immobilises the vehicle by disabling control of the spark ignition circuit and fuel supply.
On behalf of the Revenue, the Authorised Representative submitted that as per the catalogue provided by the supplier, “electronic control unit (Smartra)” is a part of a vehicle engine immobiliser system. Vehicle immobiliser greatly reduces the chance of a vehicle being stolen by preventing engine start if a previously electronically registered key is not presented.
Smartra is one key component in vehicle immobiliser system. Immobiliser functionality: after engine stops, vehicle is immobilised after a short period of time, authentication must be repeated to mobilise the vehicle and that the immobilisation of the vehicle occurs by the EMS disabling the control of the spark ignition and fuel supply.
On the other hand, the advocate for the respondent submitted that the HSN Explanatory Notes to Chapter Heading 8536 reads as apparatus for switching electrical circuits. The imported goods are nothing but an electronic chip consisting of transistor and logic chip for a voltage not exceeding 1000 volts. It is submitted that the device switches on the EMS, when the appropriate signal is received from the transponder, i.e., the impugned goods make it circuit.
The Smartra Immobilser undoubtedly is used only in the vehicles for antitheft purpose and it is not excluded by the provisions of the Notes to Section XVII, thus, satisfying both the conditions.
A two member bench of Mr P A Augustian, Member (Judicial) and Mrs R Bhagya Devi, Member (Technical) observed that the sole and principal use of smartra immobiliser is only as an accessory to the vehicle as an antitheft device, adding value to the vehicle in terms of security, the question of classifying the same under Chapter Heading 8536 does not arise. Moreover, it is to be classified as part of motor vehicle unless excluded by the Section or Chapter Notes or if there is a specific entry in the Tariff as per the General Explanatory Notes.
“It is rightly classifiable under Chapter Heading 8708 as there is no specific entry elsewhere. Therefore, since the smartra immobiliser is only a security device to prevent a vehicle from being stolen it is rightly classifiable under Chapter Heading 8708 as parts of a motor vehicle. When the primary evidences and criteria for classification as discussed supra do not allow classifying the items under Chapter Heading 8536, the question of following the Tariff Advice which is only a persuasive value does not arise.”, the Bench concluded. While allowing the appeal, the CESTAT set aside the impugned order.
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