Classification of goods for customs must be based on their condition at import, not intended use, impacting applicable duties and penalties.

JUSTICE DILIP GUPTA:

Hanon Climate Systems India Pvt. Ltd., the appellant has challenged the order dated 30.04.2021 passed by the Commissioner by which the classification of the three goods imported by the appellant, namely, aluminium tubes, aluminium pipes and aluminium profiles, the goods under Customs Tariff Heading, CTH 7604, CTH 7608 and CTH 7616 have beenrejected and have been ordered to be re-classified under CTH 8708. The Commissioner has also directed for recovery of customs duty under section 28(4) of the Customs Act 1962, the with interest. The Commissioner has also imposed penalty upon the appellant under section 114A and section 114AA of the .

2. The appellant is engaged in the import of goods which are used for manufacturing engine cooling module, ECM radiators and condensers which shall collectively be referred to as finished goods.

3. The present case concerns the classification of the goods imported by the appellant during April 2015 to March 2016 through various Bills of Entry.

4. The appellant has described the goods in the following manner:

(i) Aluminium Tubes: Two types of aluminium tubes are imported by the appellant. The first type of aluminium tubes is in long rectangular shape which are hollow from inside and the same are used for making „Core‟ (which is a part of radiator), by process of fin insertion, crimping, degreasing and brazing in furnace. The second type of aluminium tube is a dimpled tube which is again long rectangular tubes/stripes which are hollow, and the same further undergoes the process of working (i.e. core making/brazing in furnace/final assembly with plastic, rubber, etc.) to make the finished goods (i.e. engine cooling module);

(ii) Aluminium Pipes and articles i.e. RD Pipes and RD Tank: The Receiver Dryer, RD pipe is an aluminium hollow pipe which is used for making RD Tank Assembly for storing refrigerant. During manufacturing process, holes are punched at required places on the RD Pipe so that it can properly connect with the RD Tank, which is a curved aluminium structure. When RD Pipe and RD Tank are put together, it forms the RD Tank Assembly;

(iii) Aluminium Profiles: Aluminium profiles imported by the appellant are used in manufacturing condensers.

5. The appellant undertakes manufacture of the finished goods using the pipes, tubes and profiles. The finished goods of the appellant have been described by the appellant in the following manner:

(i) Engine Cooling Module: The ECM is a combination of radiator, cooling fan and shroud. It rejects the heat generated within the engine into ambient air using the cooling fan mounted on the radiator. The appellant inter alia uses aluminium tubes to manufacture ECM. The tubes are further worked upon so that a radiator can be made over which cooling fan in mounted;

(ii) Charge Air Cooler: Intercooler optimized combination of air can be supplied to the vehicle engine through the heat exchanging processes of heated air that has been pressurized by Turbo Chargers and atmosphere. The appellant manufactures the charge air cooler using the rectangular tubes;

(iii) Condenser: The Condenser cools and converts the hearted and high-pressure refrigerant received from the compressor into a liquid form. The appellant manufactures the condenser assembly using the aluminium profiles and RD Tank Assembly.

6. The appellant classified the goods under Customs Tariff Item, CTI 7604 21 00, CTI 7608 20 00 and CTI 7616 99 90 of the First Schedule to the Customs Tariff Act, 1975, the Tariff Act and claimed exemption from payment of Basic Customs Duty, BCD in terms of Serial No. 610 of Notification No. 152/2009-Cus dated 31.12.2009, the Notification dated 31.12.20