CESTAT New Delhi Allows Toyota Boshoku's Appeal, Holds Seat Components As 'Parts Of Seats'

The New Delhi Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) on 21 April held that goods specifically classifiable as parts of seats cannot be reclassified under a general entry for motor vehicle parts, and accordingly allowed the appeal filed by Shiroki Automobiles India Pvt. Ltd. (now known as Toyota Boshoku Device India Pvt. Ltd.).

A Bench comprising President Justice Dilip Gupta and Technical Member P.V. Subba Rao set aside the order of the Commissioner of Customs, ICD Patparganj and held that the goods are correctly classifiable as “parts of seats” under Customs Tariff Item (CTI) 9401 90 00 and not under CTI 8708 99 00. It observed:

“'track assembly' is an integral part of a complete seat and is supplied to a car seat manufacturer for manufacture of the seats. 'Gear vertical adjuster' is affixed in a car seat at a particular location along with brake seat lifter. 'Track assembly' helps in the upward and downward seat adjustment. 'Bar seat track lock' is used to lock the position of the seat at the required position. It cannot, therefore, be doubted that all the four parts imported by the appellant are parts of car seats and cannot be described as 'parts' and 'accessories' of motor vehicles. The appellant, therefore, correctly classified the goods under CTI 9401 90 00 as 'parts of seats'.”

The dispute arose from an order dated 7 January 2025 passed by the Commissioner of Customs, ICD Patparganj, whereby the classification declared by the appellant was rejected.

The Commissioner reclassified the imported goods—namely track assembly, gear vertical adjuster, brake/case sub-assembly, and bar seat track lock—as parts and accessories of motor vehicles and consequently confirmed demand of differential duty under Section 28(4) of the Customs Act, along with interest and penalty.

Shiroki Automobiles contended that the imported goods are integral components of car seats and are supplied directly to seat manufacturers, not automobile manufacturers. It argued that these parts are essential to the functioning and assembly of seats and are not independently usable as motor vehicle parts.

The company further relied on an earlier decision of the Tribunal in its own case, where similar goods were held to be classifiable under CTI 9401, and pointed out that the said decision had attained finality after dismissal of the Department's appeal by the Supreme Court.

The Department, on the other hand, argued that the goods facilitate adjustment and positioning of seats and are fitted within motor vehicles, thereby qualifying as accessories of automobiles. It placed reliance on the judgment of the Supreme Court in Insulation Electrical to support classification under CTI 8708.

The Tribunal observed that the Commissioner's refusal to follow the earlier Tribunal ruling in the company's own case was improper and contrary to settled principles laid down by the Supreme Court.

On merits, the Bench held that the goods in question are integral parts of car seats and are supplied to seat manufacturers for incorporation into seats before being fitted into vehicles.

It noted that the tariff entry under CTI 9401 specifically covers seats and their parts, including those used in motor vehicles, whereas CTI 8708 is a more general entry for parts and accessories of motor vehicles. Applying the principle that a specific entry prevails over a general one, the Tribunal concluded that CTI 9401 is the appropriate classification.

The Bench opined that “the Commissioner committed an error in holding that the goods imported by the appellant deserve classification under CTI 8708 99 00 as 'parts' and 'accessories' of motor vehicles.”

Accordingly, the CESTAT set aside the impugned order and allowed the appeal

For Appellant: Bharat Raichandani and Arjyadeep, Advocates

For Respondent: Ranjan Prakash and Rajesh Singh, Authorised Representatives