ORDER
C.N.B. Nair, Member (T)
1. This appeal arises from and is directed against Order-in-Appeal No. HKS(335)/ICD/2001, dated 25-4-2001 passed by the Commissioner of Customs (Appeals), New Delhi. Under the impugned order, Commissioner confirmed A.O No. 13/98, dated 30-4-98/4-5-98 passed by the Dy. Commissioner of Customs, ICD, Patparganj, New Delhi.
2. The dispute which arose for decision was the classification of 500 sets of Car alarm and locking system imported by the appellants. The appellant claimed classification under Customs Tariff Heading 8301.20. This claim was rejected by the authorities and they held that the goods are correctly classifiable under Heading 8531.10. The change of classification had effect on import policy also. If the classification claimed by the appellant was correct, the goods could be freely imported. Otherwise, they were restricted for import, and the appellant did not have the lice-rise to import the goods. Consequently., on account of the change in classification, the goods were held to be liable to classification under Section 111(d) of the Customs Act. They were confiscated with an option to redeem on payment of Rs. 2,25,000/-. A penalty of Rs. 25,000/- was also imposed on the appellant under Section 112 of the Customs Act.
3. 8301.20 covers “Locks of a kind used for motor vehicles,” while 8531.10 covers “Burglar or fire alarms and similar apparatus”. Thus, the issue required to be resolved is whether me car alarm and locking system in question is “locks tor motor vehicle” or “burglar or fire alarms”.
4. The goods in question is a combination of car locking system and alarm. Thus, it is a combination of two products. It is neither car locking system alone nor burglar or fire alarms alone. Both the sides are therefore, agreed that classification should be determined based on which is the main part in the combination, whether locking system or alarm. The appellants contend that the main part is locking system and the alarm is of much less importance and value. As against this, the finding in the impugned order is that the alarm system is the main part. The adjudicating authority has noted from the catalogue of the goods that it describes the goods as super car alarm system with day time and night time twin buttons operation, intelligent code learning, self governed auto-alarming, five steps anti-hijacking, door’s supervisor. His findings on the point are as under :-
“I have perused the sample and catalogue of the goods. The catalogue describes the goods as super car alarm system with day time and night time twin buttons operation, intelligent code learning, self governed auto-alarming, 5 steps anti-hijacking, door’s supervisor. A central control power lock system is also part of alarm system. The catalogue also explains the installation, wiring and function of different wires. The Brown were (door switch “ACC” detector), is utilized to detect whether the ignition key is at ‘ON’ or ‘OFF’ position. The yellow wire (engine immobolizer output), when ‘armed’, will cut off ignition ‘ON’ wire, ignition ‘START’ wire, or fuel pump wire, etc. and engine can no longer be started with an ignition key. The grey wire extends risen out. The orange wire is connected to side lamp or dim light output. Even the catalogue describes the goods as Super car alarm system with locking and not as car locking system with alarm system. The alarm system gives audio and visual signaling, in case the care is tampered with. Even if, any person enters the car by breaking open a glass and tries to start the car, it will not start, as the ignition is also cut off and the system wilt raise an alarm. Hence, I am of the view that the item under import is primarily a car alarm system, with locking facility as a secondary function and the goods, therefore, cannot be classified under CTH 8301.20, which covers locks for motor vehicles”.
5. The appellate order, in addition to agreeing with the findings of the original authority, has also referred to section note of Section XV and Section XVII of the Customs Tariff Schedule. Though no note has been specifically mentioned in the appellate order, it appears from the submissions made by both sides during the hearing that the reference is to Note l(f) under Section XV which states that Section XV does not cover articles of Section XVI (machinery, mechanical appliances and electrical goods). The appellant’s submission is that this note cannot have any application for classification of goods under Chapter 83 as Heading 8301 specifically refers to “Padlocks and locks (key, combination or electrically operated), of base metal”. The appellants have pointed out that it is clear from the words of the heading that locks of all kinds, including electrically operated, would be covered under this heading. It has also been pointed out that Heading 8301.20 is specific to “Locks of a kind used for motor vehicles”. The main contention of the appellant is that security of a moveable property like car is ensured basically through reliable locking system. If the locking system is tamper proof and reliable, thieves would find it difficult to break in and take away the car. It has been contended that this is to be seen in contrast to the alarm system used for the protection of homes, stores etc. In respect of such immoveable
property, security is ensured through burglar alarm system which would alert security organizations and personnel to come to the spot when break-ins are attempted. During the hearing of the appeal the appellant has explained with the help of sample that most of the parts included in the system related to locking of the car. Mainly, the siren alone related to the alarm system. The appellant has therefore, contended that the combination system in question should be treated as mainly consisting of car locking system and not alarm. The appellant has also submitted that the value of the alarm portion in a combination like this would not be the main element of the cost of the combination system. From a quotation from General Security International Corp., Taiwan for car locking and alarm system, the appellant has pointed out that while the cost of the locking and alarm system in the various combinations varied from 22 to 35 US S, the cost of siren (alarm) was only 1 to 1.5 US $. The appellant has therefore, submitted that the car locking and alarm system in the present case should be treated as car locking system and not as burglar alarm, based on the critarion of main item in the combinations. As against the above submissions of the appellant, learned SDR has pointed out that the lower authorities had recorded a detailed finding after seeing the sample and perusing the catalogue that the item is mainly an alarm system and such a carefully reached finding is not required to be over turned in the present case. The learned SDR has also brought to our notice Bill of Entry No. 0598015108, dated 5-7-98 of the Bombay Customs which shows that alarm and accessories have been classified under Chapter 8531.
6. The goods in question is a combination of lock and alarm. There is no dispute that classification of such an item should be done based on which is the main part. There is much force in the appellant’s submission that lock is the main line of defence for a car and central locking system comes as a normal accessory for cars. Alarm is only secondary to the security of moving objects. From the sample placed, it is observed that most of the parts relate to the locking of the car. The same appears to be the relative position with regard to value of the components for locking and alarm too. Quotation of General Security International Corp., though it is not in respect of the specific product before us, appears to be relevant with regard to the price of various components of locking and alarm system. While the combination product is priced from 22 to 35 US $, the price of the siren is found to be only about 1 to 1.5 US $. Going by the critarion of price also the correct classification of the car locking and alarm system would be as car lock. We are not able to find much relevance to the observation in the appellate order in regard to applicability of section note. Heading 83.01 specifically covers electrically operated locks. Therefore, locks including electrically operated lock, would be classifiable under this heading. There is no requirement to exclude the lock in question from the purview of Chapter 83 on account of it being an electrical equipment. Assessment in Bill of Entry No. 0598015108, dated 5-7-98 constitutes no precedent as the goods covered by that Bill of Entry was admittedly alarm and accessories and not combination of lock assembly and alarm.
7. In view of our findings above, the appeal succeeds and is allowed with consequential relief, to the appellants.