Customs Tariff Act, 1975 – First Schedule – Chapter 90 – LCD panels – Classification of – CESTAT held that the LCD panels imported by assesses were classifiable in Chapter Heading 9013.8010 of the First Schedule to the 1975 Act – Held: Reasoning and conclusion of CESTAT that the LCD sets were classifiable under Chapter 90, Entry 9013.8010, is sound and unexceptionable. Customs Tariff Act, 1975 – First Schedule – Section XVI, XVII – Chapters 85 and 90 – General Interpretive Rules and Notes – Plea of revenue that by virtue of Note 2 (b) to Chapter 85, the goods are to be classified based on their principal or sole use – Held: Revenue’s argument jumps over interpretive instructions – In the present case, Note 1 (m) along with the General Note 3 (a) [of the General Rules of Interpretation] that headings that are specifically provided should be preferred over the general ones, is decisive – Thus, the aforesaid contention of revenue is insubstantial because of the clear mandate of Note 1 (m) to Chapter 85 which excludes Chapter 90 goods (which includes LCD panels) – When goods are excluded from a particular chapter, the “pull in” through a note has to be narrowly construed, as otherwise, the basis of exclusion would be defeated, and the earlier note (of exclusion) rendered redundant – Secure Meters case is decisive on the question that LCDs are not articles provided “more specifically in other headings”, i.e., other than 90.13 – Furthermore, the fact that LCDs could be used for purposes other than television sets or audio sets is also concluded because in the said decision its use in meters was in issue – Tax/Taxation.
Dismissing the appeals, the Court
HELD: 1.1 On a reading of the General Interpretive rules and the notes to the concerned chapters (85 and 90, in the present case), it is evident that: (a) classification has to be in accord with “the terms of the headings and any relative Section or Chapter Notes” (Note 1) (b) Reference in a heading to “an article” includes “that article incomplete or unfinished” provided, such incomplete or unfinished article has “the essential character of the complete or finished article.” [Note 2(a)] (c) If on an application of Rule 2(a), an article is classifiable in more than one heading “the heading which provides the most specific description shall be preferred to headings providing a more general description.” [Note
3 (a)] [Para 22][273-B-D]
1.2 Note 1 (m) to Chapter 85 excludes “(m) Articles of Chapter 90…” The revenue relies on Note 2 (b) to Chapter 85, which says “other parts and accessories, “if suitable for use solely or principally with a particular kind of machine, instrument or apparatus, or with a number of machines, instruments or apparatus of the same heading” and then enumerates heading 9013, to say that Chapter 85 would cover the present case. The difficulty in accepting the revenue’s argument, in this case, is that it jumps over interpretive instructions. One, General Note (1) states that classification has to be in consonance with terms and headings in chapter notes. Two, Rule 3 (a) categorically enjoins that in regard to classification, the heading providing for a “more” specific description prevails over the general one. Three, Note 1 (m) – in Chapter 85 excludes the application of articles falling in Chapter
90. In this court’s opinion, this note, along with the General Note
3 (a) [of the General Rules of Interpretation] that headings that are specifically provided, should be preferred over the general ones, is decisive. Thus, the revenue’s contention that by virtue of Note 2 (b) to Chapter 85, the goods are to be classified based on their principal or sole use is insubstantial because of the clear mandate of Note 1 (m), which excludes Chapter 90 goods (which includes LCD panels). More importantly, Note 2 opens with the expression “subject to Note 1”. This subordinates the entire subject matter in Note 2; it is only where the article is a “part” which acts as an accessory, that the enumerated portions of Chapter 85 come into play. Such an interpretation is plainly untenable. [Paras 23, 25][273-D-E; 274-D-G]
Commissioner of Central Excise, Delhi-III v. UNI Products India Ltd. (2020) 19 SCC 742 : [2020] 13 SCR 295 – relied on.
1.3 When goods are excluded from a particular chapter, the “pull in” through a note has to be narrowly construed, as otherwise, the basis of exclusion would be defeated, and the earlier note (of exclusion) rendered redundant. Finally, Secure Meters is decisive on the question that LCDs are not articles provided “more specifically in other headings”, i.e., other than
90.13. Furthermore, the fact that LCDs could be used for purposes other than television sets or audio sets is also concluded because, in that decision, its use in meters was in issue. [Para 28][278-EF][278-E-F] Secure Meters v Commissioner of Customs (2015) 14 SCC 239 : [2015] 6 SCR 219; Collector of Central Excise v Delton Cables Ltd. & Anr. (2005) 12 SCC 284; Commissioner of Central Excise, Delhi-III vs. UNI Products India Ltd. (2020) 19 SCC 742 : [2020] 13 SCR 295; M/S Intel Design Systems (India) (P) Ltd. vs. Commissioner of Customs and Central Excise (2008) 3 SCC 258 : [2008] 2 SCR 686 – relied on.
G. S. Auto International Ltd. v. Collector of Central Excise 2003 (152) ELT 3 (SC) : [2003] 1 SCR 372 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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