2003 (12) TMI 342 - AT - Central Excise

Summary

Issues: Classification of populated printed circuit board

Classification of Goods:
The appeal before the Appellate Tribunal CESTAT, Mumbai revolves around the classification of populated printed circuit boards manufactured by the appellant. The appellant claimed the boards to be classifiable as parts of machinery under Heading 8431, while the department proposed classifying them under Heading 8542.00, covering integrated circuits and microassemblies. The Asstt. Commissioner initially accepted the appellant's contention, but the Commissioner (Appeals) disagreed, classifying the boards as microassemblies under Heading 8542.00.

Analysis:
The Tribunal examined Heading 8542, which pertains to electrical integrated circuits and microassemblies, as per the Explanatory Notes in the Harmonised System of Nomenclature. Microassemblies are described as combinations of discrete components, excluding integrated circuits, and are typically in module form. The Tribunal noted that microassemblies are distinct from printed circuit boards, which do not meet the specified criteria and, therefore, cannot be considered microassemblies. The Commissioner (Appeals) did not provide adequate reasoning for classifying the boards as microassemblies, leading to the exclusion of populated printed circuit boards from classification under Heading 85.42.

Interpretation of Notes:
The Tribunal emphasized that populated printed circuit boards are excluded from classification under Heading 85.42, a principle mirrored in the notes to Heading 85.34 for printed circuits. The notes clarify that circuits with mounted mechanical or electrical components are not considered printed circuits under Heading 85.34 but are classified as parts of the machine they are designed for, in line with Note 2 to Section XVI or Note 2 to Chapter 90. Therefore, the populated printed circuit boards, as indicated in the classification list, containing discrete electrical or mechanical components, qualify for classification as parts, as per the Asstt. Commissioner's decision.

Decision:
Conclusively, the Tribunal allowed the appeal, setting aside the Commissioner (Appeals) order. The judgment highlights the importance of correctly interpreting the classification criteria for electronic components and the significance of detailed reasoning in making classification determinations under the relevant headings.