2003 (1) TMI 700 - SC - Central Excise

Summary

Issues Involved:
1. Classification of goods manufactured by the assessee.
2. Application of functional test vs. commercial identity test for classification.
3. Classification under pre-1986 and post-1986 Central Excise Tariff.

Summary:

Issue 1: Classification of Goods Manufactured by the Assessee
The appeals concern the classification of thirty-two items manufactured by the assessee. The Tribunal initially classified these items under Tariff Item 52 of the First Schedule to the Central Excise Act, 1944, based on the functional test, identifying them as component parts of motor vehicles with a fastening function. However, for a different period, the Tribunal later classified the same goods under Tariff Item 68, recognizing them as specialized parts for automobiles, not general fasteners.

Issue 2: Application of Functional Test vs. Commercial Identity Test for Classification
The Tribunal's initial classification under Tariff Item 52 was based on the functional test. However, the Supreme Court emphasized the commercial identity test, as established in Purewal Associates Limited v. Collector of Central Excise, which determines classification based on how goods are referred to in the market. The Court held that the goods in question, being specialized parts for automobiles, should not be classified as general nuts and bolts under Tariff Item 52 but under Tariff Item 68.

Issue 3: Classification under Pre-1986 and Post-1986 Central Excise Tariff
For the post-1986 period, the classification was contested between Chapter Heading 73.18 and Chapter Heading 87.08 of the Central Excise Tariff Act, 1985. The Tribunal, applying the commercial identity test, classified the goods under Chapter Heading 87.08, suitable for use primarily with motor vehicles, rather than under Chapter Heading 73.18, which pertains to general screws, bolts, and nuts.

Conclusion:
The Supreme Court set aside the Tribunal's initial classification under Tariff Item 52 and upheld the classification under Tariff Item 68 for the pre-1986 period. For the post-1986 period, the Court confirmed the classification under Chapter Heading 87.08. The appeals filed by the assessee were allowed, and those by the Revenue were dismissed with costs.