2009 (2) TMI 814 - AT - Customs

Classification of imported goods - TFT-LCD modules of sizes 20.1 , 26 and 31.5 - classified under Chapter Heading 9013.8010 or under Chapter Heading 8529.9090? - Held that - Held that - LCD panels will be classifiable under Chapter Heading 9013.8010 and not under Chapter Heading 8529.9090.

Issues Involved:
1. Classification of imported TFT-LCD modules.
2. Applicability of Chapter Heading 9013.8010 versus 8529.9090.
3. Interpretation of Section Notes and Chapter Notes.
4. Relevance of HSN Explanatory Notes.
5. Functional and commercial identity tests for classification.

Issue-Wise Detailed Analysis:

1. Classification of Imported TFT-LCD Modules:
The appellants, M/s. Videocon Industries Limited, imported TFT-LCD modules and claimed classification under Chapter Heading 9013.8010, which carries a NIL rate of basic customs duty. The goods were initially cleared provisionally under Chapter Heading 8529.9090 with a bank guarantee for 25% of the differential duty. A show cause notice was issued, and the Dy. Commissioner, after remand from Commissioner (A), classified the goods under Chapter Heading 8529.9090, finalizing the assessment and ordering recovery of the differential duty. This order was upheld by the Commissioner (A).

2. Applicability of Chapter Heading 9013.8010 versus 8529.9090:
The appellants argued that the imported LCD panels, having multiple uses in televisions and computer monitors, are specifically covered under Chapter Heading 9013.8010, which relates to Liquid Crystal Devices (LCD). They contended that parts of television (Chapter Heading 8529) cannot be considered a specific heading and that LCD panels do not constitute articles described more specifically in other headings. The LCD TFT modules lacked components like speakers, TV tuner mechanisms, PCB assembly, or sockets to receive and process television signals, thus not qualifying as parts of LCD TVs.

3. Interpretation of Section Notes and Chapter Notes:
The appellants referred to Section Note 2(a) and 2(b) for classifying parts, arguing that parts which are goods specified in other headings of Chapter 84 or 85 should be classified in those headings rather than in a heading covering parts. They cited various judicial precedents and Circulars to support their claim that LCD panels should be classified under Chapter Heading 9013.8010. The revenue, however, emphasized that the disputed goods are principally used in the manufacture of LCD TVs and should be classified under heading 8529 as parts of LCD TVs.

4. Relevance of HSN Explanatory Notes:
The appellants highlighted the HSN Explanatory Notes, which exclude goods specified in other chapters from the purview of Chapter Heading 85.29. They argued that LCD panels, being specifically covered under Chapter Heading 90.13, cannot be classified under Chapter Heading 85 due to this exclusion clause. The revenue countered that the HSN Explanatory Notes and end-use considerations are external aids and should only be applied when statutory rules for classification are insufficient.

5. Functional and Commercial Identity Tests for Classification:
The revenue submitted that the LCD panels have specific part numbers and are primarily used in LCD TVs, as evidenced by the manufacturer's literature and website. They argued that the principal use and commercial identity of the goods should determine their classification. The appellants contended that LCD panels are general application devices and should remain classified under Chapter Heading 90.13. They cited US Customs rulings and judicial precedents to support their claim.

Judgment:
The Tribunal found that the LCD panels are covered by Chapter Heading 90.13, which refers to LCDs not constituting articles provided for more specifically in other headings. The competing entry, Chapter Heading 8529, relates to parts suitable for use solely or principally with the apparatus of headings 8525 to 8528, including LCD TVs. However, this entry is general and not specific to LCD panels. The Tribunal held that LCD panels are more specifically described under Chapter Heading 90.13 and cannot be classified as parts under Chapter Heading 8529. The order of the Commissioner (Appeals) was set aside, and the appeal was allowed.

Conclusion:
The Tribunal concluded that the imported LCD panels should be classified under Chapter Heading 9013.8010, not under Chapter Heading 8529.9090, based on the specific description of LCDs in the tariff and the exclusion of parts covered by other chapters. The appeal was allowed, and the order of the Commissioner (Appeals) was set aside.

← Previous Next →