2007 (3) TMI 121 - AT - Customs

Classification - Department contended the PTC Thermistors classified under Heading 85.15 not under Heading 85.33 and accordingly differential demand were made - Held that the contention was correct and demand sustained

Summary

Issues:
1. Classification of imported goods under Heading 85.33 or SH 8516.90
2. Interpretation of Customs Tariff Schedule and Explanatory Notes
3. Applicability of Section Notes 2(a) and 2(b) of Section XVI
4. Demand of differential duty based on re-classification
5. Precedent regarding the period for demanding duty under revised classification

Detailed Analysis:
1. The appellants imported goods declared as "PTC Thermistors" classified under Heading 85.33 but faced show-cause notices proposing classification under SH 8516.90 as parts of heaters for insecticides, leading to a demand for differential duty. The original authority and the first appellate authority upheld this re-classification, prompting the appeal.

2. The goods were initially assessed under SH 8533.39 but the assessee argued for classification under SH 8533.40, citing the ITC(HS) Classification. The dispute centered on whether the goods should be classified under SH 8516.90 as part of electric insecticide diffusers, with authorities ultimately ruling against the assessee's objection based on Note 2(a) of Section XVI of the Customs Tariff Schedule.

3. The goods were described in the manufacturer's catalogue as "Thermistors for insecticide electric diffusers," indicating their intended use as parts of heaters for diffusing insecticides. The Explanatory Notes to HSN Heading 85.16 clarified that such items fall under Heading 85.16, with the lower authorities correctly applying Section Note 2(b) to classify the goods under SH 8516.90.

4. The appellant invoked a Supreme Court judgment to argue against the demand for duty prior to the re-classification under SH 8516.90, while the department relied on a different Supreme Court decision allowing duty collection for a period before re-classification. The Tribunal followed the view of the Larger Bench of the Supreme Court, upholding the demand for differential duty.

5. Considering the above analysis, the Tribunal sustained the impugned order, dismissing the appeal and confirming the classification of the goods under SH 8516.90. The decision was pronounced in open court on 29-3-2007.