2008 (3) TMI 22 - SC - Central Excise

Classification of goods - Central excise - manufacturing of Rail Assembly Frost Seat Adjuster and Assembly Slider Seat is classifiable as accessories to the motor vehicle under 8708.00. It can not be classified as parts of seats, as claimed by the revenue.

Summary

Issues:
Classification of products under Central Excise Tariff Act, 1985 - Parts and accessories of motor vehicles vs. parts of seats under different chapter headings.

Detailed Analysis:

Issue 1: Classification of Products
The appeal was filed by the Revenue against the judgment of the Tribunal, which allowed the appeal of the assessee based on misclassification of products. The assessee had classified its products under chapter heading 8708.00 as "parts and accessories of motor vehicles," attracting a 15% rate of duty. However, the Revenue contended that the products should be classified under chapter heading 9401.00, attracting a higher rate of duty at 18%. The Tribunal set aside the lower authorities' orders, concluding that the products were adjuncts to seats for comfort and convenience, not essential parts of seats, and therefore classified under chapter heading 8708.00.

Issue 2: Interpretation of Chapter Headings
The Court examined the definitions of chapter headings 8708.00 and 9401.00 under the Central Excise Act. Chapter 8708.00 covers parts and accessories of motor vehicles, while chapter 9401.00 pertains to seats and parts thereof. The assessee supplied products directly to a car manufacturer, not a seat manufacturer, and the goods were specifically numbered by the car manufacturer. Merely supplying to seat manufacturers did not dictate classification under chapter 9401.00.

Issue 3: Legal Precedents
Legal precedents were cited to support the classification decision. The Court referred to the Supreme Motors v. State of Karnataka case, emphasizing that accessories must be essential for the effective operation of the vehicle to fall under a specific entry. The distinction between 'accessories' and 'parts' was crucial, with 'parts' being essential components of the whole. The products in question were deemed accessories for motor vehicles, enhancing comfort and convenience but not integral parts of seats.

Conclusion
The Court agreed with the Tribunal's classification, stating that the products manufactured by the assessee were accessories to motor vehicles, not essential parts of seats. The items were adjuncts for adjusting seats, enhancing convenience for passengers and drivers. Therefore, the products were classified under chapter heading 8708.00 as claimed by the assessee. The appeal filed by the Revenue was dismissed, with no order as to costs, based on the detailed analysis and interpretation of relevant legal provisions and precedents.