1994 (9) TMI 68 - SC - Customs

Whether the goods manufactured by the appellant fall in clause (a) as if it can be classified with reference to (a) then clauses (b) and (c) would not apply? Held that - On the finding recorded by the Assistant Collector, the goods produced by the appellant which are component part of the flow meter specifically fall in Heading No. 90.24. They may also fall in Heading No.90.26 but that being more general entry preference should have been given to the entry 90.24 as the goods satisfy most specific description of being flow meter. The Tribunal or the appellate authority without adverting to it applied clause (c) and levied duty under 90.26 as it was a latter heading. But clause (c) would apply only if clauses (a) and (b) do not apply. Since the goods manufactured by the appellant satisfied the specific description of Tariff Heading 90.24 being a flow meter, the Tribunal committed an error of law in classifying it under Tariff Heading 90.26 as it was a latter item under the classification list. Appeal allowed.

Summary

Issues:
Applicability of rules of interpretation appended to the Schedule of Customs Act for classification of goods under Tariff Heading 90.24 or 90.26.

Detailed Analysis:

1. Classification under Tariff Heading 90.24 or 90.26:
The appellant, a manufacturer of volumetric displacement type flow meter, imported components and accessories for use in the end-product. The dispute arose regarding the correct classification of these imported goods under Tariff Heading 90.24 or 90.26. The Assistant Collector classified the goods under Tariff Heading 90.26 based on the interpretation of the Customs Act, considering the flow meter's capability to measure volume. The Tribunal upheld this decision without considering the specific nature of the flow meter. However, the judgment highlighted that flow meters are specifically covered in Tariff Heading 90.24, and the accessories imported by the appellant were solely used for the flow meter's manufacture. Therefore, the goods should be classified under Tariff Heading 90.24, as they satisfied the specific description of a flow meter.

2. Applicability of Interpretory Rules:
The judgment delves into the application of the Interpretory Rules appended to the Customs Schedule, specifically Rule 3, which dictates the classification of goods consisting of multiple materials under different headings. The rule emphasizes that the heading providing the most specific description should be preferred over more general headings. In this case, the goods manufactured by the appellant were specifically described and used as flow meters, falling under Heading No. 90.24. Despite the general nature of Heading 90.26, the Tribunal erroneously classified the goods under it. The judgment clarifies that the Tribunal's decision to apply clause (c) for classification was incorrect, as the goods satisfied the specific description of Tariff Heading 90.24, making the classification under Heading 90.26 erroneous.

3. Final Decision:
The appeal was successful, and it was held that the items imported by the appellant, which were component parts of the flow meter, should be classified under Tariff Heading 90.24 for the purpose of duty payment. The judgment emphasized the importance of specific classification based on the nature and use of the goods, ensuring accurate application of the Customs Act and related rules for proper tariff classification.