1986 (10) TMI 203 - AT - Central Excise

Summary

Issues Involved:
1. Classification of 'Silicon Power Transistor Chips' under the Customs Tariff Act (CTA).
2. Entitlement to the benefit of Notification No. 172/77-Cus.

Detailed Analysis:

1. Classification of 'Silicon Power Transistor Chips' under the Customs Tariff Act (CTA):
The primary issue in these appeals is the classification of 'Silicon Power Transistor Chips' under the Customs Tariff Act (CTA). The goods were initially assessed under T.I. 85.18/27(1) of the CTA as 'Diods, Transistor and similar semi-conductor devices'. The appellants contended that these chips should be classified under Chapter 38.01/19 of the CTA as 'miscellaneous and chemical products'. They argued that the chips, when imported, had not acquired the character of a finished product known as a 'semi-conductor device' but were merely raw materials requiring further processing to acquire semi-conductivity.

The Tribunal examined the process involved in manufacturing these chips, including doping and diffusion, and concluded that the 'silicon chips' had acquired the essential characteristics of a 'semi-conductor device' after selective diffusion. The Tribunal upheld the classification under T.I. 85.18/27(1) of the CTA, stating that the chips had crossed the stage of primary raw material and had acquired a definite shape and size, thus fitting within the scope of 'semi-conductor devices'.

2. Entitlement to the benefit of Notification No. 172/77-Cus:
The appellants alternatively sought the benefit of Notification No. 172/77-Cus, which provides a concessional rate of duty for certain goods. The Collector of Customs (Appeals) had rejected this claim, stating that the exclusion clause in the notification applied to 'diods, transistors and similar semi-conductor devices', which included the imported chips.

The Tribunal disagreed with this interpretation, noting that the exclusion clause referred to finished products in the commercial sense, not semi-finished or unfinished articles classified under T.I. 85.18/27(1) with the aid of Interpretative Rule 2(a). The Tribunal emphasized that the imported 'diffused chips' were not finished 'semi-conductor devices' but raw materials or components requiring further processing. The Tribunal also noted that a similar view had been taken by the Collector of Customs (Appeals) in a previous unchallenged order, which provided the benefit of Notification No. 172/77-Cus to the same importers for identical goods.

The Tribunal concluded that the appellants were entitled to the benefit of Notification No. 172/77-Cus, as the imported 'diffused chips' did not fall within the exclusion clause of the notification. Consequently, the appeals were allowed with consequential relief to the appellants.