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Issues: Classification of imported goods under Chapter 82 or Heading 98.06, Correct rate of duty applicable, Applicability of Chapter Note 1 to Chapter 98, Interpretation of Customs Notification 257/88, Classification of goods as parts of machinery or tools.
In this case, the Collector (Appeals) held that "Tungsten Carbide Drills" should be classified as tools under Chapter 82, not under Heading 98.06 as parts of machinery, rejecting the lower authority's duty structure. The respondents imported bevel gear cutting tools assessed under Heading 98.06, claiming they were tools under Chapter sub-heading 8207.90, not parts of machines. The Collector (Appeals) allowed the appeal based on this classification, setting aside the lower authority's decision. The learned SDR argued that Chapter Note 1 to Chapter 98 mandates that parts of machinery from specific chapters fall under Heading 98.06, citing Customs Notification 257/88 to exclude Chapter 82 articles. The SDR contended that the imported bevel gear cutting tools, imported before the notification, should be classified under Heading 98.06 with a different duty rate. Referring to past Tribunal decisions, the SDR emphasized that tools deemed parts of machinery are classified under Heading 98.06, not as independent tools. The Tribunal analyzed the nature of the imported goods, determining that the bevel gear cutting tools were parts of machinery, not standalone tools. Relying on precedent, the Tribunal concluded that the blades were essential components of machinery, falling under Chapter Heading 98.06 for classification and duty assessment. The Tribunal applied the decision in a similar case involving chipper knives to classify the blades accordingly. Based on the above analysis, the Tribunal allowed the appeal, setting aside the Collector (Appeals) order and classifying the bevel gear cutting tools (blades) under Chapter Heading 98.06. The judgment highlights the importance of distinguishing between tools and parts of machinery for correct classification and duty assessment under the Customs Tariff.
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