2001 (3) TMI 540 - AT - Customs

Summary

Issues Involved:
Classification of Magnet Separator under Heading 8437.90 or 8505.90 of the Customs Tariff Act.

Detailed Analysis:
The main issue in this appeal was the classification of the Magnet Separator imported by M/s. Chillies Export House Ltd. The appellant argued that the Magnet Separator should be classified under Heading 8437.90 as it was used in their milling machine to remove foreign metal parts from vegetables. The appellant referred to the explanatory note to the Harmonized System Nomenclature (HSN) to support their classification argument.

On the other hand, the Department argued that parts of machines falling under Headings 84 and 85 should be classified in their respective headings as per Note 2(a) to Section XVI of the Customs Tariff Act. The Department contended that the exclusion mentioned in the explanatory note to HSN was not applicable in this case as the impugned goods were not presented with the machines for assessment purposes.

The Commissioner (Appeals) had considered the matter in detail and found that the impugned goods, although considered as parts of a milling machine, fell under Heading 85.05 specifically covering goods like permanent magnets. The Commissioner's findings explained that the impugned goods should be classified under sub-heading 8505.11 as they were permanent magnets made of metal, and not under sub-heading 8505.90. Despite the mistaken classification, the tariff rate of duty remained unaffected.

The Explanatory Notes in HSN under Heading 85.05 clarified that permanent magnets should be classified under this heading unless presented with the machines they are designed to form a part of. As the impugned permanent magnets were imported separately and not with the milling machine, they were correctly classified under Heading 85.05. The Commissioner (Appeals) upheld the original order, noting that the impugned goods were correctly classifiable under sub-heading 8505.11 and not under sub-heading 8505.90.

The Appellate Tribunal agreed with the Commissioner (Appeals) and upheld the classification of the impugned goods under sub-heading 8505.90. The Tribunal found no merit in the appellant's argument that the goods were used in the milling machine, emphasizing that the provisions of Note 2(a) for classification were applicable, and no reference to Note 2(b) could be made since the goods were not imported along with the machine. Consequently, the appeal was rejected.