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TMI Blog2015 (5) TMI 241X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment at Nil rate insofar as basic duty is concerned. However, the case of the respondent/custom authorities is that on verification it was found that the goods were not simple liquid crystal. On the contrary, these were LCD Modules and Elastomeric LCD Displays and were part of Energy Meter. The relevant invoices also described the goods as "electronic part for energy meter". The drawing and literature which were provided did not specify the purpose. 2) The Deputy Commissioner, Customs (Adjudicating Authority), thus, passed orders dated 31.08.2001 holding that LCDs were classifiable under Chapter Heading 9028.90 and not under 9013.80 as claimed by the appellant. For classifying the goods under the aforesaid category, recourse to Rule 3(c) of the General Rules for the Interpretation of the First Schedule - Import Tariff was taken by the Adjudicating Authority. The Deputy Commissioner observed that even if he considered the goods to be devices, then only those LCD devices/displays which do not constitute articles provided for more specifically in other heading would cover in Chapter Heading 9013 and, accordingly, he took the view that the goods are specific part of the electri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove, parts and accessories for machines, apparatus, instruments or articles of this Chapter are to be classified according to the following rules: (a) Parts and accessories which are goods included in any of the headings of this Chapter or of Chapter 84, 85 or 91 (other than heading No.84, 85, 85.48 or 90.33) are in all cases to be classified in their respective headings; (b) other parts and accessories, if suitable for use solely or principally with a particular kind of machine, instrument or apparatus, or with a number of machines, instruments or apparatus of the same heading (including a machine, instrument or apparatus of heading No. 90.10, 90.13 or 90.31) are to be classified with the machines, instruments or apparatus of that kind; (c) all other parts and accessories are to be classified in heading No. 90.33." 7) It is not in dispute that the goods in question which are imported by the appellant are LCDs. It is also not in dispute that these devices are used in electricity supply meters. Since the LCDs are used for electronic supply meters by the appellant, the Revenue has taken the view that it would fall in tariff item No. 9028.90 as that entry specifically includes, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule) presented unassembled or dis-assembled. (b) Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles of rule 3. 3. When by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: (a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (e.g. CTH 9029.90 in present case). And when any good is classifiable in two or more headings, then as per Rule 3(c) of General Rules for Interpretation, the heading which occurs last in numeric order is to be preferred." 12) We have given due consideration to the aforesaid submissions made by learned counsel for the parties. 13) We may point out at the outset that Rule 3 of the General Rules, which is sought to be invoked by the Department, would be seen and examined if the classification cannot be determined according to the terms of the headings and relevant Section and Chapter Notes thereof. It is clearly provided in Rule 1 of the General Rules itself, which reads as under: "Classification of goods in this Schedule shall be governed by the following principles: 1. The titles of Sections, Chapters and sub-Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions: xx xx xx" It is manifest from the reading of this Rule that we will have to first unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable. (c) When goods cannot be classified by reference to (a) or (b), they shall be classified under the heading which occurs last in the numerical order among those which equally merit consideration." Before we advert to this core issue, let us understand what constitutes LCDs and its functions, with adequate clarity. 14) In Bloomsbury Dictionary of 'Science for Everyone', LCD and LED (light emitting diode) are described in the following manner: "LCD AND LED The two principal methods of forming number sand letters on instruments such as calculators and digital watches. A basic pattern of seven bars is used to form the digits 0 to 9 and several letters. To form other letters and symbols, more than seven bars are required. In the LED (light-emitting diode), the bars are made of a substance that permits an electric current to flow through in one direction only. A substance used in this way is called a diode. As the current flows, the diode gives off red, blue, yellow, or other coloured light, depending on the compound of which it is mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh under Entry 9028.90.10 as "parts and accessories". The only reason for including the goods under Chapter Heading 9028 is that the LCDs were to be used in the electricity supply meters. However, Entry 9028 does not pertain to LCDs but gas, liquid, etc. and includes electricity supply meters as well. Merely because these LCDs are to be used as parts in the said electricity supply meters, can it be said that they are to be included in Entry 9028? Here, Note 2 of this Chapter Notes becomes important since LCDs are used in the electricity supply meters only as parts thereof. Note 2(a) stipulates that parts and accessories which are goods included in the heading of the said Chapter, i.e. Chapter 90, are to be classified in their respective headings. Going by the plain reading of Note 2(a) it is clear that LCDs, which are goods and are used as parts in the final product mentioned in Chapter 90, namely, electricity supply meters, are to be classified in its respective heading. Respective heading, which is specifically provided, is 9013. 16) It was sought to be argued by Ms. Kiran Suri that as per Note 2(b), when these LCDs are used solely for particular instrument, namely, electricit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... table for use solely or principally with the machines, appliances, instruments or apparatus of this Chapter are classified with those machines, appliances, etc. This general rule does not, however, apply to: (1) Parts or accessories which in themselves constitute articles falling in any particular heading of this Chapter or of Chapter 84, 85 or 91 (other than the residual heading 84, 85, 85.48 heading 84.14; transformers, electro-magnets, capacitors, resistors, relays, lamps or valves, etc., remain classified in Chapter 85; the optical elements of heading 90.01 or 90.02 remain in the headings cited regardless of the instruments or apparatus to which they are to be fitted; a clock or watch movement is always classified in Chapter 91; a photographic camera falls in heading 90.06 even if it is of a kind designed for use with another instrument (microscope, stroboscope, etc.) (2) Parts or accessories suitable for use with several categories of machines, appliances, instruments or apparatus falling in different headings of this Chapter are classified in heading 90.33, unless they are in themselves complete instruments, etc., specified in another heading (see paragraph (1) above)." 1 ..... 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