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TMI Blog2023 (3) TMI 1338X X X X Extracts X X X X X X X X Extracts X X X X ..... Chapter 90, Entry 9013.8010, is sound and unexceptionable. - appeal dismissed. - S. RAVINDRA BHAT And DIPANKAR DATTA , JJ. For the Appellant : Ms. Alka Agrawal, Adv. Mr. Mukesh Kumar Maroria, AOR For the Respondent : Mr. S. S. Shroff, AOR Mr. V Lakshmikumaran, Adv. Ms. Charanya Lakshmikumaran, AOR Ms. Apeksha Mehta, Adv. Ms. Falguni Gupta, Adv. Ms. Neha Choudhary, Adv. JUDGMENT S. RAVINDRA BHAT, J. 1. These appeals, by the revenue, challenge two orders by the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT hereafter). 2. In the first appeal CA 5622/2009 , the assessee is M/s Videocon International (hereafter Videocon ). CESTAT, by its impugned order Dated 06.01.2009 in Order No. A/46/09/CSTB/C-II in the first appeal, allowed Videocon s appeal and held that the LCD panels imported by it are classifiable in Chapter Heading ( CH ) 9013.8010 [of the First Schedule to the Customs Tariff Act, 1975 (hereafter CTA )], as Liquid Crystal Devices- as opposed to the revenue s stand, that they are classifiable as 85.29 parts of goods falling under heading 85.28 [television sets falling in heading 85.28]. Videocon manufactures TV sets; the LCD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In the Harman appeal too, the assessee claimed that the imported items i.e., LCD panels [declared before the customs authorities as Liquid Crystal Devices-TFT-LCD 4.8 in ] for car audio assemblies, were properly classifiable in CH 9013.8010. Its contention was rejected by the revenue authorities, who classified it as Sound Recording or Reproducing Apparatus in CH 8519, and fell in CH 8522, item 8522.9000. CH 8522 reads as follows: 8522 Parts and accessories suitable for use solely or principally with the apparatus of headings 8519 or 8521 The litigation history in Harman s case followed a trajectory similar to Videocon s; ultimately, by the impugned order, CESTAT upheld its contention that the goods, meant for use in car audio systems, were classifiable in CH 9013.8010. Contention of parties 7. Ms. Nisha Bagchi, learned counsel appearing for the revenue, argued that the findings of the CESTAT are erroneous. She argued that the literature and other documents reveal that the LCD panels have specific model numbers. She pointed to the fact that the websites of the manufacturers of the imported articles are meant for use in LCD TVs. It was undeniable that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principally with a particular kind of machine, instrument or apparatus or with a number of machines, are to be classified with that machine, instrument or apparatus of that kind. In view of this note, LCDs for computer monitor are classifiable as part of computer monitor, and the various general application and special application monitors will alone be classifiable under Chapter Heading 90.13. The example given for such LCD panels were panel for video games, medical monitoring and industrial test and control, etc., which are not part of any particular equipment or machine but can be used in an assortment of machines. It was submitted that the assessee's plea about classification of different parts in various Chapter Headings other than Chapter 84 and 85, is irrelevant as the various notes/explanatory notes of all sections, chapters, and headings are unique to the respective sections or chapters or headings and cannot be generalized or interchanged or applied to with other sections, chapters or headings, unless specified in the tariff/explanatory notes or by any other legislation. The absence of explanatory note stating the parts of LCD TVs will not be classifiable under Chapt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned Senior counsel (appearing in the Videocon appeal), submitted that the view taken by CESTAT is correct. Goods are admittedly liquid crystal device; they are specifically covered by the entry heading 90.13 as it is not described more specifically in any other heading. The entry referred to by the revenue i.e., Chapter Heading 8529 relates to parts suitable for use solely or principally with the parts of heading nos.85.25 to 85.28, which inter alia includes LCD TV, cannot be considered as a specific heading. 15. It was argued that Section Note 1(m) to Section XVI clearly excludes articles of Chapter 90. Therefore, first, it has to be specifically held that the LCD panels are not covered by Chapter 90. The revenue does not deny that LCD panels are covered by Chapter Heading 90.13. This heading, according to the revenue, covers only LCD panels meant for general use and are interchangeable and not what are principally meant for use in TVs. It is argued that tariff entry 90.13 refers to LCDs which do not constitute articles provided for more specifically in other headings. The entry relied on by the revenue is 8529, which deals with parts suitable for use solely or principally wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s belong, i.e., Section XVI. Section Note 2(a) and 2(b) in Section XVI are different from Section Notes of Section XVII. According to Section Note 2(a) of Section XVI the parts which are goods included in any of the headings of Chapter 84 or 85 are, in all cases, to be classified in their respective headings, and it is only when the parts are not classifiable as per Section Note 2(a) that Section Note 2(b) is attracted. Therefore, even though a part is suitable for use or solely with a particular kind of machine finds mention under any headings in Chapter 84 or 85, it will then get classified under that heading and not as a part of apparatus or a machine. 18. Learned senior counsel relied on the decision of this court in Secure Meters (supra) and urged that the distinction sought to be made by the revenue, with this case, is on untenable grounds. It was argued that though the competing entries were in Heading 90, nevertheless, the article was LC Displays, but used in meters. This clearly undermined the revenue s argument that LCD sets were meant principally for TVs. They have multiple uses; if the revenue is correct, each such use would then be a principal use. In that event, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the LCD panels imported by the assessee were meant to act as voltage stabilizers. The provisions 21. First, it would be necessary to refer to the relevant norms of interpretation under First Schedule of the CTA, i.e. The General Rules of Interpretation of this Schedule . Rules 1, 2 and 3 are relevant and are extracted below: THE FIRST SCHEDULE IMPORT TARIFF (See Section 2) GENERAL RULES FOR THE INTERPRETATION OF THIS SCHEDULE 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. 2. (a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not being parts of the articles of heading 8484, 8544, 8545, 8546 or 8547) are to be classified according to the following rules: (a) Parts which are goods included in any of the headings of Chapter 84 or 85 (other than headings 8409, 8431, 8448, 8466, 8473, 8485, 8503, 8522, 8529, 8538, and 8548) are in all cases to be classified in their respective headings; (b) other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 8479 or 8543) are to be classified with the machines of that kind or in heading 8409, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate. However, parts which are equally suitable for use principally with the goods of headings 8517 and 8525 to 8528 are to be classified in heading 8517 (c) all other parts are to be classified in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate or, failing that in heading 8485 or 8548 Chapter Heading 90, which falls in Section XVII, reads as follows: CHAPTER 90 Optical, Photographic, Cinematographic, Measuring, Checking, Precision, Medical or Surgical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCC 51 where the Court held that the Rules for the Interpretation of the Schedule to the CET Act are framed pursuant to the powers under Section 2 of that Act. The court observed: The Rules for the Interpretation of the Schedule to the Central Excise Tariff Act, 1985 have been framed pursuant to the powers under Section 2 of that Act. According to Rule 1 titles of sections and chapters in the Schedule are provided for ease of reference only. But for legal purposes, classification shall be determined according to the terms of the headings and any relevant section or chapter notes . If neither the heading nor the notes suffice to clarify the scope of a heading, then it must be construed according to the other following provisions contained in the Rules. Rule 1 gives primacy to the section and chapter notes along with terms of the headings. They should be first applied. If no clear picture emerges then only can one resort to the subsequent rules. The appellants have relied upon Rule 3. Rule 3 must be understood only in the context of sub-rule (b) of Rule 2 which says inter alia that the classification of goods consisting of more than one material or substance shall be accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng with interpretation of the Rules specifically exclude tufted textile carpets, identifiable for use in motor cars from 87.08 and place them under heading 57.03. Revenue's argument is that the Explanatory Notes have persuasive value only. But the level or quality of such persuasive value is very strong, as observed in the judgments of this Court to which we have already referred. Moreover, the Commissioner himself has referred to the Explanatory Notes in the orderin- original while dealing with the Respondent's stand. Thus, we see no reason as to why we should make a departure from the general trend of taking assistance of these Explanatory Notes to resolve entry related dispute. Now, on referring to these Explanatory Notes, we find that one category of carpets [Textile carpets (Chapter 57)] has been excluded specifically from parts and accessories. In our opinion, the subject-item does not satisfy the third condition specified in Section XVII of the Explanatory Notes in relation to III-Parts and Accessories . A plain reading of Clause (C) thereof, which we have quoted above, excludes textile carpets (Chapter 57). 26. The main argument of the Appellant is that b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) would only apply once it was found that the items in question were not specifically classifiable under their respective headings. As has been clearly said by the Collector (Appeals) from the sequence of the paragraphs given under Section Note 2 it is clear that the question of switching over to Section Note 2(b) can arise only after ensuring that the parts are not covered by Section Note 2(b) [sic Section Note 2(a).] which begins with the expression other parts meaning thereby that the parts which are not covered by Section Note 2(a) would be considered for coverage by Section Note 2(b). One cannot therefore directly jump over to Section Note 2(b) without exhausting the possibility of Section Note 2(a). 27. M/S Intel Design Systems (India) (P) Ltd. vs. Commissioner of Customs and Central Excise [2008] 2 S.C.R. 686: 2008 (3) SCC 258 is a decision, where the goods were described as parts of tanks and other armoured and motorized fighting vehicles, under Heading 8710 was held to fall within Chapter 85. The reasoning of this court, in that case, was as below: 4. As per Rule 1 on Interpretive Rules, classification of excisable goods is to be determined according ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally in other headings , i.e., other than 90.13. Furthermore, the fact that LCDs could be used for purposes other than television sets or audio sets is also concluded because, in that decision, its use in meters was in issue. This court held, pertinently, as follows : 17. Keeping in mind the aforesaid nature of product in question, we revert to the tariff entries. It cannot be disputed that LCDs are specifically provided in Tariff Item 9013. The only condition is that such LCDs should not constitute articles provided more specifically in other headings. In the present case, it is also not in dispute that LCDs imported by the appellant did not constitute any such article which is more specifically provided in other headings. On the contrary, the Revenue wants to include in the same chapter i.e. Chapter 90, though 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 elect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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