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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 ..... and, 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 panels are used by it, along with other items, such as printed boards, decoders, etc. 3. In the second appeal, CA 8026/2022 the revenue is aggrieved by order of the CESTAT Dated 09.11.2021 in Order No. A/87132/2021 in Customs Appeal No. 85003/2019 whereby import of LCD panels by the assessee i.e., M/S Harman International (India) Pvt. Ltd., (hereafter "Harman") was held to be classifiable under CH 9013.8010, rejecting the revenue's contention that they were classifiable as "Car Audio or Video Players" under either CTH 8519 or 8555. The LCD panels, in this case, were used as part of audio systems in automobiles. Brief facts 4. In both appeals, the assesses had imported LCD panels/display boards. In Videocon appeal, Videocon claimed that the imported goods fell in the relevant entry in CH 9013.8010. That entry reads as follows: "9013.8010 Liquid crystal devices (LCD)" The Chapter Heading read as follows: "9013 Liquid crystal Devices not constituting articles provided for more specifically in other he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the websites of the manufacturers of the imported articles are meant for use in LCD TVs. It was undeniable that the imported items were used in the manufacture of LCD TVs. Some, however, were used in manufacturing monitors, though they were not sold in the market. Therefore, the goods were LCD devices principally used in the manufacture of LCD TVs. LCD TV is an apparatus covered specifically under heading 85.25 & 85.28. 8. Counsel argued that heading 90.13 covers only those articles which are not provided for more specifically in other headings. In the present case, LCDs are specifically mentioned as parts of LCD TVs in heading 85.29. Therefore, they cannot be classified under heading 90.13. Reliance was placed on G.S. Auto International Ltd v Collector of Central Excise [2003] 1 S.C.R. 372: 2003 (152) ELT 3 (SC). It was emphasized that in G.S. Auto (supra), this court held that the true test for classification is the test of commercial identity and not functional test. Therefore, the correct question is how the articles are referred to in the market by those who deal with them, whether for purchase, sale or otherwise. The commercial parlance test, therefore, is determinative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er legislation. The absence of explanatory note stating the parts of LCD TVs will not be classifiable under Chapter Heading 85.29 if it is specifically specified under any other chapter heading (in this case, Chapter Heading 90.13), the assessee cannot rely on notes relating to other sections and chapters. 11. Lastly, Ms. Bagchi, anticipating reliance- by the assessee upon the judgment of this court, in Secure Meters v Commissioner of Customs [2015] 6 S.C.R. 219: 2015 (14) SCC 239 - submitted that the ratio of that case cannot be applied to the facts of this case because, firstly, the competing entries (in that case) fell within the same chapter, and secondly, that the factual basis in the present case, is stronger, because the websites of the manufacturers, clearly reveal that the imported goods were meant principally to be used in television sets. Section note 2 (b) applies in this case because the item in question was not specifically classifiable under its headings, because it is principally meant for use in television sets. 12. In the second appeal CA 8026/2022 concerning import by Harman International, the revenue argues that the items are LCD attached with inseparable PCBs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elied on by the revenue is 8529, which deals with parts suitable for use "solely or principally with the apparatus" of Heading 8525 to 8528. This entry is not confined to LCD panels meant for use in TVs only but to several other parts which go into the making of LCD TV like TV tuners, PCB boards, switches, connectors, speakers, etc., all of which will be classifiable under heading 8529. The heading referring to parts cannot be treated as heading covering the LCDs more specifically. 16. It is submitted that the description under heading 8529 is general and not specific, whereas the description under heading 90.13 is more specific. LCDs consist of items like LCD TV, (referred to under Chapter Heading 8528.7218 and 8528.7510) and indicator panels incorporating LCDs (referred to in entry 8531.2000) and other items which are specifically provided for. The Supreme Court decision in G.S. Auto (supra) is in the context of Section XVII where Note 2 and 3 provides: "2 The expression parts' and 'parts and accessories' do not apply to the following articles, whether or not they are identifiable as for the goods this section: (a) ******** (b) Parts of general use, as define ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue is correct, each such use would then be a "principal" use. In that event, the Chapter Heading would be rendered redundant. 19. Mr. V. Lakshmikumaran, learned counsel appearing in Harman, adopted the submissions made by Mr. Vivek Singh. He additionally relied on Rule 1 of the General Rules of Interpretation, which provides that: "Classification of goods in this Schedule shall be governed by the following principles: 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." It was argued that in terms of Rule 1, since classification of a 'Liquid Crystal Device' is specifically provided for by nomenclature under tariff item 9013 8010, the LCDs imported by the assessee were correctly classifiable under tariff item 9013 8010, in terms of the nomenclature of the item. 20. It was argued that Tariff Item 9013 8010 prescribes a more specific description and is to be preferred over any other heading, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all also be taken to include a reference to that article complete or finished (or falling to be classified as complete or, finished by virtue of this rule), presented unassembled or disassembled. (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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts and Apparatus; Parts and Accessories Thereof" Note 2 to Chapter 90 reads as follows: 2. Subject to Note 1 above, 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 4[8487], 8548 or 9033) 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 9010, 9013 or 9031) 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 9033." Analysis and Conclusions 22. On a reading of the General Interpretive rules and the notes to the concerned chapters (85 and 90, in the present case), it is evident that: (a) classification has to be in accord with "the terms of the headings and any relati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when goods are prima facie, classifiable under two or more headings, classification shall be effected according to sub-rules (a), (b) and (c) of Rule 3 and in that order." 25. The difficulty in accepting the revenue's argument, in this case, is that it jumps over interpretive instructions. One, General Note (1) states that classification has to be in consonance with terms and headings in chapter notes. Two, Rule 3 (a) categorically enjoins that in regard to classification, the heading providing for a "more" specific description prevails over the general one. Three, Note 1 (m) - in Chapter 85 excludes the application of articles falling in Chapter 90. In this court's opinion, this note, along with the General Note 3 (a) [of the General Rules of Interpretation] that headings that are specifically provided, should be preferred over the general ones, is decisive. Thus, the revenue's contention that by virtue of Note 2 (b) to Chapter 85, the goods are to be classified based on their principal or sole use is insubstantial because of the clear mandate of Note 1 (m), which excludes Chapter 90 goods (which includes LCD panels). More importantly, Note 2 opens with the expression "subject t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d also in cars, they should be identified as parts and accessories. But if we go by that logic, textile carpets could not have been excluded from Parts and Accessories. We have referred to such exclusion in the preceding paragraph. It has also been urged on behalf of the revenue that these items are not commonly identified as carpets but are different products. The Tribunal on detailed analysis on various entries, Rules and Notes have found they fit the description of goods under chapter heading 570390.90. We accept this finding of the Tribunal. Once the subject goods are found to come within the ambit of that sub-heading, for the sole reason that they are exclusively made for cars and not for "home use" (in broad terms), those goods cannot be transplanted to the residual entry against the heading 8708. As we find the subject-goods come under the chapter-heading 570390.90, and the other entry under the same Chapter forming the subject of dispute in the second order of the Commissioner, in our opinion, there is no necessity to import the "common parlance" test or any other similar device of construction for identifying the position of these goods against the relevant tariff entries. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section XVII (which governs Chapter 87) excludes the goods viz. electrical machinery and equipment (Chapter 85). The goods in question i.e. contractors, switches, control box etc. are the goods used for switching, protecting electrical circuits or for making connections to or in electric circuit. These parts/components are specifically covered under CSH 8536.90. The CBEC Circular relied upon by the assessee is not relevant. 5. As per the Explanatory Notes to HSN the parts falling under Chapter Heading 8710 would be covered under the said chapter, provided they fulfill both the conditions i.e. they must be identifiable as being suitable for use solely or principally for such vehicles and that they must not be excluded by the provisions of Notes to Section XVII. The identifiable parts under the said heading bodies of armoured vehicles and parts thereof, cover special road wheels for armoured cars, propulsion wheels for tanks, tracts etc. As per this requirement, the goods should not only be identifiable to be armoured vehicles, but it should so not have been excluded by Notes to Section XVII. The Chapter note 2(f) excludes electrical machinery and equipment falling under Chapter 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te 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. 18. 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, electricity supply meter, it has to be classified with the said meter and, therefore, Chapter Entry 9028 would get attracted. However, this argument loses sight of the fact that Note 2(b) relates to "other parts and accessories", namely, it would apply to those parts and accessories for which Note 2(a) is inapplicable. Once we find that in the present case Note 2(a) squarely applies, the irresistible conclusion is that the goods will be classified in Tariff Item 9013, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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