Part and accessories if mentioned as goods in specific tariff heading, is to be classified in their respective heading only-Supreme Court
M/s Secure Meters Ltd. vs. Commissioner of Customs (Supreme Court), Civil Appeal No.-7526 of 2004, Date of Pronouncement- May 5,2015
Brief of the case:
- The Hon’ble Supreme court in the case of Secure Meters held that parts and accessories which are goods included in the heading of the Chapter 90, are to be classified in their respective headings. The end of such goods is not determinative of its classification.
- Thus, LCD even used as parts in the final product electricity supply meters are to be classified in its respective heading as the same is separately provided in tariff item 9013.
Facts:-
- The assessee is engaged in the manufacture of electricity meters. The assessee imported a consignment consisting of LCD Modules.
- The assessee sought clearance of LCDs under tariff item 9013.80 of Chapter 19 and claimed assessment at Nil rate (basic duty), 16% additional duty and 4% SAD. On the other hand, Customs authorities classified the same under tariff item 9028.90 as in its view the same was used as a part of energy meter.
- The order of adjudicating authority was confirmed by the CESTAT accepting the plea of department that the invoices issued by the supplier of the goods specifically mentioned that the LCD and was imported as a parts of electronic energy meters and even the appellant had admitted that these goods had to be used as parts of energy meter.
- Aggrieved by the order of CESTAT, assessee is now in appeal with Supreme Court.
Assessee’s Points:
- Whenever a particular item falls in a specific tariff item, it has to be classified under the said tariff item and not in other heading where it can be used as part of other machinery/equipment falling under that heading.
- The LCDs are specifically covered by tariff item which is 9013, it has to be classified in that entry only and the factum of its use as part or accessory in the electronic supply meters would be irreverent to determine the classification.
- Further , as per Note No. 2(a) attached to Chapter 90 provides that if the parts and accessories are separately included as goods in any other heading of chapter 90 , then such part/accessories to be classified under that heading in which the same is so included.
Revenue’s Point:
- The Note No. 2(a) attached to Chapter is not applicable in the present case because goods were specifically meant for use as parts in electric meters, which is even accepted by the assessee.
- Liquid crystal devices/displays which do not specifically form part of an equipment/machinery are classifiable under the heading 9013. Since, the LCD are used as a part of energy meter the same is classifiable under tariff item 9028.
Held by the Hon’ble Supreme Court:
- It is not in dispute that the only condition for classifying LCD in tariff item 9013 is that such LCD should not constitute ‘articles’ provided more specifically in other headings and it is also not disputed that the LCD not so constitute articles more specifically provided somewhere else same is not the case in the present.
- The revenue sought to include the LCDs under the tariff item 9028 as “parts and accessories” of electronic supply meter as the LCDs have been used in electronic supply meter.
- As per Note 2(a) attached to chapter 90 that parts and accessories which are goods included in the heading of Chapter 90, are to be classified in their respective headings.
- Thus, LCDs, which are goods and are used as parts in the final product electricity supply meters, is to be classified in its respective heading. Respective heading in which LCD is specifically mentioned is 9013.
- Further Part –III of Chapter notes to Chapter 90 provides that parts or accessories identifiable as suitable for use solely or principally with the machines, appliances, etc., they are to be classified with those machines/appliances. However, that those parts and accessories which in themselves constitute ‘article’ falling in any particular heading of this Chapter, the general rule will not apply and said article would fall in that particular heading.
- Thus, even if the LCD is a part/accessory of electronics supply meter , but since it is separate article in tariff item 9013 , it is to be classified in 9013 only.
- In result the appeal was decided in the favour of assessee.
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