Elite Electronics Vs Commissioner of Customs-Ahmedabad (CESTAT Ahmedabad)
Conclusion: Reclassification of AC remote components made by assessee was accepted as specific Chapter Notes and Section Notes were to be preferred over General Interpretative Rules while classifying product.
Held: Assessee-company was engaged in manufacturing ‘Remote Control Handset’, PCB Assembled after mounting which were supplied to various Air Conditioner manufacturing companies. Such Remote Control Handsets use approximately 145 components, of which 20 were imported by assessee. The main item was un-mounted or bare PCB and various 19 other components used for mounting. While department was of the view that these un-mounted PCBs or circuit layouts, (commonly known) were specific items and deserved to be classified in Chapter Heading 84159000 of the Customs Tariff Act, 1975. Two items i.e. Buzzer and LED were in any case were being classified under Tariff Heading 84159000 and other items were classified under Chapter 85 of CTA by the party excepting silicone keypad, Zebra/Keypad and springs which were classified under Tariff Heading, 39269099, 40169990, 73209090 respectively. Commissioner had applied Rule 2A of General Interpretative Rules (GIR) of HSN treating the goods as presented before the Customs as unassembled or disassembled goods having features of complete article and therefore the same were parts of AC being main PCB and parts of Remote Control Handsets. However, assessee argued that the classification under CTH 85159000 of the items as sought by them was appropriate, since, as per notes i.e. (Section Note 2) of HSN Explanatory Notes to Section XIV of Customs Tariff it had been mentioned that principle of “sole and principle use” rule did not apply to parts which in themselves constitute an article covered by heading of this section and the same should in all cases be classified in their own appropriate heading even if specifically designed to work as part of a specific machine. It was held that that specific Chapter Notes and Section Notes were to be preferred over General Interpretative Rules while classifying product. The observations made by the Court were based on the guiding principles of HSN, which in turn have incorporated all important rule of interpretation as contained in Latin expression ‘Generalibus Specialia Derogant’ (Special mention derogates from General). The classification as done by assessee was upheld in respect of item at Sr. No. 1-15 of table in factual matrix, hold that items at Sr. No. 16, 19 and 20 would be classified under Tariff Heading 84159000, item at Sr. No. 17 Zebra/Keypad under Tariff Heading 40169990 and item at Sr. No. 18 i.e. Spring under Tariff Heading 73209090. Appeal was accepted with modification of classifying silicone keypad under 84159000.
