CCE, AURANGABAD versus M/S VIDEOCON INDUSTRIES LTD. THR. ITS DIRECTOR

Citation: [2023] 6 S.C.R. 259 · Decided: 29-03-2023 · Supreme Court of India · Bench: S. RAVINDRA BHAT · Disposal: Dismissed

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Judgment (excerpt)

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CCE, AURANGABAD
v.
M/S VIDEOCON INDUSTRIES LTD. THR. ITS DIRECTOR
(Civil Appeal No. 5622 of 2009)
MARCH 29, 2023
[S. RAVINDRA BHAT AND DIPANKAR DATTA, JJ.]
Customs Tariff Act, 1975 – First Schedule – Chapter 90 –
LCD panels – Classification of – CESTAT held that the LCD panels
imported by assesses were classifiable in Chapter Heading
9013.8010 of the First Schedule to the 1975 Act – Held: Reasoning
and conclusion of CESTAT that the LCD sets were classifiable under
Chapter 90, Entry 9013.8010, is sound and unexceptionable.
Customs Tariff Act, 1975 – First Schedule – Section XVI, XVII
– Chapters 85 and 90 – General Interpretive Rules and Notes –
Plea of revenue that by virtue of Note 2 (b) to Chapter 85, the
goods are to be classified based on their principal or sole use –
Held: Revenue’s argument jumps over interpretive instructions – In
the present case, Note 1 (m) 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 aforesaid contention of revenue is insubstantial
because of the clear mandate of Note 1 (m) to Chapter 85 which
excludes Chapter 90 goods (which includes LCD panels) – When
goods are excluded from a particular chapter, the “pull in” through
a note has to be narrowly construed, as otherwise, the basis of
exclusion would be defeated, and the earlier note (of exclusion)
rendered redundant – Secure Meters case is decisive on the question
that LCDs are not articles provided “more specifically 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 the said decision its use in meters was
in issue – Tax/Taxation.
Dismissing the appeals, the Court
HELD: 1.1 On a reading of the General Interpretive rules
and the notes to the concerned chapters (85 and 90, in the present
[2023] 6 S.C.R. 259
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SUPREME COURT REPORTS
[2023] 6 S.C.R.
case), it is evident that: (a) classification has to be in accord with
“the terms of the headings and any relative Section or Chapter
Notes” (Note 1) (b) Reference in a heading to “an article” includes
“that article incomplete or unfinished” provided, such incomplete
or unfinished article has “the essential character of the complete
or finished article.” [Note 2(a)] (c) If on an application of Rule
2(a), an article is classifiable in more than one heading “the
heading which provides the most specific description shall be
preferred to headings providing a more general description.” [Note
3 (a)] [Para 22][273-B-D]
1.2 Note 1 (m) to Chapter 85 excludes “(m) Articles of
Chapter 90…” The revenue relies on Note 2 (b) to Chapter 85,
which says “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” and then enumerates heading 9013, to say
that Chapter 85 would cover the present case. 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 to Note 1”. This subordinates the entire
subject matter in Note 2; it is only where the article is a “part”
which acts as an accessory, that the enumerated portions of
Chapter 85 come into play. Such an interpretation is plainly
untenable. [Paras 23, 25][273-D-E; 274-D-G]
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Commissioner of Central Excise, Delhi-III v. UNI
Products India Ltd. (2020) 19 SCC 742

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