LexCOMMISSIONER OF CENTRAL EXCISE, DELHI versus INSULATION ELECTRICAL (P) LTD
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[2008] 5 S.C.R. 625 COMMISSIONER OF CENTRAL EXCISE, DELHI v. INSULATION ELECTRICAL (P) LTD .. (Civil Appeal No. 5943 of 2002) MARCH 27, 2008 (ASHOK BHAN AND DALVEER BHANDARI, JJ.) Central Excise Tariff Act, 1985: A B Chapter Heading 8708.00 - Parts and accessories of motor vehicles - 'Rail Assembly Front Seat (omni)' Adjuster/ C Assembly Slider Seat' 'YE-2 Rear Back Lock Assembly', '1000cc Rear Back Lock Assembly' manufactured by assessee - HELD: Can at best be termed as accessories to motor vehicle classifiable under Chapter Heading 8708.00 - · The products are not essential parts of seat and, therefore, D not classifiable under Chapter Heading 9401 - A 'part' is an essential component of the whole without which the whole cannot function. Words and Phrases: Expressions 'part' and 'accessory' - Difference between in the context of Central Excise Tariff Act, 1985 E The assessee was engaged in manufacture of 'Rail Assembly Front Seat(omni)' 'Adjuster, Assembly Slider Seat' 'YE-2 Rear Back Lock Assembly' and '1000cc Rear F Back Lock Assembly'. In the classification list submitted by the assessee in the year 1996, it classified and the Revenue approved the products as "parts and accessories of motor vehicles" subject to 15% rate of duty under Chapter Heading 8708.00 of the Central Excise Tariff G ·Act, 1985. However, subsequently after a visit to the premises of the assessee, show cause notices were issued stating that the assessee had been misclassifying its products, and the same were class.ifiable un.der Chapter 625 H 626 SUPREME COURT REPORTS [2008] 5 S.C.R. A Heading 9401.00 as parts of seats subject to 18% duty. 1 The ~djudicating authority confirmed the demand of duty and imposed the penalty. The Commissioner of Central Excise (Appeals) upheld the demand of duty but waived the penalty. However, the Customs Excise and Gold B (Control) Appellate Tribunal set aside the demand holding that the products were classifiable under Chapter Heading 8708.00 and not under Chapter Heading 9401.00. In t~e -instant appeal filed by the Revenue, the question for consideration before the Court was: whether C the products manufactured by the assessee were the integral parts of the seats, as put forth by the department and classifiable under chapter heading 9401.00 or the same were parts and accessories of motor vehicles, as claimed by the assessee and classifiable under chapter D heading 8708.00? Dismissing the appeal, the Court HELD: 1.1 The 'Rail Assembly Front Seat (Omni)', 'Adjuster/Assembly Slider Seat', 'YE-2 Rear Back Lock E Assembly' and '1000cc Rear Back Lock Assembly' manufactured by the assessee can at best be termed as accessories to the motor vehicle classifiable under Chapter Heading 8708.00 of the Central Excise Tariff Act, 1985. It is clear that Chapter Heading 8708.00 covers parts F and accessories of motor vehicles and this chapter heading is wide enough in its scope so as to cover all accessories of motor vehicles whereas Chapter heading 9401.00 covers all type of seats and parts thereof. [para 13 and 20] (632-C, D; 634-C, D] G 1.2 Admittedly the assessee was supplying the products manufactured by it to the car manufacturing company. The said company has given a specific part number to the goods in question and issued purchase orders in the name of the assessee. The payment for the H same was received directly from the car manufacturing COMMISSIONER OF CENTRAL EXCISE, DELHI v. 627 INSULATION ELECTRICAL (P) LTD. company. Merely supplying the material through the A companies which are manufacturing the seats classifiable under chapter heading 9401.00, does not lead to the conclusion that the products in question fall under chapter heading 9401.00. [para 14] [632-E-G] 2.1 Chapter 9401 covers all types of seats and not B _. only the seats of a car; and a seat is complete even without the rail assembly front seat, adjuster/assembly slider seat ) or rear back lock assembly. These are not essential parts of the seat. Chapter Heading 9401 covers only the parts of seats and not accessories to seats. A 'part' is an c essential component of the whole without which the whole cannot function. The Tribunal rightly held that the products manufactured by the assessee cannot be the 'parts' of seats, as claimed by the revenue. [para 18-19] [633-F-H] D ~- 2.2 Chapter heading 8708 covers both the 'parts' as well as 'accessories'. The
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