G.S. AUTO INTERNATIONAL LTD. versus COLLECTOR OF CENTRAL EXCISE, CHANDIGARH

Citation: [2003] 1 S.C.R. 372 · Decided: 15-01-2003 · Supreme Court of India · Bench: S.S.M. QUADRI · Disposal: Disposed off

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A. 
G.S. AUTO INTERNATIONAL LTD. 
v. 
COLLECTOR OF CENTRAL EXCISE, CHANDIGARH 
JANUARY 15, 2003 
B 
[SYED SHAH MOHAMMED QUADRI AND ASHOK BHAN, JJ.] 
Central Excises and Salt Act, 1944/Central Excise Tariff Act, 1985-
Schedule I, Tariff Item 58 and 62/Tariff Heading No. 73.18 and 87.08-Excise 
Duty-Levy of-Classification of goods, namely, screws, nuts, bolts etc.-Test 
C of classification-Commercial identity test or functional test-Held, true test 
of classification is commercial identity test-It is to be ascertained as to how 
goods are referred to in niarket by those who deal with them-Applying this 
test, goods in question being parts of automobile are classified under Tariff 
Item 68 'all other goods, not specified elsewhere' and not under Tariff Item 
D 52 'bolts, nuts, screw etc'-Under 1985 Act goods are classified under heading 
87.08 'parts and accessories of motor vehicles' and not under 73.18 'screws, 
bolts, nuts etc '. 
The question which arose for consideration in these appeals is with 
regard to classification of certain goods, namely, screws, bolts, nuts etc., 
E in all thirty two items, manufactured by the assessee. It was for the 
assessment years 1979 to 1986 though for different periods and assessment 
years 1986-1987. 
In the order impugned, in the.first set of appeals, tribunal applied 
functional test and classified these goods under Tariff Item 52 of the 
F Central Excises and Salt Act, 1944 holding that though the goods are used 
as component parts of motor vehicles they had the fastening function; in 
the second set of appeals and the last appeal tribunal applied the test of 
commercial identity and held that these goods being virtually parts of 
automobile were classified under Tariff Item 68 of the 1944 Act and for 
. G assessment year 1986-87 the goods were classifiable under Chapter 
Heading 87.07 and not under 73.18 of the Central Excise Tariff Act, 1985. 
+ 
It was contended for the assessee that in the first set of appeals, 
~ 
tribunal erred in applying the functional test and holding that the good$ 
in question are classifiable under Tariff Item 52 and, therefore, the order 
H 
372 
G.S. AUTO INTERNATIONAL LTD. v. C.C.E CHANDIGARH 
373 
of the tribunal is liable to be set aside; and that the tribunal correctly A 
applied the test of commercial identity in its orders, which are subject 
matter of the second set of appeals and the third appeal, which deserves 
to be upheld. 
It was inter alia contended for the Revenue that in regard to pre-
1986 period, the findings recorded by the tribunal and the function of the B 
goods would show that nuts, bolts and screws, etc. are generic terms and 
notwithstanding the fact that they are parts of automobile, they would 
nonetheless be species of nuts and bolts classifiable under Tariff Item 52; 
and that in regard to the classification under post-1986 period, Chapter 
Heading 73.18 takes in screws, bolts, nuts, etc. and that the expressions C 
"parts" and "parts and accessories" have been defined in Section XVII, 
Note 2(b), inasmuch Note (2) to Section XV takes away the goods 
classifiable under Chapter Heading 73.02, therefore, the goods in question 
have to be classified only as nuts, bolts, screws even if they formed parts 
of automobile. 
Disposing of the appeal, the Court 
HELD: I.I. With regard to the classification of goods appropriately 
under Tariff Item 52 'bolts, nuts, screws' or under Tariff Item 68 'all other 
goods, not having been specified elsewhere', the proper test is to be applied. 
D 
It is the functional test or commercial identity test which would determine E 
the issue. This question is no longer res integra. It was laid down that the 
true test for classification was the test of commercial identity and not the 
functional test. It needs to be ascertained as to how the goods in question 
are referred to in the market by those who deal with them, be it for the 
purposes of selling, purchasing or otherwise. (380-H; 381-A-B) 
1.2. From a perusal of the Excise Collector's Trade Notice No.127/ 
71 dated Stb July, 1971, it becomes apparent, that mere existence of 
threads would not render an article as a bolt, nut or screw so long as that 
F 
is recognizable as component part of an instrument, apparatus, appliance or 
machine and that the expression used in Tariff Item 52 is intended lo cover G 
only those which are known as bolt, nuts and screws in the market. The Trade 
Notice re-affirms the test of commercial identity of good

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