Electronic Research Ltd. vs >1995(07)LCX0020

1995(07)LCX0020

BEFORE THE COMMISSIONER OF CUSTOMS (APPEALS), MADRAS

Shri A.K. Raha, Commissioner

IN RE : ELECTRONIC RESEARCH LTD.

Order-in-Appeal No. M. Cus. 1317/95, dated 18-7-1995 in

Appeal No. C3/50/95

CASE CITED

Collector v. Cosmo Ferrites Ltd. — 1993(12)LCX0054 Eq 1994 (070) ELT 0613 (Tribunal) [Paras 8, 12]

[Order]. - The present appeal is filed against the Order No. S59/128/94, Gr. 5B, dated 17-11-1994, passed by the Assistant Commissioner of Customs, Gr. 5B, Custom House, Madras-1. The Lower Authority uphold the `assessment’ of the Soft Ferrite Cores imported by the party under Heading 85.29 with 40% plus 25% Customs duty.

2. Aggrieved by the above order, the appellant filed this appeal furnishing the facts and grounds of appeal and also requested for personal hearing.

3. It is submitted by Shri Gururaja that it was not correct on the part of the lower authority to hold that the impugned goods viz., Ferrite FBT Cores imported by the appellant were correctly classifiable under sub-heading 8529.90 as parts of TV SETS FALLING UNDER 85.28. It is the case of the appellant that the impugned goods were actually parts of electrical transformers (flyback transformers). Therefore, the same were correctly classifiable under 8504.90. In terms of Notification No. 62/94-Cus., the impugned goods were exempt from duty in excess of 25%. It is further submitted that the fact that flyback transformers are required for the manufacture of Colour TV sets is not of any relevance as the parts of fly back transformers cannot par se be taken as parts of TV sets.

4. A written Note was also submitted during the personal hearing by the appellant which is taken on record.

FINDINGS

5. I have carefully considered the written and oral submissions made by the appellant.

6. I have also carefully examined the Catalogue, relevant extracts and write up produced by the appellant.

7. The short question that falls for determination is whether the Ferrite Cores imported by the appellant are classifiable under sub-heading 8504.90 as parts of transformers of under sub-heading 8529.90 as parts suitable for use solely or principally in the Colour TV set, as held by the lower.

8. The lower authority, I find, has largely and primarily relied upon the CEGAT decision in the case of Collector of Central Excise, Chandigarh v. Cosmo Ferrites Ltd. reported in 1993(12)LCX0054 Eq 1994 (070) ELT 0613 (Tribunal). In the case under reference, the goods were power ferrites and for Central Excise Classification, it was decided by Hon’ble CEGAT that the goods were correctly classifiable under sub-heading 8529.00 as those components were being used as a final device for which it was made as a component part in TV, Radio, Radar, Radio Navigational Equipment and Radio Reception Apparatus for the purpose of deflection Yokes, low Power, High Frequency transformer. It was further observed by Hon’ble CEGAT that it was very clear from the reading of the entire literature and certificate produced by the assessee that the component in question were not parts of electromagnets and their classification under 8505.00 was not appropriate. According to CEGAT, the goods in question were correctly classifiable under sub-heading 8529.00.

9. In the instant case, it is contended by the appellant that the impugned ferrites were parts of flyback transformers and, therefore, the same were classifiable under sub-heading 8504.90. It is urged that even though those transformers may be eventually used in Colour TV sets, this, by itself, will not permit the parts of transformers to be treated as parts of TV sets primarily because parts of Transformers are specifically covered by a different sub-heading in the Customs Tariff.

10. I find that the lower authority in his Order has not disputed that the Ferrite Cores in question were required for the manufacture of flyback transformers. He has merely stressed the point that those transformers were also admittedly required for the manufacture of Colour TV sets and, therefore, when the goods were classifiable under more than one sub-heading viz. 8504.90 and 8529.90 the sub-heading that appears last has to be followed in terms of Rule 3(c) of the Rules for the Interpretation. Rule 3(c) of the General Rules for the Interpretation of the first schedule provides that when goods can not be classified by reference to (a) or (b), they shall be classified under the Heading which occurs last in numerical order among those which equally merits consideration. Obviously, the lower authority has primarily relied on this Rule though he has not discussed this Rule in detail in his Order. However, before applying Rule 3(c) sub-rules (a) and (b) of Rule 3 have to be gone through and eliminated. Sub-rule (a) of Rule 3 provides that the Heading which provides the most specific description shall be preferred to Heading providing a more general description. It is the case of the appellant that the Heading 85.04 and, in particular, sub-heading 8404.90 provides most specific description for the goods in question and, therefore, the question of their classification under Heading 85.29 would not arise.

11. I find considerable force in the above submission made by the appellant. The finding of the lower authority that both Headings 85.04 and 85.29 were equally applicable in respect of the impugned goods would have been valid provided the ferrites in question could have been directly used for the manufacture of both Transformers and Colour TV sets. From the drawing produced by the appellant, it is seen that the Ferrite in question were to be used as part of a transformer which is named flyback transformers. (Flyback) Transformer is covered by Heading 85.04. Thus, as a part of Transformer, the impugned goods are more directly co-relatable to Transformer rather than Colour TV set. The flyback transformer is used specifically covered by Heading 85.04 the same will also not be classifiable under Heading 85.29 as part of TV set in terms of Rule 3(a) of the Rules for Interpretation of the first schedule.

12. In the instant case decided by Hon’ble CEGAT vide 1994 (070) ELT 613, Hon’ble CEGAT was of the view that Heading 8505.00 was not applicable to the power ferrites in question. Here, it is nobody’s case that Heading 8505 was applicable in respect of the impugned Ferrite Cores. The other alternative that was placed before Hon’ble CEGAT was sub-heading 8529.00. I find that Hon’ble CEGAT did not consider in detail whether the impugned goods were classifiable under sub-heading 8504.00 which was merely referred to in passing in para 3 of the judgment. In the case decided by Hon’ble CEGAT, the assessee were manufacturing power ferrites (i.e.) U-Cores, B-Cores and Torrids which were used as parts of special purpose transformers which inturn were used as components in TV sets, computers and other electronic gadgets. The assessee were also manufacturing Yoke Ring Cores which were directly used as parts and components of TV sets. Thus, it will be seen that some of their components were directly used in the manufacture of TV sets. In the instant case, however, the impugned Ferrite Cores were not meant for direct use in the manufacture of Colour TV sets. Those goods were meant for direct use in the manufacture of Flyback Transformers only, which, in turn, was to be used in the manufacture of Colour TV sets. Thus, on facts also, the subject case is distinguishable from the case decided by the Hon’ble CEGAT, the assessee themselves contended that Ferrite Cores were classifiable under sub-heading 8529.00 or under sub-heading 8504.00. Therefore, Hon’ble CEGAT did not find it necessary to distinguish sub-heading 8504.00 from sub-heading 8529.00. In so far as classification of the soft ferrites was concerned. In the instant case, the dispute between sub-heading 8529.90 and sub-heading 8504.90 of Customs Tariff. Hence, one has to distinguish the above two sub-headings for classification of the impugned goods.

13. It is a settled point for classification that if the goods in question are specifically covered by a particular Heading or sub-heading, that shall have precedence over the other Headings and sub-headings that may generally cover the goods in question. I have also explained in detail why Heading 85.04 and sub-heading 8504.90 in particular shall have precedence in the classification of the impugned goods over Heading 85.29 and sub-heading 8529.90. In view of the above, the original order is clearly not maintainable.

ORDER

14. For the reasons stated above, the Original Order is set aside and the appeal is allowed. The impugned Ferrite Cores be re-assessed under Heading 8504.90 of Customs Tariff, read with Notification No. 62/94-Cus.

Equivalent 1996 (86) ELT 171 (Commr. Appl.)