Functional test in tariff classification requires technical evidence and reasons before reclassifying motor vehicle parts.

Classification of heater and blower assembly and duct assembly air intake turned on their actual function and the technical evidence supporting the claimed use as motor vehicle parts rather than air-conditioner parts. The record indicated prior treatment as motor vehicle components, but the reclassification orders were criticised for inadequate consideration of technical literature, drawings and other material, and for failing to give proper reasons for the change in view. Applying the functional test and natural justice principles, the matter was remanded for fresh consideration with an opportunity to adduce evidence and seek expert examination, followed by a speaking order.

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Issues: Whether the items namely Heater and Blower Assembly and Duct Assembly Air Intake were correctly classifiable as parts of an air conditioner under Chapter Heading 84.15, or as parts of motor vehicles under Chapter Heading 87.08, and whether the reassessment could be sustained without proper consideration of technical material and reasons for change in classification.

Analysis: The classification dispute turned on the actual function of the goods. The record showed that the items had earlier been treated as parts of motor vehicles, and the appellants produced technical literature, drawings, and other material to show that the goods had an independent function and were used even in non-air-conditioned vehicles. The impugned orders were found to have proceeded on an inadequate appreciation of the technical material and without properly explaining the basis for the changed view. The functional test, supported by technical evidence and the relevant chapter principles, indicated a prima facie case that the goods could fall under Section XVII as parts of motor vehicles. The authorities were also required to give reasons for reclassification and to follow the principles of natural justice.

Conclusion: The classification orders were set aside and the matter was remanded to the original authority for fresh consideration after giving the appellants an opportunity to establish that the items are parts of motor vehicles and for permitting expert examination, if , with a speaking order to be passed thereafter.

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