Classification of CO2 cylinders for soda makers treated as machine parts under Section XVI, not separate CO2 goods.

Special CO2 cylinders supplied as replenishments for home soda makers were classifiable as parts of the soda maker under Section XVI, because they were specially designed for use solely with that machine and had no meaningful independent utility to a purchaser seeking to replenish it. Applying Notes 2(b) and 4 of Section XVI, the Tribunal treated the cylinders as components contributing to the machine's defined function rather than as separate CO2 goods under Heading 28.11. The view that the transaction was primarily a sale of CO2 was rejected, and the Revenue's classification was held unsustainable.

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Issues: Whether special CO2 cylinders supplied as replenishments for home soda makers were classifiable as a component/part of the soda maker under Section XVI of the Central Excise Tariff Schedule, or as CO2 under Heading 28.11.

Analysis: The Tribunal applied Note 2(b) and Note 4 of Section XVI, which require parts suitable for use solely or principally with a particular machine, and individual components intended to contribute together to a clearly defined function, to be classified with the machine or under the heading appropriate to that function. On the facts, the cylinders were specially designed for use with the soda maker and had no meaningful independent utility for a purchaser seeking to replenish that machine. The reasoning in the earlier decision, found to be directly applicable, rejected the view that the transaction was primarily a sale of CO2 merely because the gas was contained in the cylinder.

Conclusion: The CO2 cylinders were correctly treated as parts of the soda maker and not as CO2 under Heading 28.11; the classification adopted by the Revenue was unsustainable.

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