Tariff classification of ceramic magnets: post-import magnetisation did not change their character, so Item 73(11) applied.

Ceramic magnets imported in unmagnetized condition were treated as component parts of loudspeakers because their special shape, size and quality made them suitable for that use. The post-importation cleaning, demagnetisation and magnetisation steps did not change the essential character of the goods and were not shown to be manufacturing processes; their cost was also insignificant compared with landed cost. The Tribunal therefore held that the goods remained classifiable under Item 73(11) of the Indian Customs Tariff and not under the residuary Item 87, so the claim for reassessment and refund failed.

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Issues: Whether ceramic magnets imported in unmagnetized condition were classifiable as component parts of loudspeakers under Item 73(11) of the Indian Customs Tariff or under the residuary Item 87, and whether the post-importation processes of cleaning, demagnetisation and magnetisation altered their classification.

Analysis: The imported goods were of a special shape, size and quality suitable for use as loudspeaker components. The post-importation operations relied upon by the importer did not show any change in the essential character of the goods, and the processes described were not established as manufacturing processes. The cost of such processes was also found to be insignificant when compared with the landed cost. The Tribunal therefore treated the magnets as already having the attributes of component parts and held that magnetisation and allied steps did not take them out of Item 73(11) or justify resort to the residuary entry.

Conclusion: The goods were correctly classifiable under Item 73(11) of the Indian Customs Tariff and not under Item 87; the assessee's claim for reassessment and refund failed.

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