2018 (2) TMI 850 - AT - Customs

Thermistors reclassified under CTH 85334030, Tribunal emphasizes proper classification order

The Tribunal allowed the appellant's appeal, setting aside the lower authorities' decision and ruling in favor of classifying Thermistors under CTH ... Classification of goods by specific tariff headings - Section Note 2(a) on classification of parts in Chapters 84 and 85 - Application of Section Note 2(b) only after exhausting Note 2(a) - Classification based on ultimate use versus specific description - Tariff Classification General Rules of Interpretation - Rule 3(a)Classification of goods by specific tariff headings - Section Note 2(a) on classification of parts in Chapters 84 and 85 - Classification based on ultimate use versus specific description - Tariff Classification General Rules of Interpretation - Rule 3(a) - Correct classification of imported Thermistors / Thermistor sub-assemblies as goods falling under CTH 85334030 (Chapter 85) rather than as parts of auto air-conditioners under Chapter 84. - HELD THAT: - The Tribunal applied the settled principle that where an item is specifically identifiable by name in a heading of Chapter 85, Section Note 2(a) requires its classification in that heading and this precludes resort to classification by ultimate use under Section Note 2(b). Reliance on the Tribunal's earlier decision in the appellant's own case and the Supreme Court decisions (Delton Cables and Secure Meters) establishes that Note 2(a) must be examined and exhausted before considering Note 2(b). The impugned order, which classified the thermistors by reference to their use in automobile air-conditioners, failed to displace the specific tariff entry under Chapter 85. Rule 3(a) of the General Rules of Interpretation and the HSN explanation were correctly applied in prior adjudication to classify similar resistive components under Chapter 85, and the same reasoning governs the present imports of thermistors.The impugned order is set aside and the thermistors are to be classified under CTH 85334030 (Chapter 85); the appeal is allowed.Final Conclusion: The appeal is allowed: thermistors/imported thermistor sub assemblies are classifiable under the specific heading in Chapter 85 (CTH 85334030) in view of Section Note 2(a) and authoritative precedents; classification by ultimate use as parts of auto air conditioners is not permissible without first excluding the specific entry. Issues:1. Correct classification of Thermistors imported by the appellant under CTH 85334030 or Chapter heading 84159000.Analysis:The dispute in this case revolves around the correct classification of Thermistors imported by the appellant. The appellant claimed classification under CTH 85334030, while the revenue argued for classification under Chapter heading 84159000 as parts of auto air conditioners. The lower authorities upheld the revenue's view and demanded differential duty based on this classification. The appellant contended that Thermistors are specifically mentioned under CTH 85334030 and cannot be classified under Chapter 84 as parts of air conditioners.2. Interpretation of Section Note 2(a) of Section XIV of the Customs Tariff Act, 1985, and its application in the classification of specified products.The appellant relied on Note 2(a) of Section XIV of the Customs Tariff Act, 1985, and a previous decision of the Tribunal in a similar case involving resistors. The Tribunal had previously concluded that specific entries under Chapter 85 should govern the classification of the product. The appellant argued that specified products identified by name should be classified under their respective headings only, as per Note 2(a) of Section XIV.3. Application of Section Note 2(b) and its relationship with Note 2(a) in the classification of goods.The Tribunal referred to Section Note 2(a) and 2(b) in the case, highlighting the importance of exhaustively examining Note 2(a) before resorting to Note 2(b) for classification. The Tribunal emphasized that jumping directly to Note 2(b) without considering Note 2(a would be erroneous. The Tribunal also cited a Supreme Court decision to support the correct application of Section Note 2(a) in classification matters.4. Compliance with Rule 3(a) of Tariff Classification General Rules of Interpretation in arriving at the classification decision.The impugned order relied on Section Note 2(a) of Section 16 and Rule 3(a) of Tariff Classification General Rules of Interpretation to arrive at a finding regarding the classification of the goods. The order correctly followed Note 2(a) and the explanation provided under the Harmonized System Nomenclature to classify the goods under Chapter 85. The Tribunal found no infirmity in this approach and dismissed the appeal by the revenue.In conclusion, the Tribunal set aside the impugned order and allowed the appeal based on the established case law and the correct application of Section Note 2(a) in the classification of goods. The judgment emphasized the importance of exhaustively considering Note 2(a) before applying Note 2(b) and highlighted the significance of specific entries in determining the classification of goods under the Customs Tariff Act.