2023 (10) TMI 684 - AT - Customs

CESTAT rules for M/s. Xioami Technology: LCD panels to be classified under Chapter Heading 9013 8010, not 8529 9090.

The CESTAT ruled in favor of the appellant, M/s. Xioami Technology, regarding the classification of imported Liquid Crystal Display (LCD) panels. The ... Classification of goods - Liquid Crystal Display (LCD) panels - to be classified under Chapter Heading 8259 9090 as decided by the Revenue or under Chapter Heading 9013 8010 as claimed by the appellant? - HELD THAT:- The matter is no longer res integra as the issue has been already settled in appellant’s own case M/S. XIAOMI TECHNOLOGY INDIA LIMITED VERSUS THE COMMISSIONER OF CUSTOMS, BANGALORE [2023 (7) TMI 325 - CESTAT BANGLORE]. Further, the Apex Court in the case of CCE, AURANGABAD VERSUS M/S VIDEOCON INDUSTRIES LTD. THR. ITS DIRECTOR [2023 (3) TMI 1338 - SUPREME COURT] on interpreting the General Rules of Interpretation and the Section Notes and Chapter Notes observed The CESTAT’s reasoning and conclusions, in both cases, that the LCD sets were under Chapter 90, Entry 9013.8010, is sound and unexceptionable. Thus, the LCD Panels are to be classified under Chapter Heading 9013 8010 - appeal allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether the imported Liquid Crystal Display (LCD) panels and related parts are classifiable under Chapter Heading 9013 8010 (Chapter 90) or under Chapter Heading 8529 9090 (Chapter 85). 2. Whether Note 2(b) of Section XVI (pull-in rule for parts) applies to subject goods so as to require classification with Chapter 85 articles, or whether Note 1(m) and the Chapter/Section Notes governing Chapter 90 exclude such pull-in and require classification in Chapter 90. 3. Whether prior authoritative decisions (including the Apex Court interpretation of tariff and notes and the Tribunal's earlier Final Order on substantially identical facts) govern the present classification dispute and, if so, whether they are followed or distinguished. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Proper Tariff Classification: Chapter 90 (9013 8010) v. Chapter 85 (8529 9090) Legal framework: Classification governed by General Rules of Interpretation, Section and Chapter Notes (including Note 1 and Note 2 of Section XVI and specific Chapter Notes), and the principle that goods specifically provided in a heading are to be classified there unless excluded. Precedent treatment: The Court followed the Apex Court's authoritative interpretation (referred to in the judgment) and the Tribunal's own earlier Final Order on identical issues. Interpretation and reasoning: The Court examined whether LCD panels are 'articles' specifically provided in Chapter 90 (9013). If so, they fall within Chapter 90 unless they are 'articles provided more specifically in other headings.' The Revenue relied on Section XVI Note 2(b) to classify the panels as parts of television sets under Chapter 85/8529 9090. The Court reasoned that where Chapter 90 expressly covers LCDs, the exclusion and specific provision for Chapter 90 must not be negated by a broad pull-in under Note 2(b) of Section XVI. Note 1(m) (which excludes certain goods from Chapter 85 scope and identifies Chapter 90 goods) and the opening phrase 'subject to Note 1' in Note 2 narrow the application of the pull-in: an exclusion from Chapter 90 must not be defeated by an expansive reading of pull-in provisions. The Court relied on prior authority establishing that LCDs, even when used as parts, are to be classified in the specific Chapter 90 heading (9013) where the goods are otherwise covered by that heading. Ratio vs. Obiter: Ratio - LCD panels that are goods falling within the specific tariff description of Chapter 9013 are to be classified under 9013 even if used as parts in goods of Chapter 85, because Note 1(m) and the specific Chapter 90 provision exclude them from being pulled into Chapter 85 by Section XVI Note 2(b). Obiter - ancillary observations on possible alternative uses of LCDs and references to other headings not squarely in issue here. Conclusion: The imported LCD panels and Light Guide Plates are classifiable under Chapter Heading 9013 8010 and not under Chapter Heading 8529 9090. Issue 2 - Applicability and Construction of Section XVI Note 2(b) vis-à-vis Note 1(m) and the 'pull-in' Principle Legal framework: Section XVI Note 2 prescribes classification rules for parts; Note 2(b) pulls parts into the headings of machines with which they are suitable for use; Note 1 to Section XVI and Chapter Notes (including Note 1(m) referenced in judgment) can operate as exclusions; GRI and notes are read together with the primacy of earlier notes where expressed. Precedent treatment: The Court expressly followed the Apex Court's construction, which held that Note 1(m) and the 'subject to Note 1' language limit the scope of Note 2(b), and earlier decisions (including 'Secure Meters' reasoning cited by the Apex Court) which supported classification in Chapter 90 where LCDs are specifically provided. Interpretation and reasoning: The Court emphasized that Note 2 opens with 'subject to Note 1,' thereby subordinating Note 2 to Note 1. Where Note 1 excludes goods from a chapter (e.g., Chapter 85) because they are covered by Chapter 90, the pull-in of Note 2(b) must be narrowly construed; otherwise the exclusion would be rendered meaningless. The Court rejected the revenue's expansive reading of Note 2(b) which would classify parts 'solely or principally' used with television sets into Chapter 85 even when Chapter 90 specifically provides for those goods. The Court relied on the reasoning that parts which are themselves goods classifiable in Chapter 90 must be classified in their respective specific heading (9013) per Note 2(a) and the Chapter 90 provision, and that a broad pull-in would undermine the exclusionary function of Note 1(m). Ratio vs. Obiter: Ratio - Note 2(b) cannot be applied so as to defeat the explicit exclusion in Note 1(m) and the specific Chapter 90 provision; the pull-in must be narrowly construed where an earlier note excludes the goods from the chapter into which the part would be pulled. Obiter - general comments on hypothetical applications of Note 2(b) to other categories of parts not squarely before the Court. Conclusion: Note 2(b) of Section XVI does not operate to bring LCD panels into Chapter 85 where Note 1(m) and Chapter 90 specifically provide for LCDs; the pull-in is subordinate to and constrained by the earlier exclusionary note. Issue 3 - Binding Effect of Prior Decisions and Application to Present Appeals Legal framework: Principle of stare decisis and the persuasive/ binding effect of higher court and tribunal decisions on identical issues. Precedent treatment: The Court applied the Apex Court's authoritative decision interpreting tariff headings and notes (the judgment relied upon in argument) and the Tribunal's own Final Order on identical facts issued earlier in the appellant's related matters. Interpretation and reasoning: The Court observed that the issue is no longer res integra because an identical question had been decided in the appellant's own case by the Tribunal and aligned with the Apex Court's interpretation. Given identity of issues and the controlling nature of the Apex Court's ruling on the interpretation of the General Rules of Interpretation and Chapter/Section Notes, the Court adopted that ratio to decide the present appeals in favour of classification under 9013 8010. Ratio vs. Obiter: Ratio - Where an identical issue has been authoritatively decided by the Apex Court and by the Tribunal in the same factual matrix, the decision governs the present appeals and must be followed. Obiter - remarks on pendency of other litigations and administrative orders not determinative of the present legal point. Conclusion: The Court followed the Apex Court's interpretation and the Tribunal's earlier order, applied those precedents to the present appeals, and allowed the appeals by classifying the goods under Chapter Heading 9013 8010 with consequential relief.