2005 (10) TMI 90 - SC - Customs

Proper Classification of Goods: Function Over Form

WESTERN INDIA PLYWOODS LTD. Versus COLLECTOR OF CUSTOMS, COCHIN

The Supreme Court criticized the Tribunal for incorrectly classifying the 'motor-vibrator with actuators' solely as a prime mover under the Customs Tariff ... Whether, in the facts and circumstances of this case, the Customs, Excise & Gold (Control) Appellate Tribunal was right in classifying 'motor-vibrator with actuators' under residuary sub-heading 8479.89 of Customs Tariff Act, 1975? Held that:- The Tribunal has failed to consider the various provisions of Section XVI and Chapter 84 as appearing in the CTA and in HSN. Note 2(b) of Section XVI lays down that in the absence of a specific heading, a part suitable for a particular machine is classifiable under the heading applicable to that machine. Section XVI in CTA and in HSN is captioned 'machinery and mechanical appliances'. Section XVI makes a distinction between 'machinery' and 'machines'. In the matter of classification, unless the department is in a position to establish that the goods in question can by no conceivable process of reasoning be brought under CTA : SH 8439.91, resort cannot be had to the residuary Heading 8479.89. Thus on account of non-consideration of various aspects enumerated above, we set aside the impugned judgment and remit this case to the Tribunal for its decision in accordance with law. Accordingly the appeal is allowed. Issues: Classification of 'motor-vibrator with actuators' under Customs Tariff ActIn this case, the main issue is whether the Customs, Excise & Gold (Control) Appellate Tribunal (referred to as 'the Tribunal') correctly classified the 'motor-vibrator with actuators' under the residuary sub-heading 8479.89 of the Customs Tariff Act, 1975 (CTA). The appellant imported a complement of pulp-making machinery and argued that the motor vibrator is an integral part of the machinery, classifiable under CTA : SH 8439.91, while the department contended it should be classified under CTA : SH 8479.89, being a machinery and mechanical appliance with individual functions not specified elsewhere.The Supreme Court highlighted the importance of correctly identifying goods for classification under the Customs Tariff Act. It emphasized that the application of the residuary tariff entry should only be made when no other provision applies expressly or by necessary implication. The Court noted that the classification should focus on the goods themselves, not just their description, and that a single tariff item may cover various goods of different types. The Court also pointed out that machinery used for more than one purpose should be classified based on its principal purpose, as per the relevant provisions of the Customs Tariff Act and the Harmonized System of Nomenclature (HSN).The Court criticized the Tribunal for solely relying on one clause from the explanatory notes to the HSN in classifying the motor vibrator, without considering other provisions of the Customs Tariff Act and the HSN. It pointed out that the motor vibrator, being an integral part of the pulp-making machinery and regulating the flow of wood-chips, should not be classified solely as a prime mover, as determined by the Tribunal. The Court highlighted that the motor vibrator should be classified based on its principal purpose and its function within the machinery, as per the relevant notes and sections of the Customs Tariff Act and the HSN.Ultimately, the Court set aside the Tribunal's judgment due to its failure to consider various aspects of classification and remanded the case back to the Tribunal for a decision in accordance with the law. The appeal was allowed, with no order as to costs, emphasizing the importance of proper classification based on the function and purpose of the imported goods under the Customs Tariff Act.