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of <h1>Court Upholds Classification of Carbon Machinery Parts Under Mineral Substances Heading; Appeals Rejected.</h1> The court ruled that the imported machinery parts made of carbon should be classified under Heading 68.01/16(1) of the Customs Tariff Act, 1975, as ... classification Issues Involved:1. Classification of imported machinery parts made of carbon (or graphite).2. Applicability of Heading 68.01/16(1) vs. Heading 84.65 of the Customs Tariff Act, 1975.3. Interpretation of Section Notes and Chapter Notes in the Customs Tariff Act.Summary:Issue 1: Classification of Imported Machinery Parts Made of CarbonThe common point of dispute in these appeals is the classification of certain machinery parts made of carbon (or graphite) imported by the appellants. The Department assessed the goods under Heading 68.01/16(1) of the Customs Tariff Act, 1975, while the appellants sought re-assessment under Heading 84.65.Issue 2: Applicability of Heading 68.01/16(1) vs. Heading 84.65The appellants imported carbon rings and ring carbon seals for use as spare parts in turbosets and compressors. The Department considered the goods as articles of mineral substance (i.e., carbon or graphite) and assessed them under Heading 68.01/16(1). The appellants sought their re-classification as machinery parts under Heading 84.65. The claim failed at the level of the Assistant Collector and later the Appellate Collector, leading to the present appeals.Issue 3: Interpretation of Section Notes and Chapter NotesThe Bench observed that both Headings 68.01/16(1) and 84.65 are residuary items. The Customs Tariff Act mandates that the relevant headings be interpreted and applied in light of the Section Notes and Chapter Notes, which are statutory and binding. Note 1(a) to Chapter 84 explicitly states that Chapter 84 does not cover 'millstones, grindstones and other articles falling within Chapter 68.' The Bench concluded that even fully finished machinery parts made of carbon fall under Chapter 68 and not under Heading 84.65.Majority Judgment:The majority held that the classification of goods under Chapter 84 is forbidden by Note 1(a) to that Chapter if the goods fall within Chapter 68. Therefore, the appeals were rejected, and the goods were classified under Heading 68.01/16(1).Minority Judgment:Smt. S. Duggal and Shri S.C. Jain dissented, arguing that the more specific heading for the subject goods would have been T.I. 84.65 of the C.T.A. They contended that the term 'articles of mineral substances' in T.I. 68.01/16 does not include articles of carbon. They concluded that the subject goods, being machinery parts, should be classified under T.I. 84.65, and thus, the appeals should be allowed.Final Decision:In accordance with the majority judgment, both appeals were rejected.
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