Specific tariff classification governs nickel cadmium cells, while countervailing duty may be reassessed under the applicable excise item.

Nickel cadmium cells imported for use in walkie-talkie sets were treated as electric accumulators and classified under Heading 85.04, because the specific tariff heading prevailed over the claimed exemption under Notification No. 172/77-Cus., which did not extend to goods outside Heading 85.15. On countervailing duty, the goods were treated as storage batteries for excise purposes, so reassessment under Item 31(2) of the Central Excise Tariff was required with consequential refund. The result was that customs classification remained unchanged, but the excise-side duty treatment was adjusted in favour of the importer.

---

---

Issues: (i) Whether Nickel Cadmium Cells imported for use in walkie-talkie sets were classifiable under Heading 85.04 of the Customs Tariff or under Heading 85.05(1) with the benefit of Notification No. 172/77-Cus. dated 8-8-1977. (ii) Whether countervailing duty on the goods was correctly chargeable, or whether reassessment under Item 31(2) of the Central Excise Tariff with consequential refund was warranted.

Issue (i): Whether Nickel Cadmium Cells imported for use in walkie-talkie sets were classifiable under Heading 85.04 of the Customs Tariff or under Heading 85.05(1) with the benefit of Notification No. 172/77-Cus. dated 8-8-1977.

Analysis: The applicable classification principle was that where a tariff contains a separate and specific heading for the goods, that heading governs the assessment. The imported Nickel Cadmium Cells were treated as electric accumulators and, on that basis, fell within the specific customs heading for such goods. Since the exemption notification applied only to parts of receiver sets falling under Heading 85.15, it could not extend to goods classified under Heading 85.04.

Conclusion: The goods were correctly classifiable under Heading 85.04, and the exemption under Notification No. 172/77-Cus. was not available. This issue was decided against the assessee.

Issue (ii): Whether countervailing duty on the goods was correctly chargeable, or whether reassessment under Item 31(2) of the Central Excise Tariff with consequential refund was warranted.

Analysis: Although the exemption claimed for metal jacketed dry batteries did not apply, the goods were treated as storage batteries. On that footing, the proper countervailing duty treatment was reassessment under Item 31(2) of the Central Excise Tariff, which carried the lower rate referred to in the earlier decision followed by the Tribunal.

Conclusion: Countervailing duty was to be reassessed under Item 31(2) of the Central Excise Tariff, and consequential refund was payable. This issue was decided in favour of the assessee.

Final Conclusion: The customs classification under Heading 85.04 was upheld, but the countervailing duty was directed to be reassessed under Item 31(2) with consequential refund, leaving the appeal only partly successful.

Ratio Decidendi: Where a tariff provides a specific heading for the imported goods, that specific classification prevails, but if the goods are correctly treated as storage batteries for excise purposes, countervailing duty must be reassessed according to the applicable excise tariff item and not denied solely because the claimed exemption notification does not apply.

---