Specific tariff classification for nickel cadmium cells prevails over equipment-based heading, with countervailing duty reassessed under the proper item.

Nickel cadmium cells imported for use in walkie-talkie sets were held to fall under the specific tariff description for electric accumulators in Heading 85.04, because a specific heading prevails over a broader heading for the main equipment and the electrolyte form did not change their essential character. On that basis, Notification No. 172/77-Customs did not apply and the basic customs duty challenge failed. For countervailing duty, the batteries were treated as storage batteries falling under Item 31(2) of the Central Excise Tariff, so reassessment and consequential refund were directed in the specified appeals.

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Issues: (i) Whether Nickel Cadmium Cells imported for use in walkie-talkie sets were classifiable under Heading 85.04 of the Customs Tariff Act, 1975, or under Heading 85.15(1) so as to attract Notification No. 172/77-Customs dated 08-08-1977. (ii) Whether the countervailing duty was liable to be reassessed under Item 31(2) of the Central Excise Tariff with consequential refund in the appeals where such claim was made.

Issue (i): Whether Nickel Cadmium Cells imported for use in walkie-talkie sets were classifiable under Heading 85.04 of the Customs Tariff Act, 1975, or under Heading 85.15(1) so as to attract Notification No. 172/77-Customs dated 08-08-1977.

Analysis: Note 2(a) to Section XVI and Interpretative Rule 3(a) require classification under a specific heading where one exists for the goods themselves. Heading 85.04 is a separate and specific heading for electric accumulators. The imported Nickel Cadmium Cells fell within that description notwithstanding the form of electrolyte used, since the nature of the electrolyte did not take them outside the general category of electric accumulators. As the goods were covered by Heading 85.04, they could not be brought under Heading 85.15(1).

Conclusion: The goods were correctly classified under Heading 85.04, and Notification No. 172/77-Customs was inapplicable. The challenge to the basic customs duty assessment failed.

Issue (ii): Whether the countervailing duty was liable to be reassessed under Item 31(2) of the Central Excise Tariff with consequential refund in the appeals where such claim was made.

Analysis: Notification No. 94/76-C.E. applied to metal jacketed dry batteries, whereas the imported Nickel Cadmium Cells were rechargeable storage batteries and not dry batteries. Even so, since the goods were storage batteries, their assessment ought to have been under Item 31(2), which attracted the lower rate of duty claimed by the appellants. The departmental representative raised no objection to that course.

Conclusion: Countervailing duty was directed to be reassessed under Item 31(2) of the Central Excise Tariff, with consequential refund in the specified appeals.

Final Conclusion: The appeals succeeded only to the limited extent of countervailing duty relief in the specified matters, while the classification for basic customs duty and the related exemption claim were upheld against the appellants.

Ratio Decidendi: Where a specific tariff heading squarely covers imported goods, classification cannot be shifted to a heading for the main equipment or to obtain exemption, and countervailing duty must follow the appropriate tariff item applicable to the goods' true character.

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