Classification of watch movement parts: imported rotor, stator and coil components qualified for exemption, not as electric motors under Chapter 85.

Imported rotor, stator and coil components supplied with other watch movement parts were treated as parts imported in unassembled condition, not as complete electric motors under Chapter 85. The department did not produce evidence to support classification under Heading 8501, and the goods were brought on a common bill of entry with other components rather than as separate finished motors. On the notification issue, the exemption for components of mechanical and quartz analog wrist watches was read as applying to parts used in manufacture of wrist watches, so the Heading 91 condition was not confined in the manner suggested by the department. The goods were therefore eligible for the benefit of Notification No. 43/85.

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Issues: Whether rotor, stator and coil imported along with other watch movement parts were classifiable under Chapter 85 as electric motors or under Heading 91.10 as parts of quartz analog watch movements, and whether they were entitled to exemption under Notification No. 43/85 dated 28-2-1985.

Analysis: The notification exempted components of mechanical wrist watches and quartz analog wrist watches falling under Heading 91.01/11 when imported for manufacture of wrist watches. The dispute was confined to whether the imported items, though described by the department as step motors, were in fact electric motors classifiable under Chapter 85 or merely parts imported in unassembled condition forming watch movements. No evidence was produced to establish classification under Heading 8501 on the basis alleged by the department. The imported items were found to be parts brought in with other components on a common bill of entry and did not separately establish a complete electric motor. The interpretation placed on the notification also indicated that the Heading 91 condition applied to the finished watches, not to every component.

Conclusion: The imported goods were not classifiable under Chapter 85 for the purpose of denying the exemption, and the appellants were entitled to the benefit of Notification No. 43/85.

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