Specific tariff heading prevails over functional use when printed circuit assemblies qualify as microassemblies under Heading 85.42.

Printed circuit assemblies used as telephone equipment components were treated as modular assemblies of discrete active and passive parts, bringing them within Heading 85.42 as electronic integrated circuits and microassemblies. Chapter Note 5 to Chapter 85 gave Headings 85.41 and 85.42 precedence over competing headings, and Section Note 2 to Section XVI required goods specifically covered by Chapter 85 to be classified there first. Heading 85.17 for telephony apparatus applied only if the goods were not otherwise classifiable under Heading 85.42. On that basis, the broader functional heading could not displace the more specific tariff entry, and the classification in favour of the assessee was upheld.

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Issues: Whether printed circuit assemblies used as components of telephone equipment were classifiable under Heading 85.17 as electrical apparatus for telephony or under Heading 85.42 as electronic integrated circuits and microassemblies.

Analysis: Chapter Note 5 to Chapter 85 gave Heading 85.41 and 85.42 precedence over any other heading in the Schedule that might cover the goods by reference to their function. The goods were described as modular assemblies consisting of discrete active and passive components, which brought them within the concept of microassemblies under Heading 85.42. Section Note 2 under Section XVI also required goods falling specifically under Chapter 85 to be classified in their respective headings, and Heading 85.17 could be considered only if the goods were not otherwise classifiable under Heading 85.42. The appellate finding that the goods did not answer the telephony apparatus entries was supported by the record.

Conclusion: The goods were correctly classifiable under Heading 85.42 and not under Heading 85.17; the Revenue's challenge failed.

Final Conclusion: The classification adopted in the assessee's favour was upheld and the Revenue's appeal was dismissed.

Ratio Decidendi: Where goods are specifically covered by a later and more specific tariff heading, supported by chapter and section notes giving that heading precedence, classification cannot be shifted to a broader functional heading merely because the goods are used as components of that function.

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