Project-import tariff classification upheld for air filters used in a flour milling plant, with related exemption benefit allowed.

Air filters used in a flour milling plant were treated as classifiable under the special project-import headings in Chapter 98 rather than under Tariff Heading 8421.39, because tariff headings must be construed by their own wording and Chapter 98 is intended to cover machinery meeting the prescribed project-import parameters. The goods were not shown to be excluded by any Chapter Note or by the Project Import Regulations, and their functional connection with the flour milling machinery supported the special classification. On that basis, the related benefit of Notification No. 69/87-Cus. was also upheld in favour of the assessee.

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Issues: Whether the air filters used in a flour milling plant were classifiable under Tariff Heading 9801/9806 as claimed by the assessee, or under Tariff Heading 8421.39 as contended by the Revenue, and whether the benefit of Notification No. 69/87-Cus. was admissible.

Analysis: The applicable tariff headings had to be construed according to their own wording, and the special import headings under Chapter 98 were intended to cover machinery meeting the prescribed parameters for project imports. The goods in question were not shown to be excluded from Tariff Heading 9801 or 9806 by any Chapter Note or by the Project Import Regulations. The earlier authority's view, based on the explanatory note and the functional connection of the filters with the flour milling machine, was found to be correct, and the same reasoning supported grant of the notification benefit.

Conclusion: The classification under Chapter 98 and the consequential benefit of Notification No. 69/87-Cus. were upheld in favour of the assessee.

Ratio Decidendi: Where goods satisfy the scope of a special project-import tariff heading and are not excluded by the tariff notes or project import regulations, they are to be classified under that special heading, with the related exemption or notification benefit following accordingly.

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