1998 (7) TMI 271 - AT - Central Excise

CEGAT Classifies Clocks in Pen-stands & Diaries Based on Original Character

The Appellate Tribunal CEGAT ruled that Clocks fitted into Pen-stands and Diaries should be classified based on the original character of the goods, ... Manufacture - new article - classification of composite goods - essential character - Rule 3(b) of the Rules for the Interpretation of the Central Excise Tariff - HSN Explanatory NotesManufacture - new article - Installation of clocks into pen-stands, pen-cups, diaries and similar articles constitutes the bringing into existence of a new article (i.e., amounts to manufacture). - HELD THAT: - The Tribunal found that the activity of fitting digital clocks into pen-stands, pen-cups and diaries is materially more complex than merely placing an item into a box and, on that basis, upheld the Collector's conclusion that a new article is brought into existence. The comparison relied upon the cited authority concerning mere packaging but distinguished it on facts, concluding that the installation operation effects manufacture. [Paras 4]The installation of clocks into the described articles amounts to manufacture and results in a new article.Classification of composite goods - HSN Explanatory Notes - The composite articles with clocks are not classifiable under Heading 8472.00 as 'other office machines'. - HELD THAT: - The Tribunal accepted the submission that the tariff wording and the HSN Explanatory Notes do not support treating such composite articles as 'other office machines.' The HSN general Explanatory Note to Chapter 91 was applied to show that where clocks are combined with other articles, classification must follow the nomenclature rules rather than a broad characterization as office machines. [Paras 5]Classification under Heading 8472.00 is not attracted to the composite articles in question.Rule 3(b) of the Rules for the Interpretation of the Central Excise Tariff - essential character - classification of composite goods - Composite articles containing clocks must be classified according to the component which gives them their essential character, and the matter is remitted for fresh classification proceedings. - HELD THAT: - Relying on Rule 3(b) the Tribunal held that composite goods are to be classified as if they consisted of the component which imparts their essential character. Applying that rule the original character of the goods (e.g., pen-stand, diary) is to prevail over the presence of a clock. Consequently, the Tribunal set aside the lower orders and remitted the matter to the jurisdictional Assistant Collector to examine the composition of each product and re-determine classification in de novo proceedings. [Paras 5, 6]The composite articles are to be classified according to the component giving them essential character; proceedings are remitted to the Assistant Collector for fresh classification.Final Conclusion: The Tribunal held that fitting clocks into pen-stands, diaries and similar articles amounts to manufacture creating a new article; rejected classification under Heading 8472.00; directed application of Rule 3(b) to classify each composite article according to the component giving it its essential character and remitted the matter to the Assistant Collector for de novo determination. The Appellate Tribunal CEGAT, New Delhi heard a case where Clocks were fitted into Pen-stands and Diaries. The Assistant Collector classified them as 'other office machines,' but the tribunal disagreed. The tribunal ruled that the original character of the goods should prevail, so the composite articles should be called a pen-stand with Clock or a Diary with Clock. The tribunal remitted the proceedings back to the Assistant Collector for reclassification based on the components other than the clocks.