1994 (5) TMI 66

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....ly covered under the said heading and Notes 1(k) and 2(a) of Section XVI of the CETA, 1985 come into play. Respondents on the other hand contend that the said goods are covered under Tariff Heading 87.08 as tractor parts. Notes of Section XVI, as mentioned above, do not apply in view of Section Note 2(e) of Section XVII of the CETA, 1985. It may be noted that Chapter 84 falls under Section XVI and Chapter 87 falls under Section XVII of the Tariff. 2. In order to appreciate the above controversy, we may reproduce the relevant Tariff Headings and Section notes :- (1) Section Note 1(k) :- "1. This Section does not cover : (k) Articles of Section XVII : (2) Section Note 2(a) of Section XVI :- 2. Subject to Note 1 to this ....

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....n Note 1(k) specially states that Section XVI, in which Chapter 84 falls, does not cover articles falling under Section XVII. Question of applying Section Note 2(a) of Section XVI, therefore, arises after recording a finding that Section XVII does not apply to the goods under consideration. We have, therefore, to examine whether Section XVII i.e. Chapter 87 applies to the goods under consideration. 4. Now Tariff Heading 87.08 applies to `parts and accessories' of Motor vehicles of Heading Nos. 87.01 to 87.05. It is admitted to both sides that `shafts' and `gears' under consideration before us are parts of tractors inasmuch as they are principally used in tractors. No other use of these parts has been brought on record. Learned SDR, ....

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....o, so that the driving forces applied to the wheels of the vehicle can be adapted to the varying road resistance conditions." 5. Shri P.S. Bedi, learned consultant on the other hand relies on the lower Appellate Authority's judgment. He submits that `gears' and `shafts' are not integral parts of engines; they effect the power of the engine being outside the engine of a tractor. Engine merely produces power. Any part which controls the power produced by the engine will naturally be outside the engine and cannot be an integral part of it. He relies on HSN Explanatory Notes and points out the `gears' and `shafts' of automobiles are specifically excluded from the scope of 84.83. Relevant extracts from HSN Explanatory Notes in respect of....

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....incipally with the abovementioned vehicles; and (ii) They must not be excluded by the provisions of the Notes to Section XVII (See the corresponding General Explanatory Note). Parts and accessories of this heading included : ................................................................... (d) Gear boxes of all types (mechanical, overdrive, preselector, electro-mechanical, automatic, etc.); torque converters ; gear box castings; shafts (other than internal parts of engines or motors); gear pinions; direct drive dog-clutches and selector rods, etc. * * * * * *  (f) Other transmission parts and components (for example, propeller shafts, half-shafts; gears, gearing; plain shaft bearings; reduction....

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....al nature part of tractors. Such an argument advanced by the appellant-Collector ignores the various Section Notes mentioned above. This cannot be accepted, because the very first rule is the Interpretative Rules relied upon by the Revenue itself enjoins that classification is to be made according to the terms of the headings and the relative Section Notes and Chapter Notes. 7.3 Argument now advanced by the learned SDR that `gears' and `shafts' under consideration are integral parts of the engine, on the basis of the meaning of the word `integral' is in our view without any evidence. It appears from the finding of the learned lower appellate authority, already set out and emphasised above, that the "goods in question are undisputedl....