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TMI Blog2012 (9) TMI 276X X X X Extracts X X X X X X X X Extracts X X X X ..... re manufactured at its factory at Delhi. Thereafter, the said components are assembled in the same factory for the purpose of testing of each component and for checking the working of each television set. Thereafter the television sets so assembled are disassembled and then transported as parts to various satellite units of the appellant company at different places. In these satellite units, the separate components are re-assembled and, as per the appellant, some further processes are carried out in order to make those sets marketable. The issue is whether such components, which are manufactured at and transported from the factory of the appellant at Delhi are liable to be assessed as 'Television Receivers' or as 'Parts of Television Receivers'. 4. The appellant was issued a show-cause notice dated 21.3.1990 by the Assistant Collector, New Delhi, whereby it was asked to show-cause as to why the goods manufactured by the appellant were not liable to be classified under sub-heading 8528.00 of the Tariff as 'Television Receivers', rather than under Entry 8529.00, as 'parts' of the same. The appellant replied to the show-cause notice that the goods/components as transported from its f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the provisions hereinafter contained. 2. (a) Any reference in a heading to goods shall be taken to include a reference to those goods incomplete or unfinished, provided that, the incomplete or unfinished goods have the essential character of the complete or finished goods. It shall also be taken to include a reference to those goods complete or finished (or falling to be classified as complete or finished by virtue of this rule), removed unassembled or disassembled." 9. Mr. Dushyant Dave, learned senior counsel appearing for the appellant contended that the aforestated Rules of the Rules for Interpretation may not be taken recourse to in the instant case, as there exists a clear stipulation to the contrary in the Section Notes to Section XVI of the Tariff, where the headings involved herein are located. Note 2 of the Section Notes to Section XVI is as follows: "2. Subject to Note 1 to this Section, Note 1 to Chapter 84 and to Note 1 to Chapter 85, parts of machines (not being parts of the articles of hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n should be determined according to the terms of the headings, and as the appellant had manufactured only parts of Television Receivers, the Revenue ought not to have classified the goods manufactured by the appellant as 'Television Receivers' under a different head instead of as 'parts' of the same. 14. In addition to these contentions, he also contended that if the goods manufactured by it are held to be Television Receivers covered by Tariff Entry 8528 mentioned above, it would lead to double-taxation as the satellite units, where such goods are finally assembled into Television Receivers, are in fact paying excise duty on the assembled goods under the above Tariff Entry 8528. 15. On the other hand, on behalf of the revenue, Mr. P.P. Malhotra, learned Additional Solicitor General justified the judgment delivered by the Tribunal. He tried to narrate the facts which lead the Revenue to classify the goods manufactured by the appellant as complete television for the reasons, some of which are as follows: a. The appellant was assembling manufactured parts of TV sets and operating TV sets so as to check whether the entire set was complete and operative and then the TV sets w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le- I gives primacy to the Section and Chapter Notes along with terms of the headings. They should be first applied. If no clear picture emerges then only can one resort to the subsequent rules." 20. Therefore, as clearly specified by the above rule, resort must first be had only to the particular tariff entries, along with the relevant Section and Chapter Notes, to see whether a clear picture emerges. It is only in the absence of such a picture emerging, that recourse can be made to the Rules for Interpretation. 21. In the matter at hand, the entire case of the Revenue is based on an application of Rule 2(a) of the Rules for Interpretation to the goods produced by the appellant, however, the applicability of this Rule cannot be established unless the classification is first tested against the relevant Section and Chapter Notes. In this case, the relevant Section Note is Section Note 2 to Section XVI of the Tariff, as reproduced above. The same may be reproduced again here for the purpose of a closer examination: "2. Subject to Note 1 to this Section, Note 1 to Chapter 84 and to Note 1 to Chapter 85, parts of machines (not being parts of the articles of heading 84.84, 85. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant in its complete form or in a disassembled form is irrelevant. 25. Looking to the facts of the case, it is not in dispute that complete Television was manufactured by the appellant and therefore, in our opinion, the Revenue had rightly classified the goods- product as complete Television set even though it was subsequently disassembled. 26. It is seen from the material on record, that at the time of the parts of the TV set being transported from the factory of the appellant, the parts manufactured by it are already identified as distinct units. As it can be seen from the affidavit of the Revenue, which has not been controverted by the appellant, the parts manufactured by it are matched and numbered within the factory itself, and also assembled together to receive pictures for the purpose of testing and quality control. The consequence of this is that the goods assembled at the satellite units would be identifiably the same as those assembled together by the appellant in its factory for the purpose of testing, as all such parts are already numbered and matched. This element of identifiability shall take the goods manufactured by the appellant away from being classified ..... X X X X Extracts X X X X X X X X Extracts X X X X
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