TMI Blog2015 (5) TMI 241X X X X Extracts X X X X X X X X Extracts X X X X ..... pter Note 5, measuring or checking optical appliances, instruments and machines are excluded from this heading and fall in heading 90.31. Chapter Note 4, however, classifies certain refracting telescopes in this heading and not in heading 90.05. It should, moreover, be noted that optical instruments and appliances can fall not only in headings 90.01 to 90.12 but also in other headings of this Chapter (in particular, heading 90.15, 90.18 or 90.27). - LCD would be covered by 'other devices' mentioned in 9013.80 - Decided in favour of assessee. - Civil Appeal No. 7526 of 2004 - - - Dated:- 5-5-2015 - A. K. Sikri And Rohinton Fali Nariman,JJ. For the Petitioner : Mr. Rajesh Kumar For the Respondent : Mr. B. Krishna Prasad JUDGMENT A. K. Sikri, J. The appellant is engaged in the manufacture of electricity meters. In September 2000, the appellant imported a consignment consisting of LCD Modules (Printed Circuit Boards) and Liquid Crystal Display (LCD) from Hong Kong. The classification of the LCD Module is not in dispute. The dispute in the instant case relates to classification of LCDs. The appellant sought clearance of LCDs under Chapter Heading 9013.80 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issued as parts of energy meter. 4) Since the appellant claims that the LCDs fall under Chapter Heading 9013.80 and the argument of the Revenue is that these are rightly classified under Heading 9028.90, we may first take note of these Chapter Headings: Tariff Item Description of Goods (1) (2) 9013 Liquid Crystal Devices not constituting articles provided for more specifically in other headings; lasers, other than laser diodes; other optical appliances and instruments, not specified or included elsewhere in this Chapter 9013.80 Other devices, appliances and instruments; 901380.10 Liquid Crystal Devices (LCD) 9028 Gas, Liquid or electricity supply or production meters, including calibrating meters therefor 9028.90 Parts and accessories 9028.90.10 For electricity meters 5) One thing is clear. Both the tariff items under which classification is sought by the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aran, learned counsel appearing for the appellant, is that when the specific description of the goods in question, namely, LCDs, is distinctly covered by another tariff item which is 9013, it has to be classified in that entry and the factum of its use as part or accessory in the electronic energy meters would be of no consequence and, therefore, it cannot be held to be covered by tariff item 9028.90. The submission, precisely, was that whenever a particular item of goods falls in a specific tariff item, it has to be classified under the said tariff item and not in other item where it can be used as part thereof. 9) Mr. Lakshmikumaran has also placed heavy reliance upon Note 2 attached to Chapter 90 and argued that as per Note 2(a), parts and accessories, which has goods included in any of the headings of said Chapter 90 (or of Chapter 84, 85 or 91), are to be classified in their respective headings. 10) Ms. Kiran Suri, learned senior counsel appearing for the respondent/department, argued, per contra, that in the present case goods were specifically meant for use as parts in electric meters, which is even accepted by the appellant. Therefore, Note 2 would not apply in this c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied by reference to (a) or (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration. 11) She argued that as per Rule 3(a) of the Rules, it was incumbent to classify the goods in that heading which provides 'the most specific description' in contrast with the heading providing for a more general description. She also referred to the following portion of the assessment order made by the Commissioner of Customs to buttress her aforesaid submission: Even if we ignore the above definition of device and consider the imported parts i.e. Liquid Crystal Displays to be devices , only those liquid crystal devices/displays which do not constitute article provided for more specifically in other headings will be covered in CTH 90.13. In other words, liquid crystal devices/displays which do not specifically form part of a specific type of equipment will be classified here. General purpose LCD, for example the one displaying only 0-9 numbers, which can be attached to several devices/equipments and cannot be specifically covered in any one heading as parts are to be classified here if they are considered as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant para is reproduced below: 11. The Rules for the Interpretation of the Schedule to the Central Excise Tariff Act, 1985 have been framed pursuant to the powers under Section 2 of that Act. According to Rule 1 titles of sections and chapters in the Schedule are provided for ease of reference only. But for legal purposes, classification shall be determined according to the terms of the headings and any relevant section or chapter notes . If neither the heading nor the notes suffice to clarify the scope of a heading, then it must be construed according to the other following provisions contained in the Rules. Rule 1 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. The appellants have relied upon Rule 3. Rule 3 must be understood only in the context of sub-rule (b) of Rule 2 which says inter alia that the classification of goods consisting of more than one material or substance shall be according to the principles contained in Rule 3. Therefore when goods are prima facie, classifiable under two or more headings, classification shall be effected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... true solids. But the molecules can be rotated slightly by an electric current. When no current flows, the bars are not noticeable, because they reflect light to the same extent as the rest of the display surface. But when a current flows through a bar, its molecules rotate and its ability to reflect light is reduced. That bar appears darker than the area around it and forms part of a number or letter. You can produce a similar darkening effect, called polarization, with Polaroid sunglasses. Hold the glasses several centimeters from one eye and look through one lens at a shiny, sunlit surface. Rotate the lens and observe the darkening. Liquid crystals can be made to order to do a particular job. For example, one kind of crystal is sensitive to slight temperature changes. It is used in thermometers where the number representing the temperature appears, then disappears, to be succeeded by a higher or lower number as the temperature changes. The basic pattern of digits or letters which is formed in these LCDs is as follows: 0 1 2 3 4 5 6 7 8 9 a c e f h I j l p u As is clear from the above, in the LCD the bars are made of liquid crystals which are neither liquid nor sol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods will be classified in tariff item 9013, which is the specific heading for these goods. 17) In Collector of Central Excise v. Delton Cables Ltd. Anr. (2005) 12 SCC 284, this Court has held, while interpreting Notes 2(a) and 2(b) of Chapter Heading 85, which is virtually to the same effect, that Note 2(b) would apply only if the items in question were not specifically classifiable under their respective headings. Para 4 of the said judgment, to this effect, reads as under: 4. It is clear from a reading of the two clauses to the section note that clause (b) would only apply once it was found that the items in question were not specifically classifiable under their respective headings. As has been clearly said by the Collector (Appeals) from the sequence of the paragraphs given under Section Note 2 it is clear that the question of switching over to Section Note 2(b) can arise only after ensuring that the parts are not covered by Section Note 2(b) [sic Section Note 2(a)] which begins with the expression other parts meaning thereby that the parts which are not covered by Section Note 2(a) would be considered for coverage by Section Note 2(b). One cannot therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the above takes things beyond the pale of any doubt by making it crystal clear that those parts and accessories which in themselves constitute 'article' falling in any particular heading of this Chapter, the general rule will not apply and said article would fall in that particular heading. To demonstrate this, examples which are given, eminently fit into the case at hand. 20) The aforesaid view of ours gets further cemented on going through Explanatory Notes issued by the World Customs Organization. Volume 4 of the Second Edition (1996), which covers Chapters 85-97, contains explanatory note in respect of item mentioned at 90.13, with which we are directly concerned herein. Relevant portion thereof reads as under: 90.13 - LIQUID CRYSTAL DEVICES NOT CONSTITUTING ARTICLES PROVIDED FOR MORE SPECIFICALLY IN OTHER HEADINGS: LASERS, OTHER THAN LASER DIODES; OTHER OPTICAL APPLIANCES AND INSTRUMENTS, NOT SPECIFIED OR INCLUDED ELSEWHERE IN THIS CHAPTER. 9013.10 - Telescopic sights for fitting to arms; periscopes; telescopes designed to form parts of machines, appliances, instruments or apparatus of this Chapter or Section XVI 9013.20 - Lasers, other than laser diode ..... X X X X Extracts X X X X X X X X Extracts X X X X
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