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CASE NO.: Appeal (civil)  4564 of 2002

PETITIONER: M/s Intel Design Systems (India) P. Ltd

RESPONDENT: Commissioner of Customs & Central Excise

DATE OF JUDGMENT: 11/02/2008

BENCH: Dr. ARIJIT PASAYAT & LOKESHWAR SINGH PANTA

JUDGMENT: J U D G M E N T

CIVIL APPEAL NO. 4564 OF 2002

Dr. ARIJIT PASAYAT, J.

1.      Challenge in this appeal is to the order passed by the  Customs, Excise and Gold (Control) Appellate Tribunal, Fort,  Mumbai (in short ’CEGAT’) dismissing the appeal filed by the  appellant questioning correctness of the order in appeal dated  27.10.1999 passed by Commissioner, Customs and Central  Excise (Appeals), Pune (in short ’Commissioner (Appeals)).    

       Background facts in a nutshell are as follows:

       The appellant, engaged in the manufacture of excisable  goods, inter alia, filed classification list of their products  mentioned at Sr. No.1(a) to (u) of the classification declaration  with effect from 20.12.1996 claiming classification under  Chapter Heading 8710 of the Schedule to the Central Excise  Tariff Act, 1985 (in short the ’Tariff Act’).  The goods in the  classification list were described as parts of tanks and other  armoured and motorized fighting vehicles under Chapter Sub- Heading 8710.00 of the Tariff Act. It is the contention of the  appellants that the said goods are manufactured for  Government of India, Ministry of Defence and are used in the  tanks and armoured fighting vehicles.  These goods are strictly  manufactured as per drawing and design supplied by the  customer i.e. Ministry of Defence.  Since the goods are  manufactured for use solely and principally for fitting into the  tanks in armoured fighting vehicles of the Defence  Department, the correct classification would be under Chapter  sub-heading 8710.00.  In support of their contention, they  have also relied upon the Circular No.17/90 CEX IV dated  9.7.1990 in which it was clarified that transmission elements,  switches, gears, gearing etc. do not fall under Chapter Heading  84.83 when they are specifically designed for use in the  vehicles of Section XVII of the Tariff.  In support they have  submitted CT2 certificate received from Superintendent,  Central Excise, Madras wherein it was stated that said goods  are classifiable under Chapter Heading 8710.  In view of the  evidence, it was contended that their classification under  Chapter Heading 8710 was in order.  On the other hand, the  adjudicating authority relied upon Note 2(f) to Section XVII  which excludes the goods i.e. electrical machinery and  equipment falling under Chapter 85 and since the appellants’  manufacture goods such as contractors, switches, control box

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etc. and are used for switching/protecting electrical circuits or  for making connections to or in electric circuits, these are  parts of electrical equipments falling under chapter sub- heading 8536.90 and CBEC circular was, therefore, not  relevant.  Moreover, reliance was placed on the interpretative  Rule 3(a) which provides that specific entry shall be preferred  to the heading providing more general description.   Accordingly, Assistant Commissioner classified the goods  under chapter sub-heading 8536.90 and confirmed the  demand.                

       CEGAT dismissed the appeal filed by the appellant.  

2.      Learned counsel for the appellant submitted that the  classification list for period in question was submitted on  9.4.1997 for the previous periods. Such classification lists  were approved. The show-cause notice was issued by the  Department proposing to levy duty under Heading 8536.90.   The Department had not proved that articles fall within  Heading 8536.90. It has also relied on Circular No.17/90- CX.4, dated 9.7.1990.  A note II has no application because  Department has not proved that the articles fall under Chapter  85.  Leaned counsel for the respondent supported the orders.   

3.      It is to be noted that the CEGAT has held that goods are  identifiable as goods under Chapter 8536.90. The authorities  have categorically held that the article falls under Chapter 85.

4.      As per Rule 1 on Interpretive Rules, classification of  excisable goods is to be determined according to the terms of  the Heading and in terms of Section/Chapter notes.  Note 2(f)  to Section XVII (which governs Chapter 87) excludes the goods  viz. electrical machinery and equipment (Chapter 85). The  goods in question i.e. contractors, switches, control box etc.  are the goods used for switching, protecting electrical circuits  or for making connections to or in electric circuit. These  parts/components are specifically covered under CSH  8536.90. The CBEC Circular relied upon by the assessee is  not relevant.

5.      As per the Explanatory Notes to HSN the parts falling  under Chapter Heading 8710 would be covered under the said  chapter, provided they fulfill both the conditions i.e. they must  be identifiable as being suitable for use solely or principally for  such vehicles and that they must not be excluded by the  provisions of Notes to Section XVII. The identifiable parts  under the said heading bodies of armoured vehicles and parts  thereof, cover special road wheels for armoured cars,  propulsion wheels for tanks, tracts etc.  As per this  requirement, the goods should not only be identifiable to be  armoured vehicles, but it should so not have been excluded by  Notes to Section XVII.  The Chapter note 2(f) excludes  electrical machinery and equipment falling under Chapter 85.   Explanatory Notes to HSN relating to the parts and accessories  excluded by Note 2 specify items with reference to specific   Chapter Heading as per (7) (a), (k) which excludes photographs  and other current collectors for electric traction vehicles,  fuses, switches and other electric apparatus of Heading  No.85.35 or 85.36. The items, therefore, manufactured by the  appellants are identifiable or are in the nature of goods falling  under Chapter Heading 85.36.  Since these fall under the  category of excluded goods under Chapter Notes, even though  they are used specifically solely or principally with the  armoured vehicles of Chapter Heading 8710, they are  classifiable under Chapter Heading 8536.90 only as held by

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the adjudicating authority.         6.      The appeal is therefore sans merit, deserves dismissal  which we direct.