Case: Commnr. Of Customs, New Delhi Vs. M/S. Sony India Ltd

HSN Explanatory Notes to Rule 2 (a) had to be applied while considering the relevant Tariff Entry. It has also correctly held after considering the whole process that the process involved in the user of the components is the complex manufacturing process during which many components are subjected to working operation requiring sophisticated machinery and skilled operators. Further it has correctly assessed the effect of the amendment of HSN Explanatory Notes which came on 14.3.1997. We approve of the finding given by the Tribunal in para 25 of its order which takes into account the fact that there was no amendment to Clause (v) while this is amended to the effect that complexity of the assembly method was made irrelevant. However, it was made clear that the components would not be subjected to any further working operation for completion in the finished state. The Tribunal has referred in details to the manufacturing process to show that some of the components require further working operation for completing the manufacturing process and further that CTV is not a machine which is presented in assembly for the sake of convenience of packing, handling or transport. We are, therefore, in agreement with the finding that even applying the amended HSN Explanatory Notes the position would be no different. 16. Our attention was invited to a very interesting decision reported in Modi Xerox Ltd. v. CCE, New Delhi (1998 (103) ELT 109] which was confirmed by this Court in 2001 (ELT) A 91 (it must be noted that the decisions in Woodcraft Products is specifically confirmed in this decision). In this case, the Tribunal had relied on Tara Chands case as also the CC v. Mitsuny Electronics Works [1987 (13) ELT 345 (Cal. HC)] which we have made reference in the earlier part of this judgment. The Tribunal had held that the fax machine in completely knocked down condition imported by the appellant being not a fax machine but part thereof, the benefit of exemption under notification No.59/88/Cus. Dated 1.3.1988 would not be available. Very interestingly, it was claimed by the importer that it had imported the fax machine and not the components obviously because the duty payable on the components was more. The Tribunal came to the conclusion that in view of Section Note 2 to Section XVI Rule 2(a) would not apply and confirmed the import of goods as components. While interpreting Explanatory Note to Rule 2(a), the Tribunal had held that this Rule would apply only when the imported articles presented in unassembled or disassembled can be put together by means of simple fixing device or riveting or welding. It came to the conclusion that fax machines were not the type of goods which were normally traded or transported in knocked down condition and therefore, the imports were that of the components and not of fax machines. Shri Lakshmikumaran also invites our attention to the fact that Chapter 64 dealing with footwear does not have a note similar to Note 2 in Section XVI. Thus this position would render support to the proposition that Rule 2(a) would apply only when the imported articles presented unassembled or disassembled can be put together by means of simple fixing device or by riveting or welding. We have already pointed out in the earlier part of our judgment that the complicated process would be required for the user of those parts. 17. Lastly, we must take stock of the argument of Shri Lakshmikumaran that Section Interpretative Rule 2(a) would not be applicable at all in this case. For this he invited our attention to Rule 1 of Interpretative Rules as also to the decision in Simplex Mills v. Union of India [2005 (181) ELT 345 (SC)] wherein this Court had held in para 11 as under: "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 sector 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-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." Relying on this the further contention of the counsel is that Section Note 2 of Section XVI provides mandate for classification of the parts of machines falling under Section XVI. In terms of Rule 1 of Interpretative Rules, invocation of Rule 2(a) for certain categories of goods covered in Section XVI like the goods of CTVs are prohibited. For this the learned counsel relied on the decision in Modi Xerox (supra). In that view the learned counsel says that Rule 2(a) would not be applicable at all. This question needs no consideration here particularly in view of the interpretation that we have given to Rule 2 (a). On facts, we have already found that Rule 2(a) would not be applicable to the present case since there is no question of the goods having the essential character of CTVs. In that view, the question of applicability of Section 2(a) on this account need not be gone into in this judgment. 18. We also approve of the reliance by the Tribunal on the reported decision in Susha Electronics Industries v. CC [1989 (39) ELT 585], Trident Television Pvt. Ltd. v. CC [(1990) 45 ELT 24] , Vishal Electronics Pvt. Ltd. v. CC, Bombay [1998 (102 ELT 188], Sharp Business Machines (supra) and the judgment of the Calcutta High Court in HCL Ltd. (supra). 19. Accordingly, we are of the clear opinion that the Tribunals judgment needs no interference.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]We also approve of the reliance by the Tribunal on the reported decision in Susha Electronics Industries v. CC [1989 (39) ELT 585], Trident Television Pvt. Ltd. v. CC [(1990) 45 ELT 24] , Vishal Electronics Pvt. Ltd. v. CC, Bombay [1998 (102 ELT 188], Sharp Business Machines (supra) and the judgment of the Calcutta High Court in HCL Ltd. (supra).Accordingly, we are of the clear opinion that the Tribunals judgment needs no interference.