IMPORTANT POINT
The goods in question, which are found to be parts of automobiles are wrongly classified by Tribunal under tariff item 52 of CE Act, 1944 and were rightly classified under T.I. 68 in the respective Civil Appeals for the period prior to 1986.

Headnote:(i) Central Excise Act, 1944 (For Pre 1986 period)-Classification of component parts of Motor Vehicles- Tribunal classifying them under Tariff Items 52 and 68 of the first schedule-Controversy centres round tariff items 52 (15% duty) or 68 (12% duty).
       Held : The question that needs to be adverted to is: whether the goods in question can appropriately be classified under Tariff Item 52 or not having been specified elsewhere, they fall under Tariff Item 68. In construing these items, what is the proper test to be applied? It is the functional test or is it commercial identity test which would determine the issue. It seems to us that this question is no longer res integra. It fell for consideration of this Court earlier and it was laid down that the true test for classification was the test of commercial identity and not the functional test. It needs to be ascertained as to how the goods in question are referred to in the market by those who deal with them, be it for the purposes of selling, purchasing or otherwise. (Para 16)
       Held after case law : In the light of the above discussion, if we read the findings of fact recorded by the Tribunal in the appeals before us, referred to above, it cannot but be concluded that the goods in question, which are found to be parts of automobile were wrongly classified under Tariff Item 52 by the Tribunal in Civil Appeal Nos. 4598-4612 of 1994 and were rightly classified as falling under Tariff Item 68 in Civil Appeal Nos. 5701-5705 of 2001. (Para 22)
       (ii) Central Excise Tariff Act 1985 (For the past 1986 period)-Classification of components parts of motor vehicles-Competing Heading Nos. 73.18 and 87.08-Notes under them-Meaning-Correct heading 87.08-Result-Appeal by Revenue dismissed.
       Held : A conjoint reading of the Notes, referred to above, would show that the expression "parts of general use" throughout the Schedule, means, inter alia, articles of Heading No. 73.18 and similar articles of other base metal; and the expression part and accessories in Chapter Heading 87.08 does not apply to parts or accessories which are not suitable for use solely or primarily with articles of Chapter Heading 87.08 which pertains to parts and accessories of motor vehicles of Chapter Heading Nos. 87.01 to 87.05. For the purposes of classification under Chapter Heading 87.08, the test to be applied is: whether the goods are suitable for use solely or primarily with articles of Chapter Heading Nos. 87.01 to 87.05; if the answer is in the affirmative, the goods will be classifiable under Chapter Heading 87.08, but if the answer is in the negative, they would have to be classified under Chapter Heading No. 73.18. Having regard to the finding that the goods in question cannot but be regarded as parts of automobiles, it has to be held that they are suitable for use primarily with articles of Chapter Heading Nos. 87.01 to 87.05. It follows that the goods in question cannot be treated as falling under Chapter Heading No. 73.18 and that they can properly be classified under Chapter Heading No. 87.08 of the Central Excise Tariff Act, 1985. (Para 28)
       Held consequently : In this view of the matter, the judgments and orders of the Tribunal under challenge in the first set of appeals (Civil Appeal Nos. 4598-4612 of 1994) are set aside and the appeals filed by the assessee are allowed. The judgment of the Tribunal under challenge in the second set of appeals (Civil Appeal Nos. 5701-5705 of 2001) and the order impugned in the third appeal (Civil Appeal No. 5711 of 1999) are confirmed and accordingly, the appeals filed by the Revenue are dismissed with costs. (Para 29)

JUDGMENT

Syed Shah Mohammed Quadri, J.-This bunch of appeals raises a common question of classification of certain goods (thirty two items), which will be referred to presently, manufactured by the assessee-appellant in Civil Appeal Nos. 4598-4612 of 1994 (the first set of appeals) which are directed against the final judgment and order of the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi (for short, the C.E.G.A.T. ) in Appeal Nos. E-5455-5469/92-D dated November 22, 1993 and the order in Rectification Application No. E/41/93-D passed on March 3, 1994. The second set of appeals, Civil Appeal Nos. 5701-5705 of 2001, filed by the Revenue, is from final judgment and order in Appeal Nos. E-289-293/1988-D dated January 9, 2001. All these twenty appeals relate to the Assessment Years 1979 to 1986, albeit, for different periods, Civil Appeal No. 5711 of 1999 is filed by the Revenue, dissatisfied by the final judgment and order of the C.E.G.A.T. in Final Order No. 351/99-B in Appeal No. E/2483/1992-B passed on April 6, 1999 and it relates to the Assessment year 1986-87.

2. In the order impugned in the first set of appeals, the Tribunal applied the functional test and classified those thirty two items, manufactured by the assessee, under Tariff Item 52 of the First Schedule to the Central Excise Act, 1944. The classification was based on the finding recorded by the Tribunal, after referring to the findings in the identical case of M/s. Hindustan Motors Limited vs. Collector of Central Excise, Calcutta [Tribunal s Order No. E/333/93-D dated 6th October, 1993 Appeal No. E/882/85-D]. The finding reads as follows:

"....the Tribunal had clearly held that goods, even though used as component parts of motor vehicles having a fastening function primarily, are to be classified under Item 52 C.E.T."

(Emphasis supplied)

3. Two points may be noted in this finding. (1) the goods in question are component parts of motor vehicles; and (2) the function of those goods is the fastening of parts.

4. For the same assessment years but for a different period, the Tribunal, in its order dated January 9, 2001 (subject-matter of Civil Appeal Nos. 5701-5705 of 2001), approved the following findings recorded by the Collector (Appeals) with regard to the same goods:

"I observe that these are specially designed parts for use in automobile vehicles, sold in unit and as per part numbers of the original vehicle manufacturers. They are not inter-changeable and can be marketed only by auto-vehicle part dealers. Each and every part in question has code number, vehicle in which they can be used, their nomenclature, description marking and part number. On careful examination of these samples, I find that some of the items are not even threaded. They are suitable for use only in different motor vehicles according to their specifications. As per the sample and catalogue, by no stretch of imagination these items in question can be termed as general type of fasteners.

(Emphasis supplied)

5. Referring to the test applied by this Court in Purewal Associates Limited vs. Collector of Central Excise (87 E.L.T. 321), the Tribunal held:

"No one uses these parts as general parts of bolts and nuts. Some parts are such that they can, if one wants, be used as a general purpose bolt or nut. This type of stray use of which they may be put can not take them out of the category of parts of Automobile. The materials now made available namely the catalogue, affidavits given by dealers in automobile parts and the communications received from M/s. Maruti Udyog Ltd., M/s. Mahindra and Mahindra, M/s. Daewoo Motors show that these goods manufactured are specialised parts required for automobiles. These parts are manufactured at the instance of automobile manufacturers and they procure it as original equipment or replacement parts. No iota of evidence is forthcoming from the Revenue to show that these parts are ever made available in the market as bolt and nuts or that they are

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Judicial Analysis

SupremeToday

2003 Supreme(SC) 43

IMPORTANT POINTThe goods in question, which are found to be parts of automobiles are wrongly classified by Tribunal under tariff item 52 of CE Act, 1944 and were rightly classified under T.I. 68 in the respective Civil Appeals for the period prior to 1986.

Judicial Analysis

IMPORTANT POINT
The goods in question, which are found to be parts of automobiles are wrongly classified by Tribunal under tariff item 52 of CE Act, 1944 and were rightly classified under T.I. 68 in the respective Civil Appeals for the period prior to 1986.