IMPORTANT POINT
Exclusion from payment of customs duty – When goods are excluded from a particular Chapter, “pull in” through a note has to be narrowly construed.

JUDGMENT :

S. RAVINDRA BHAT, J.

1. These appeals, by the revenue, challenge two orders by the Customs, Excise and Service Tax Appellate Tribunal (‘CESTAT’ hereafter).

2. In the first appeal¹[CA 5622/2009], the assessee is M/s Videocon International (hereafter “Videocon”). CESTAT, by its impugned order² [Dated 06.01.2009 in Order No. A/46/09/CSTB/C-II] in the first appeal, allowed Videocon’s appeal and held that the LCD panels imported by it are classifiable in Chapter Heading (“CH”) 9013.8010 [of the First Schedule to the Customs Tariff Act, 1975 (hereafter “CTA”)], as Liquid Crystal Devices-as opposed to the revenue’s stand, that they are classifiable as 85.29 "parts of goods falling under heading 85.28" [television sets falling in heading 85.28]. Videocon manufactures TV sets; the LCD panels are used by it, along with other items, such as printed boards, decoders, etc.

3. In the second appeal, CA 8026/2022 the revenue is aggrieved by order of the CESTAT⁴[Dated 09.11.2021 in Order No. A/87132/2021 in Customs Appeal No. 85003/2019] whereby import of LCD panels by the assessee i.e., M/S Harman International (India) Pvt. Ltd., (hereafter “Harman”) was held to be classifiable under CH 9013.8010, rejecting the revenue’s contention that they were classifiable as “Car Audio or Video Players” under either CTH 8519 or 8555. The LCD panels, in this case, were used as part of audio systems in automobiles.

Brief facts

4. In both appeals, the assesses had imported LCD panels/display boards. In Videocon appeal, Videocon claimed that the imported goods fell in the relevant entry in CH 9013.8010. That entry reads as follows:

“9013.8010 Liquid crystal devices (LCD)”

The Chapter Heading read as follows:

“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”

Whereas, the revenue contended that the LCD panels were to be classified as CH 8529, which reads as follows:

“Chapter 8529. "Parts suitable for use solely or principally with the apparatus of heading 8525 to 8528”

CH 8528 reads as follows:

“8528 Monitors and projectors, not incorporating Television reception apparatus, reception apparatus for television, whether or not incorporating radio-broadcast receivers or sound or video recording or reproducing apparatus”

5. The revenue claimed that the goods were improperly classified; a show cause notice was issued. The Deputy Commissioner, who adjudicated them, ruled against the assessee and held that the goods were classifiable under CH 8529. 9090. The assessee’s appeal succeeded, and the Commissioner directed a remand. The Dy. Commissioner, after remand, confirmed the show cause notice, and affirmed the classification proposed by it; the assessee appealed against this order, unsuccessfully. The Commissioner (Appeals) rejected its appeal. It, therefore, approached the CESTAT, which by the impugned order, set aside the demand, and upheld the assessee’s plea that the proper classification of the goods was in CH 9013.8010.

6. In the Harman appeal too, the assessee claimed that the imported items i.e., LCD panels [declared before the customs authorities as “Liquid Crystal Devices-TFT-LCD 4.8 in”] for car audio assemblies, were properly classifiable in CH 9013.8010. Its contention was rejected by the revenue authorities, who classified it as “Sound Recording or Reproducing Apparatus” in CH 8519, and fell in CH 8522, item 8522.9000. CH 8522 reads as follows:

“8522 Parts and accessories suitable for use solely or principally with the apparatus of headings 8519 or 8521”

The litigation history in Harman’s case followed a trajectory similar to Videocon’s; ultimately, by the impugned order, CESTAT upheld its contention that the goods, meant for use in car audio systems, were classifiable in CH 9013.8010.

Contention of parties

7. Ms. Nisha Bagchi, learned counsel appearing for the revenue,