Date – 18 August 2022

Facts

• The appellant, M/s. L.G. Electronics India Pvt. Ltd is engaged in the manufacture of various models of Colour Television Sets (CTVS) and their parts and sub-assemblies in the factory at Greater Noida. The CTVS were classified under Heading 85.28, sub-assemblies of CTVS were being classified under Heading 85.29 of the Tariff, and central excise duty was paid.
• The Commissioner stated that the sub-assemblies CTVs should be classified under Heading 85.28 as complete CTVS and they should be charged to excise duty in terms of Serial No. 229 (ii) of the Notification dated 02.06.1998.
• A show cause notice dated 19.08.2003 was, issued to the appellant demanding duty for the period from December 1998 to September 2002 by relying upon Interpretative Rules 2(a) of the Tariff and by invoking the extended period of limitation under the proviso to section 11A of the Excise Act.
• Two more SCN dated 07.11.2003 and 20.10.2004 was issued for periods from October 2002 to September 2003 and October 2003 to 14.01.2004 demanding differential duty.
• Aggrieved by the order of the Commissioner, Appellants filed for appeal.

Issue

• Whether demanding duty on the ground that sub-assemblies CTVs should be classified under Heading 85.28 is justified?

Order

• The Tribunal observed that Rule 1 provides that the goods are to be classified according to the terms of the headings and relative section or chapter notes but if it is not possible to classify goods under the respective headings, then they can be classified according to other Interpretative Rules.
• Rule 1 further provides that unless the headings, section/chapter notes otherwise provide, classification has to be done as per headings, section/chapter notes. It is seen in the present case that Heading 85.29 covering parts of CTV is more specific to the facts of the present case and the sub-assemblies are classifiable under Heading 85.29 only.
• Thus, in view of Rule 1, sub-assemblies and parts cleared by the appellant are to be classified under Heading 85.29 only. Once the goods are classifiable under a particular Heading by application of the Headings and relevant section and chapter notes, the classification cannot be altered by taking recourse to the Interpretative Rules.
• Thus, it was held that the Commissioner was not justified in taking recourse to Interpretative Rules 2(a) of the Central Excise Tariff.
• The order dated 21.03.2016 passed by the Commissioner is set aside.