Holding

The goods are classifiable under Chapter Sub‑heading 8536.90 and not under Chapter 8710.

Summary

MIS Intel Design Systems (India) Ltd. manufactures contractors, switches and control boxes that are supplied to the Ministry of Defence for use in tanks and armoured fighting vehicles. The company sought to have these items classified under Chapter 8710 of the Central Excise Tariff Act, 1985, arguing that they are parts specifically designed for armoured vehicles. The adjudicating authority, relying on Note 2(f) to Section XVII, held that the items are electrical components used for switching or protecting circuits and therefore fall under Chapter 85, sub‑heading 8536.90, rendering the CBEC circular cited by the appellant irrelevant. The Court affirmed this reasoning, applying Rule 1 of the interpretative rules and the Explanatory Notes to the HSN, which exclude such electrical machinery from Chapter 8710. Consequently, the appeal was dismissed.

Issues considered

Whether the contractors, switches and control boxes manufactured by the appellant should be classified under Chapter 8710 (parts of armoured fighting vehicles) or under Chapter 8536.90 (electrical machinery and equipment) of the Central Excise Tariff Act, 1985.

Legislation cited

Central Excise Tariff Act, 1985s. Note 2(f), s. Section XVII

Subjects

classificationcentral excisetariffNote 2(f)Chapter 85Chapter 87armoured vehicleselectrical machineryinterpretative rules

Judgment

~
[2008] 2 S.C.R. 686

A MIS INTEL DESIGN SYSTEMS (INDIA) P. LTD. y---
..
,

v.
COMMISSIONER OF CUSTOMS & CENTRAL EXCISE
(Civil Appeal No. 4564 of 2002)
FEBRUARY 11, 2008
8
[DR. ARIJIT PASAYAT AND
LOKESHWAR SINGH PANTA, JJ.]

Central Excise Tariff Act, 1985:
t
c Sub-Heading 8536. 90 - Contractors; switches and
control box - Classification of - Held: The goo(js in question
'•
are used for switching, protecting electric circuits or for making
connections to or in electric circuit - Hence, classifiable under
Sub-Heading 8536. 90 by virtue of Note 2(f) to Section XVII - .'
D CBEC circular No. 17190-CEX IV dated 9. 7. 1990 relied upon
by assessee not relevant - Interpretative Rules - Rule 1.
,l
The assessee-appellant was engaged in the
manufacture of goods such as contractors, switches and .
E · control box. It sought classification of these goods under
Ch aper Heading 8710 of the Central Excise Tariff Act, 1985
on the ground that these goods were manufactured solely
and principally for fitting into the tanks and armoured ~
fighting vehicles of the Defence Department. In support

•
I
of their contention, they relied upon Circular No. 17/90 CE
F XIV dated 9.7.1990.
~
Adjudicating Authority relied upon Note 2 (f) to
Section XVII and held that goods in question are parts of
electrical equipments falling under Chapter Sub heading
G
8536.90 and the CBEC Circular was not relevant.
Accordingly Adjudicating Authority classified the goods
under Chapter Sub-heading 8536.90 and confirmed the ~
demand. CEGAT dismissed the appeal of assessee.
Hence the present appeal.
H 686
·"{.
M/S INTEL DESIGN SYSTEMS (I) P. LTD. v. COMMNR. 687
OF CUSTOMS & CENTRAL EXCISE

..- "i Dismissing the appeal, the Court A
HELD : 1. As per Rule 1 on Interpretative 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 (~hich
governs Chapter 87) excludes the goods viz. electrical B
machinery and equipment (Chapter 85). The goods in
question i.e. contractors, switches, control box etc. are
t 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 C'
8536.90. The CBEC Circular relied upon by the assessee
is not relevant. [Para 4] [690-C, D]
2. As per the Explanatory Notes to HSN, the parts
falling under Chapter Heading 8710 would be ·covered D.
under the said chapter, provided they fulfill both the
A conditions i.e. they must be identifiable as being suitable
for use solely or principally for such vehides 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 E
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 also. not have been excluded by Notes to
Section XVII. The Chapter note 2(f) excludes electrical F
.... 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 G.
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 H
688 SUPREME COURT REPORTS [2008] 2 S.C.R.

A 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 the
adjudicating authority. [Para 5] [690-E-H; 691-A, BJ
B CIVILAPPELLATE JURISDICTION: Civil Appeal No. 4564
of 2002.
From the final Judgment and Order No. C-1/1270/WZB/
02 dated 10.05.2002 passed by the Central Excise & Gold
c (Control) Appellate Tribunal, West Regional Bench at Mumbai
in Appeal No. E/829/2000-Mum.
Ramesh Singh, Pratap Venugopal, Jhuma Bose, Harshad
V. Hameed and Dileep P. (for Mis. K.J. John & Co.) for the
Appellant.
D
P. Vishwanatha Shetty, Narasimha, S.J. Aristotle and B.
Krishna Prasad for the Respondent.
The Judgment of the Court was delivered by
Dr. ARIJIT PASAYAT, J. 1. Challenge in this appeal is to
E 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
F '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
G 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
H armoured and motorized fighting vehicles under Chapter Sub-
"' M/S INTEL DESIGN SYSTEMS (I) P. LTD. v. COMMNR.
OF CUSTOMS & CENTRAL EXCISE [PASAYAT, J.]
689

~ ., Heading 8710.00 of the Tariff Act. It is the contention of the A
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 B
manufactured for use solely and principally for fitting into the
tanks in armoured fighting vehicles of the Defence Department,
t 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 c
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
D
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 E
the appellants' manufacture goods such as contractors, switches,
control box 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. F
-~ 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. G
CEGAT dismissed the appeal filed by the appellant.
-1f
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 H
690 SUPREME COURT REPORTS [2008] 2 S.C.R.

A approved. The show-cause n'otice was issued by the r- ~
Department proposing to levy duty under Heading 8536.90. The 1
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
B 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.
c
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
0
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.
E
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
F such vehicles and that they must not be excluded by the
provisions of Notes to Section XVI I. 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
G 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 equipmentfalling .._
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
H
M/S INTEL DESIGN SYSTEMS (I) P. LTD. v. COMMNR. 691
OF CUSTOMS & CENTRAL EXCISE [PASAYAT, J.]
~ ~
excludes photographs and other current collectors for electric A
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 B
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
the adjudicating authority.
6. The appeal is therefore sans merit, deserves dismissal C
which we direct.
D.G. Appeal dismissed.