ORDER
S.L. Peeran, Member (J)
1. The appellants are aggrieved with the order dated 30-8-1988 of the Collector of Customs (Appeals), Bombay who has held that the imported item ‘Heating element for Domestic Refrigerators’ fall under the Heading 98.06 of CTA, 1975 by virtue of note 1 of Chapter 98 and has rejected the claim of the importer for classification under Heading 8516.80. The brief findings of the Collector (Appeals) reads as follows –
“The goods imported are admittedly specific parts of refrigerators. Before the Heading 98.06 was created they were classified under Heading 8516.80 but w.e.f. 1-3-1987, a new Heading 98.06 was created in the First Schedule to CTA, 1975 to cover all parts of goods falling under Chapters 84, 85, 86,89 and 90 and as per Chapter Note 1 to Chapter 98, such parts would be classified under Chapter 98 even if they are covered by a more specific heading elsewhere in the Schedule. It does not apply only to goods specified in Note 7 to Chapter 98 and to Notification No. 132/87-Cus. issued thereunder. The goods falling under Heading 85.16 are not excluded from Heading 98.06 hence the assessment of goods under Heading 9806.00 is in order. The impugned order of the lower authority is accordingly maintainable.”
2. We have heard Shri Sanjay Grover, learned Advocate for the appellants and Smt. Sundaram, learned DR for the Revenue. Shri Sanjay Grover contended that the imported item is specifically covered by Chapter 85 and falls under Heading 8516.80. Relying on note 2 of Section XVI, he contended that parts which are goods included in any of the Headings of Chapter 84 or 85 are in all cases to be classified in their respective headings. Heating elements though designed as part of Refrigerator are classified under the separate Tariff Heading 8516.80. Shri Grover further relied on the general rules of interpretation and argued that the most specific description shall be preferred to that providing a more general description. The item is specifically classifiable under Heading 8516.80 and the lower authorities have erred in holding it as parts falling within Heading 98.06. He further submitted that the item is not used as an input in the manufacture of 300 litres capacity refrigerators nor as a spare and the Heading 98.06 covers spares of goods falling under Chapters 84, 85, 86, 89 and 90. He further stated that Chapter 98 covers to ‘Project imports’ and the item cannot be branded as ‘project imports’ and that the Chapter 98 restricts to project imports required for initial setting up of a unit or for the substantial expansion of an existing unit. He relied on the following rulings –
Board of Revenue v. Rai Saheb [AIR 1965 SC 1092]
Dunkan Agro Industries v. Union of India [1989 (39) E.L.T. 211]
Commissioner of Income-tax v. Naga Hills Tea Co. Ltd. [1973 (89) ITR 236 SC]
CA Abraham v. I.T.O. [1961 (41) E.L.T. 425]
3. Smt. Sundaram, learned DR stated that there is no conflict from Section notes and chapter note. She contended that applying Rule 3(a) of the Interpretation of Statutes, the item specifically falls under Heading 98.06 as part for equipment. She contended that the rulings are not applicable to the facts of the present case.
4. We have carefully considered the submissions made by both the sides. There is no dispute of the importer using the item as part of refrigerator. Refrigerators are classifiable under Heading 84.18 and parts are classifiable under Heading 8410.69. However, it is the contention of the importer that the item is a heating element though designed as a part of refrigerator, are classifiable under Heading 8516.80 which refers to electric heating resistors. The invoice indicated that this is specially designed and as per specification and drawing, meant as a part for refrigerator. The importer on the reverse of the bill of entry has indicated ‘to avail of proforma credit under Rule 57-A of the Central Excise Rules, 1984 in respect of the goods covered by this bill of entry”. Therefore, it follows that the item imported has been imported as a part of refrigerator although in bill of entry, they have described as “heating element double insulated P C Cable”.
5. It is the appellant’s contention that Chapter 98 does not apply to the item in view of note 2 of Section XVI. But note 1 of Chapter 98 clearly states that “This chapter is to be taken to apply to all goods which satisfy the conditions prescribed therein, even though they may be covered by a more specific heading elsewhere in this Schedule.”
Heading 98.06 (falling under Section XXI) reads as follows –
“98.06 9806.00 Parts of machinery equipments, appliances, instruments and articles of Chapters 84, 85, 86, 89 and 90”.
Therefore, in view of the above note and heading, the item would be classifiable under Heading 98.06 although the item in normal cause, would fall under Heading 8418.69 as it specifically refers to parts of Refrigerators.
6. Shri Grover had argued that note 2 of Section XVI should prevail over note 1 of Chapter 98. Shri Grover had argued to the contrary while arguing in Voltas Ltd. v. Collector of Customs [1991 (56) E.L.T. 569] and the Bench had accepted the said contention. The finding of the Bench in paras 4 and 5 are reproduced below –
But the learned DR’s contention is that Chapter 98 is unique to the Indian Customs Tariff Schedule covering as it does omnibus entries for project imports, laboratory chemicals, passengers’ and crews’ baggage etc. Chapter Note 1 must therefore, be read in context. So read, the subject solid tyres would fall under 40.12 being specified therein. We do not agree. In our considered opinion, the result of a harmonious reading of the various headings, and Section and Chapter notes can only lead to the classification of the subject goods under Heading 98.06.
In any view of matter, as rightly pointed out by the learned counsel for the appellants, even if it is considered that the goods are prima facie classifiable under Heading 40.12 and 98.06, both headings being equally deserving of consideration, the later heading is to be preferred by virtue of sub-rule (c) of Rule 3 for the interpretation of the Schedule which reads –
“3. When by application of Rule 2(b) or for any other reason, goods are prima facie, classifiable under two or more headings, classification shall be effected as follows –
(a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.
(b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.
(c) When goods cannot be classified by reference to (a) or (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.”
We do not find the rulings relied by Shri Grover to reconsider the ratio of Voltas Ltd. case is of any help as the ratio of the rulings relied do not help in classification of the goods based on headings, Section and Chapter Notes. We do not find any reason to differ from the ratio of Voltas Ltd. case referred supra. There is no merit in the various contentions of the appellants. Applying the ratio of Voltas case, the appeal deserves to be dismissed and we order accordingly.