The Central Board of Indirect Taxes and Customs (CBIC) has notified the implication of Supreme Court Judgement on difficulties owing to divergent practices arising in assessment of ‘automobile parts’ under Customs Tariff.
“References have been received from the trade and field formations pointing out difficulties owing to the divergent practices arisen in assessment of ‘automobile parts’ under the Customs Tariff, after the Hon’ble Supreme Court judgment has been delivered in the case of M/s Westinghouse Saxby Farmer Ltd. Vs. Commissioner of Central Excise, Kolkata,” the CBIC notified.
The Supreme Court held that the ‘relays’ are classifiable as parts of ‘railway signalling equipment’, under Heading 8608 of the Central Excise Tariff. In holding so, the Hon’ble Supreme Court has given precedence to the ‘sole or principal use’ test of Section Note 3 over the Note 2(f) to Section XVII which specifically excluded ‘electric equipment from being classified under Section XVII, whether or not it is identifiable as being for the goods of that Section.
In the context of the divergent practices arisen, it is noted that the classification of ‘parts’ of goods falling under Section XVII of the Customs or Central Excise Tariff is a complex issue. Further, apparently, the Section notes have been suitably applied in relevant judgments of the Hon’ble Supreme Court on issues of classification of parts and accessories.
In this regard, it may be considered that the judgement in case of M/s. Westinghouse Saxby has decided the classification of the commodity ‘relays’ used in railway signalling equipment of Chapter 86 and not parts of goods falling under Chapter 87. The judgement itself does not refer to it’s wider applicability to any other case or issue of a similar nature. Also this judgement pertains to a matter under the Central Excise Tariff Act in the year 1994 when the Central Excise Tariff and the Customs Tariff were not aligned.
Moreover, the Hon’ble Supreme Court in the Westinghouse Saxby judgement itself, has acknowledged the complexity of the issue and has pointed to the undesirability of generalising the decisions of one case to others. The Hon’ble Court, has referred to the observations made in its own judgement in the case of “A. Nagaraju Bros Vs. State of A.P, thus “there is no one single universal test in these matters. The several decided cases drive home this truth quite eloquently….. There may be cases, particularly in the case of new products, where this test may not be appropriate. In such cases, other tests like the test of predominance, either by weight of value or on some other basis may have to be applied. It is indeed not possible, nor desirable, to lay down any hard and fast rules of universal application”.
M/S Westinghouse Saxby Farmer Ltd. vs Commissioner of Central Excise, Kolkata
CITATION: 2022 TAXSCAN (SC) 124
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