The Central Board of Indirect Taxes and Customs (CBIC) has clarified that the judgement of the Supreme Court in Westinghouse Saxby case regarding the classification of “relays” have no wide application as the classification of various parts of Section XVII is to be decided to take into account all facts, details of individual cases, under the Customs Tariff Act.
In January, the Board issued a circular regarding the implication of Supreme Court Judgement on difficulties owing to divergent practices arising in the assessment of ‘automobile parts’ under Customs Tariff.
Pursuant to opinion of Learned ASG, CBIC clarified that Instruction No. 1/2022-Customs dated January 5, 2022 “brought out distinguishing reasons as to how the decision of the Supreme Court would apply only to the goods in the facts and circumstances”. Vide said instruction, CBIC earlier highlighted that SC judgment applying the ‘sole or principal use’ test was at variance with the stand taken by it in classifying other parts falling under Section XVII;
Thus, CBIC clarified that, judgment does not refer to its wide applicability to any other case or issue of a similar nature, and “classification of various parts of Section XVII is to be decided taking into account all facts, details of individual cases, all the decisions on the subject, and arrive at the appropriate classification”.
The circular issued on Monday clarified that since the law continues to remain the same, earlier instruction (issued in January) “remains valid and does not require any changes” Earlier, the Supreme Court held that the ‘relays’ are classifiable as parts of ‘railway signaling 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.
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