CBIC provides information on the implications of the Supreme Court ruling on difficulties arising from different practices in assessing “automotive parts” under the tariff [Read Circular]

The Central Board of Indirect Taxes and Customs (CBIC) has shared the impact of the Supreme Court ruling on difficulties arising from different practices in the valuation of “automotive parts” under the tariff.

“References have been received from trade and field service associations indicating difficulties arising from differences in customs tariff assessment of ‘automotive parts’ following the pronouncement of the Hon’ble Supreme Court judgment in the case of M / s. Westinghouse Saxby Farmer Ltd. vs. Commissioner of Central Excise, Kolkata, ”announced the CBIC.

The Supreme Court ruled that the “relays” as parts of “railway signal systems” are to be assigned to heading 8608 of the Central Excise Tariff. With that in mind, the Hon’ble Supreme Court has given the “sole or primary use” test of Section Note 3 priority over Note 2 (f) to Section XVII, which specifically excludes “electrical equipment from being classified in Section XVII, regardless of whether it is used whether or not is identifiable as being for the goods of this section.

In relation to the different practices, it should be noted that the classification of “parts” of goods falling under Section XVII of the Customs Tariff or the Central Excise Tariff is a complex issue. In addition, the section notes appear to have been appropriately used in related judgments of the Hon’ble Supreme Court on issues relating to the classification of parts and accessories.

In this context, it can be assumed that the judgment in the case of M / s. Westinghouse Saxby has determined that the commodity “relays” used in Chapter 86 railway signaling systems, and not parts of commodities falling under Chapter 87, is classified. The judgment itself does not make reference to its broader applicability to other cases or problems of a similar nature. This judgment also concerns a matter under the Central Consumption Tax Act from 1994, when the Central Consumption Tax Tariff and the Customs Tariff were not aligned.

In addition, the Hon’ble Supreme Court in Westinghouse Saxby itself recognized the complexity of the matter and indicated that it is undesirable to delegate the decisions of one case to others. The Hon’ble Court has ruled in its own judgment in the “A. Nagaraju Bros vs. State of AP, therefore, “There is no single universal test on these matters. The various decided cases make this truth quite eloquently clear … There may be cases, especially with new products, where this test may not be appropriate. In such cases, other tests, such as the test of predominance, either by weight of score or on some other basis, may need to be used. In fact, it is neither possible nor desirable to establish fixed and generally applicable rules. “

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