Holding

The items are accessories to motor vehicles, not essential parts of seats, and therefore fall under Chapter 8708.00 of the Central Excise Tariff Act, 1985.

Summary

The appellant, Commissioner of Central Excise, challenged the classification of four items manufactured by the respondent—rail assembly front seat, adjuster/assembly slider seat, YE‑2 rear back lock assembly and 1000 cc rear back lock assembly. The respondent had classified them under Chapter 8708.00 of the Central Excise Tariff Act, 1985 as "parts and accessories of motor vehicles" attracting 15% duty, which the revenue argued were actually "parts of seats" and should fall under Chapter 9401.00 at 18% duty. The Tribunal held that the items are merely accessories that improve seat adjustability and are not essential components of a seat, thus fitting within Chapter 8708.00. The Supreme Court affirmed this view, emphasizing that a "part" must be essential for the whole to function, whereas an "accessory" need not be. Consequently, the appeal was dismissed.

Issues considered

Whether the rail assembly front seat, adjuster/assembly slider seat and rear back lock assemblies are "parts" of seats under Chapter 9401.00 of the Central Excise Tariff Act, 1985.
Whether the same items are to be classified as "accessories" of motor vehicles under Chapter 8708.00 of the Central Excise Tariff Act, 1985.

Legislation cited

Central Excise Act, 1944s. 11A, s. 14, s. 35-L
Central Excise Rules, 1944s. Rule 1730, s. Rule 9(2)
Central Excise Tariff Act, 1985

Subjects

central exciseclassificationtariffparts vs accessoriesChapter 8708Chapter 9401motor vehicle accessoriesduty rate

Judgment

[2008] 5 S.C.R. 625

COMMISSIONER OF CENTRAL EXCISE, DELHI A
v.
INSULATION ELECTRICAL (P) LTD ..
(Civil Appeal No. 5943 of 2002)
MARCH 27, 2008
B
(ASHOK BHAN AND DALVEER BHANDARI, JJ.)

Central Excise Tariff Act, 1985:
Chapter Heading 8708.00 - Parts and accessories of
motor vehicles - 'Rail Assembly Front Seat (omni)' Adjuster/ C
Assembly Slider Seat' 'YE-2 Rear Back Lock Assembly',
'1000cc Rear Back Lock Assembly' manufactured by
assessee - HELD: Can at best be termed as accessories to
motor vehicle classifiable under Chapter Heading 8708.00 - ·
The products are not essential parts of seat and, therefore, D
not classifiable under Chapter Heading 9401 - A 'part' is an
essential component of the whole without which the whole
cannot function.
Words and Phrases:
E
Expressions 'part' and 'accessory' - Difference between
in the context of Central Excise Tariff Act, 1985
The assessee was engaged in manufacture of 'Rail
Assembly Front Seat(omni)' 'Adjuster, Assembly Slider
Seat' 'YE-2 Rear Back Lock Assembly' and '1000cc Rear F
Back Lock Assembly'. In the classification list submitted
by the assessee in the year 1996, it classified and the
Revenue approved the products as "parts and
accessories of motor vehicles" subject to 15% rate of duty
under Chapter Heading 8708.00 of the Central Excise Tariff G
·Act, 1985. However, subsequently after a visit to the
premises of the assessee, show cause notices were
issued stating that the assessee had been misclassifying
its products, and the same were class.ifiable un.der Chapter
625 H
626 SUPREME COURT REPORTS [2008] 5 S.C.R.

A Heading 9401.00 as parts of seats subject to 18% duty. 1
The ~djudicating authority confirmed the demand of duty
and imposed the penalty. The Commissioner of Central
Excise (Appeals) upheld the demand of duty but waived
the penalty. However, the Customs Excise and Gold
B (Control) Appellate Tribunal set aside the demand holding
that the products were classifiable under Chapter
Heading 8708.00 and not under Chapter Heading 9401.00.
In t~e -instant appeal filed by the Revenue, the
question for consideration before the Court was: whether
C the products manufactured by the assessee were the
integral parts of the seats, as put forth by the department
and classifiable under chapter heading 9401.00 or the
same were parts and accessories of motor vehicles, as
claimed by the assessee and classifiable under chapter
D heading 8708.00?
Dismissing the appeal, the Court
HELD: 1.1 The 'Rail Assembly Front Seat (Omni)',
'Adjuster/Assembly Slider Seat', 'YE-2 Rear Back Lock
E Assembly' and '1000cc Rear Back Lock Assembly'
manufactured by the assessee can at best be termed as
accessories to the motor vehicle classifiable under
Chapter Heading 8708.00 of the Central Excise Tariff Act,
1985. It is clear that Chapter Heading 8708.00 covers parts
F and accessories of motor vehicles and this chapter
heading is wide enough in its scope so as to cover all
accessories of motor vehicles whereas Chapter heading
9401.00 covers all type of seats and parts thereof. [para
13 and 20] (632-C, D; 634-C, D]
G 1.2 Admittedly the assessee was supplying the
products manufactured by it to the car manufacturing
company. The said company has given a specific part
number to the goods in question and issued purchase
orders in the name of the assessee. The payment for the
H same was received directly from the car manufacturing
COMMISSIONER OF CENTRAL EXCISE, DELHI v. 627
INSULATION ELECTRICAL (P) LTD.

company. Merely supplying the material through the A
companies which are manufacturing the seats classifiable
under chapter heading 9401.00, does not lead to the
conclusion that the products in question fall under chapter
heading 9401.00. [para 14] [632-E-G]
2.1 Chapter 9401 covers all types of seats and not B
_. only the seats of a car; and a seat is complete even without
the rail assembly front seat, adjuster/assembly slider seat
) or rear back lock assembly. These are not essential parts
of the seat. Chapter Heading 9401 covers only the parts
of seats and not accessories to seats. A 'part' is an c
essential component of the whole without which the
whole cannot function. The Tribunal rightly held that the
products manufactured by the assessee cannot be the
'parts' of seats, as claimed by the revenue. [para 18-19]
[633-F-H] D
~- 2.2 Chapter heading 8708 covers both the 'parts' as
well as 'accessories'. The items manufactured by the
as'sessee are only adjuncts. These are to be affixed on
the floor of motor vehicles for adjustment of seats merely
to improve the efficiency, and for convenience and E
comfort of passengers. The seats are complete in
themselves without these mechanisms and, therefore, the
parts manufactured by the assessee do not merit
classification under chapter 9401. Rather, the same would

- ~
be accessories to the motor vehicle as claimed by the F
assessee and would merit classification under chapter
heading 8708. [para 20] [634-A-C]
Mehra Brothers v. Joint commercial Officer reported in
1991 (51) ELT 173(SC); Pragati Silicons Pvt. Ltd. \f.
G
Commissioner of Central Excise, Delhi 2007 (211) ELT
534(SC) and Annapurna Carbon Industries Co. v. State of
Andhra Pradesh (1976) 2 SCC 273.
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
5943 of 2002. H
628 SUPREME COURT REPORTS [2008] 5 S.C.R.

A From the final Judgment and Order dated 09.04.2002 of
the Customs, Excise and Gold (Control) Tribunal, Delhi in Final
Order No. 140/2002-B in Appeal No. E/2199/2001/B

K. Radhakrishnan, Alka Sharma (for B.V. Balaram Das),
for the Appellant.
B
Uma Datta for the Respondent.

The Judgment of the Court was delivered by

ASHOK BHAN, J. 1. Revenue has filed this appeal under
c Section 35-L of the Central Excise Act, 1944 (for short 'the Act')
against the judgment and final order dated 9th April, 2002
passed by the Customs, Excise and Gold (Control) Appellate
Tribunal, New Delhi (for short 'the Tribunal') in Final Order
No.140/2002-B in Appeal No.E/2199/2001/B wherein and
whereby The Tribunal relying upon a judgment of the High Court
D
of Karnataka in the case of Supreme Motors v. State of
Karnataka has allowed the appeal filed by the assessee- ·"!
respondent.

Facts:
E
2. Assessee-respondent (hereinafter referred to as 'the
assessee') was holding Central Excise Registration No.19
MOR-13 MOD-Ill 92 and engaged in the manufacture of Rail
Assembly front Seat (Omni), Adjuster Assembly slider seat, YF-
2, Rear Back Lock Assembly and 1000 CC Rear Back Lock
F Assembly. It submitted its classification list in the year 1986 under
Central Excise Tariff Act, 1985 (for short 'the tariff Act')
~
classifying its products under chapter heading 8708.00 as "parts
and accessories of motor vehicles" which attracted the 15%
rate of duty. The classification list filed by the assessee was
G approved.

3. Acting on a specific information that the assessee was
short paying the excise duty by classifying its products as motor
vehicles parts and accessories, the factory premises of the
assessee was visited by a team of officers of Central Excise
H
COMMISSIONER OF CENTRAL EXCISE, DELHI v. 629
INSULATION ELECTRICAL (P) LTD. [ASHOK BHAN, J.]

•""f MOD-Ill on 8.12.1998. They physically verified the items being A
manufactured by the assessee. Statement of Shri Ashwani
Kumar, authorised signatory of the assessee was recorded
under Section 14 of the Act. In his statement, he admitted that
they were supplying Rail Assembly Frost Seat Adjuster and
Assembly Slider Seat to M/s. Bharat Seats Ltd. and M/s. Krishna B
Maruti Ltd. which were manufacturing car seats falling under
chapter heading 9401.00 and were supplying to M/s. Maruit
Udyog Limited.

4. From the information gathered on the inspection of the
factory premises of the assessee and the statement of Shri c
Ashwani Kumar, authorised signatory of the assessee, the
department came to the conclusion that the items manufactured
by the assessee were classifiable under chapter heading
9401.00 attracting central excise duty at the rate of 18% ad
valorem and not under chapter heading 8708.00 paying less D
duty at the rate of 15%. Terming that the assessee had been
>- mis-classifying its products, two show cause notices dated
4.2.1999 and 5.7.1999 were issued to it calling upon it to show
cause as to why products manufactured by it as parts and
accessories of motor vehicles and classified under chapter E
heading 8708.00 be not treated as parts of the seats which are
classifiable under chapter heading 9401.00 attracting higher
rate of duty at the rate of 18% and as to why the differential duty
j
amounting to Rs.9,50,995!- be not demanded and recovered
under Rule 9(2) of the Central Excise Rules, 1944 (for short 'the F
.., Rules') read with Section 11A of the Act.
-Ir
5. The adjudicating authority vide its order dated
24.11.1999 held that the goods manufactured by the assessee
were integral parts of seats and available in the market as such
G
and confirmed the duty demand of Rs.9,50,995/- and imposed
a penalty of Rs.2,00,000/- under Rule 1730 of the Rules and
also ordered to charge interest on the differential duty of
1 Rs.9,50,995/-.
6. Being aggrieved against the order of the adjudicating H
630 SUPREME COURT REPORTS [2008) 5 S.C.R.

A authority, assessee filed an appeal before the Commissioner
of Central Excise(Appeals). The Commissioner(Appeals) by his
order dated 7th August, 2001 upheld the order of the adjudicating
authority classifying the goods under chapter heading 9401.00.
He, however, waived the penalty of Rs.2,00,000/- imposed on
8 the assessee.

7. Assessee thereafter filed an appeal before the Tribunal.
Tribunal, by the impugned order, has set aside the orders of the
authorities below holding that the products manufactured by the
assessee are classifiable under chapter heading 8708.00 as
c claimed by the assessee and not under chapter heading
9401.00 as put forth by the revenue. Tribunal came to the
conclusion that the items manufactured by the assessee are
only adjuncts, additions to the seats for the better utilization of
the seats for comfort and convenience of the passengers and
D they are not essential components or parts of seats. That the
seats are complete in themselves without these mechanisms
and therefore do not merit classification as parts of seats under
Chapter 9401.00. Tribunal relying upon a judgment of this Court
in the case of Mehra Brothers v. Joint commercial Officer
E reported in 1991 (51) ELT 173(SC) held that the products
manufactured by the assessee merited classification under
chapter heading 8708.00 as "parts and accessories of motor
vehicles". ·.
F 8. Hence revenue is before us.

Learned senior counsel appearing for the revenue
contends that the products manufactured by the assessee are "
parts of the seats because assessee was supplying these
products to Mis Bharat Seats Limited and Mis Krishna Maruti
G Limited which were manufacturing seats classifiable under
chapter heading 9401.00.

9. Per contra, counsel appearing for the assessee
contends that the products manufactured by the assessee are t
H not seats o.r parts of the seats as contemplated under chapter
COMMISSIONER OF CENTRAL EXCISE, DELHI v. 631
INSULATION ELECTRICAL (P) LTD. [ASHOK BHAN, J.]

-r heading 9401.00. The seat is complete without the said 'products A
as rightly concluded by the Tribunal. With regard to rail assembly
front seat adjuster/assembly slider seat manufactured by the
assessee, it is stated that the item is essentially in the nature of
rails made out of iron and steel. These are to be affixed on the
floor of motor vehicles. When seats are affixed on these rails, B
seats can slide back and forth with the operation of a lever
forming part of other rail assembly front seat adjuster. This
enables the driver or the passenger, to adjust the position of the
seat to suit his comfort and convenience. It is stated that such
adjustment of seat is merely to improve the efficiency and c
convenience of the seat and does not form part of the seat.
That the seat is complete and fully functional without this rail
arrangement. With regard to YE-2 rear back lock assembly, it
is stated that the function of this item is to fix the position of the
rear seat of the car i.e. whether straight or slanting and this is D
also an accessory for enabling the passenger to fix the seat in
the most comfortable and convenient position. It is contended
that lock assembly does not form a part of the car seat at all and
the seat is complete without the lock assembly.
10. Counsel for the parties have been heard. E

11. From the pleadings of the parties as well as the
statements made before us, the point which can be culled out
for adjudication is as to whether "the products manufactured by
the assessee are the integral parts of the seats, as put forth by F
the department and classifiable under chapter heading 9401.00
or the same are parts and accessories of motor vehicles, as
claimed by the assessee and classifiable under chapter heading
8708.00.
G
12. Before coming to a conclusion, it would be appropriate
to look at the two rival entries falling under chapter Headings
.. 8708 and 9401 of the Act. The same are reproduced below for
convenience of discussion:
i
H
632 SUPREME COURT REPORTS [2008] 5 S.C.R.

A Heading Sub-heading Description of Rate of
No. No. goods duty

87.08 8708.00 1 "Parts and accessories 15%
of the motor vehicles
B of heading Nos.87.01 to•
87.05
+
94.01 9401.00 "Seats (other than those 18%
of heading No. 94.02],
whether or not convertible
c into beds and parts thereof.

13. From the bare reading of the two sub-headings,
reproduced above, it is clear that Chapter Heading 8708.00
covers parts and accessories of motor vehicles and this chapter
heading is wide enough in its scope so as to cover all
D
accessories of motor vehicles whereas Chapter heading
9401.00 covers all type of seats and parts thereof. ~

14. This is an admitted position that the assessee was
supplying the products manufactured by it directly to Mis Maruti
E Udyog Limited which manufactures cars and not seats. M/s
Maruti Udyog Limited has given a specific part number to the
goods in question and issued purchase orders in the name of
the assessee. However, later on, only invoicing pattern was
changed for some goods wherein the assessee received
F purchase orders directly from M/s Maruti Udyog Limited but
invoices were raised to M/s Krishna Maruti Udyog Limited and
M/s Bharat Seats Limited just for the sake of convenience and
economy. The payment for the same was received directly from
M/s Maruti Udyog Limited. Merely supplying the material through
M/s Bharat Seats Limited and M/s Krishna Maruti Limited which
G
are manufacturing seats classifiable under chapter heading
9401.00 does not lead to the conclusion that the products in
.,__
question fall under chapter heading 9401.00.
15. In Mehra Brothers(supra). this court observed in para
+-
H 6 as follows:
COMMISSIONER OF CENTRAL EXCISE, DELHI v. 633
INSULATION ELECTRICAL (P) LTD. [ASHOK BHAN, J.]

"6. In Supreme Motors v. State of Karnataka case( supra), A
the Karnataka High Court has taken different view. It held
that the car seat covers, at best could make the seat more
comfortable, but do not serve as aids to the vehicle as a
whole, and therefore, they must fall outside the ambit of
. Entry73 of the Second Schedule to the Karnataka Sales B
Tax Act, 1957 and was not exigible to sales tax at 13 per
cent. Undoubtedly this ratio would help the appellant. The
learned judges laid emphasis thus:-
"Every part is useful to the car for its effective operation.
Likewise should be the aid of other accessories in order C
to fall within the said entry. The accessory to a part which
has no convenience of effectiveness to the entire car as
such cannot in our opinion fall within Entry 73".
16. To the same effect are the judgments of this Court in D
the case of Pragati Silicons Pvt. Ltd. v. Commissioner of ·
-t Central Excise, Delhi reported in 2007 (211) ELT 534(SC) and
Annapurna Carbon Industries Co. v. State of Andhra Pradesh
(1976) 2 sec 273.
17. After considering in detail, the difference between the E
'accessories' and 'parts', this Court in the case of Pragati
Silicons(supra) came to the conclusion that 'accessory' is
something supplementary or subordinate in nature and need
not be essential for the actual functioning of the product.
18, Chapter 9401 covers all types of seats and not only F
the seats of a car and a seat is complete even without the rail
assembly front seat, adjuster/assembly slider seat and rear back
lock assembly. They are not essential parts of the seat. Chapter
heading 9401 covers only the pari:s of seats and not accessories
to the seats. A 'part' is an essential component of the whole- G
without which the whole cannot function.
19. We agree with the view taken by the Tribunal that the
products manufactured by the assessee cannot be the 'parts'
of seats, as claimed by the revenue.
H
634 SUPREME COURT REPORTS [2008] 5 S.C.R.

A 20. Chapter heading 8708 covers both the 'parts' as well
as 'accessories'. The items manufactured by the assessee are
only adjuncts. These are to be affixed on the floor of motor
vehicles. When seats are affixed on these rails, seats can slide
back and forth with the operation of a lever forming part of other
B rail assembly front seat adjuster. This enables the driver or the
passenger, to adjust the position of the seat to suit his comfort _.
and convenience. These are merely to improve the efficiency
and convenience of the seat and does not form part of the seat.
The sears are complete in themselves without these
C mechanisms and therefore it cannot be held that the parts
manufactured by the assessee merit classification under chapter
9401. Rather the same would be accessories to the motor
vehicle as claimed by the assessee and would merit
classification under chapter heading 8708, because they are
fitted in the motor car for adjustment of the seats for the
0
convenience and comfort of the passangers. The Rail Assembly
front seat (Omni), Adjuster/assembly slider seat, YE-2 rear back
lock assembly and 1OOOcc rear back lock assembly being
manufactured by the assessee can at best be termed as
accessories to the motor vehicle for better convenience of the
E passangers/drivers travelling in the car.
21. For the reasons stated above, we do not find any merit
in the appeal filed by the revenue and dismiss the same with no
order as to costs.
R.P. Appeal dismissed.

....
'