Holding

The proper test for classification is the commercial‑identity test; the goods are parts of automobiles and therefore fall under Tariff Item 68 (not Item 52) and under heading 87.08 (not 73.18).

Summary

G.S. Auto International Ltd manufactured screws, bolts, nuts and similar items that were used as components of motor vehicles. The dispute concerned their proper classification under the Central Excise and Salt Act, 1944 and the Central Excise Tariff Act, 1985 – whether they should fall under Tariff Item 52 (bolts, nuts, screws) or the residuary Item 68 for the pre‑1986 period, and whether they belong to heading 73.18 or 87.08 for the post‑1986 period. The Tribunal initially applied a functional test and placed the goods under Item 52, but later applied the commercial‑identity test and placed them under Item 68 and heading 87.08. The Supreme Court held that the correct test for classification is the commercial‑identity test, that the goods are parts of automobiles and therefore belong to Item 68, and that they are suitable primarily for use with motor‑vehicle parts and must be classified under heading 87.08. Consequently, the first set of appeals filed by the assessee were allowed, setting aside the Tribunal’s earlier order, while the revenue’s appeals in the second set and the third appeal were dismissed, confirming the Tribunal’s later orders.

Issues considered

The appropriate test for classification of goods under the Central Excise Tariff – functional test versus commercial‑identity test.
Whether the screws, bolts and nuts used as automobile components are to be classified under Tariff Item 52 or Item 68 of the 1944 Act for the pre‑1986 assessment years.
Whether, for the post‑1986 period, the goods fall under heading 73.18 or heading 87.08 of the 1985 Act.
The interpretation of Notes 2(b) and 3 of Section XVII and Note 2(a) of Section XV concerning ‘parts of general use’ and ‘parts and accessories’.

Legislation cited

Central Excise and Salt Act, 1944s. XV, s. XVII
Central Excise Tariff Act, 1985

Subjects

classificationcentral excisetariffcommercial identity testfunctional testscrewsboltsnutsmotor vehicle partsheading 87.08heading 73.18Central Excise Act 1944Central Excise Tariff Act 1985

Judgment

A. G.S. AUTO INTERNATIONAL LTD.
v.
COLLECTOR OF CENTRAL EXCISE, CHANDIGARH

JANUARY 15, 2003

B [SYED SHAH MOHAMMED QUADRI AND ASHOK BHAN, JJ.]

Central Excises and Salt Act, 1944/Central Excise Tariff Act, 1985-
Schedule I, Tariff Item 58 and 62/Tariff Heading No. 73.18 and 87.08-Excise
Duty-Levy of-Classification ofgoods, namely, screws, nuts, bolts etc.-Test
C of classification-Commercial identity test or functional test-Held, true test
of classification is commercial identity test-It is to be ascertained as to how
goods are referred to in niarket by those who deal with them-Applying this
test, goods in question being parts of automobile are classified under Tariff
Item 68 'all other goods, not specified elsewhere' and not under Tariff Item
D 52 'bolts, nuts, screw etc'-Under 1985 Act goods are classified under heading
87.08 'parts and accessories of motor vehicles' and not under 73.18 'screws,
bolts, nuts etc '.

The question which arose for consideration in these appeals is with
regard to classification of certain goods, namely, screws, bolts, nuts etc.,
E in all thirty two items, manufactured by the assessee. It was for the
assessment years 1979 to 1986 though for different periods and assessment
years 1986-1987.

In the order impugned, in the.first set of appeals, tribunal applied
functional test and classified these goods under Tariff Item 52 of the
F Central Excises and Salt Act, 1944 holding that though the goods are used
as component parts of motor vehicles they had the fastening function; in +
the second set of appeals and the last appeal tribunal applied the test of
commercial identity and held that these goods being virtually parts of
automobile were classified under Tariff Item 68 of the 1944 Act and for
. G assessment year 1986-87 the goods were classifiable under Chapter
Heading 87.07 and not under 73.18 of the Central Excise Tariff Act, 1985.

It was contended for the assessee that in the first set of appeals, ~
tribunal erred in applying the functional test and holding that the good$
in question are classifiable under Tariff Item 52 and, therefore, the order
H 372
G.S. AUTO INTERNATIONAL LTD. v. C.C.E CHANDIGARH 373

of the tribunal is liable to be set aside; and that the tribunal correctly A
applied the test of commercial identity in its orders, which are subject
matter of the second set of appeals and the third appeal, which deserves
to be upheld.

It was inter alia contended for the Revenue that in regard to pre-
1986 period, the findings recorded by the tribunal and the function of the B
goods would show that nuts, bolts and screws, etc. are generic terms and
notwithstanding the fact that they are parts of automobile, they would
nonetheless be species of nuts and bolts classifiable under Tariff Item 52;
and that in regard to the classification under post-1986 period, Chapter
Heading 73.18 takes in screws, bolts, nuts, etc. and that the expressions C
"parts" and "parts and accessories" have been defined in Section XVII,
Note 2(b), inasmuch Note (2) to Section XV takes away the goods
classifiable under Chapter Heading 73.02, therefore, the goods in question
have to be classified only as nuts, bolts, screws even if they formed parts
of automobile.
D
Disposing of the appeal, the Court

HELD: I.I. With regard to the classification of goods appropriately
under Tariff Item 52 'bolts, nuts, screws' or under Tariff Item 68 'all other
goods, not having been specified elsewhere', the proper test is to be applied.
It is the functional test or commercial identity test which would determine E
the issue. This question is no longer res integra. It was laid down that the
true test for classification was the test of commercial identity and not the
functional test. It needs to be ascertained as to how the goods in question
are referred to in the market by those who deal with them, be it for the
purposes of selling, purchasing or otherwise. (380-H; 381-A-B)
F
1.2. From a perusal of the Excise Collector's Trade Notice No.127/
71 dated Stb July, 1971, it becomes apparent, that mere existence of
threads would not render an article as a bolt, nut or screw so long as that
is recognizable as component part of an instrument, apparatus, appliance or
machine and that the expression used in Tariff Item 52 is intended lo cover G
only those which are known as bolt, nuts and screws in the market. The Trade
Notice re-affirms the test of commercial identity of goods. Keeping these
aspects in view, if one applies the afore-mentioned test, one cannot identify,
sell or purchase the goods in question as nuts, bolts, etc. Purewal Associates
Limited's case• furnishes a good example of application of the test on the
findings of fact recorded by the Tribunal. With regard to the parts of the H
374 SUPREME COURT REPORTS [2003) I S.C.R.

A watches, various types of screws were recognized as component parts of
instruments and they were held not to fall under Tariff Item 52; in regard
to bolts and screws used in motors, as it was found that they were not
manufactured as component parts of automobile, so they were held as
classifiable under Tariff Item 52. Therefore, on reading the findings of
fact recorded by the tribunal in the present appeals, it cannot but be
B concluded that the goods in question, which are found to be parts of
automobile were wrongly classified under Tariff Item 52 by the tribunal
and were rightly classified as falling under Tariff Item 68. (382-E-H; 383-A) 'j,

*Purewal Associates Limited v. Collector of Central Excise, 87 E.L.T.
321, relied on.
c
Jaishri Engineering Co. (P) Ltd v. Collector of Central Excise, 40
E.L.T. 214 and Plasmac Machine Mfg. Co. Pvt. Ltd v. Collector of Central
Excise, 51 E.L.T. 161, referred to.

2. A conjoint reading of Notes 2(b) and 3 of Section XVII and note
D 2(a) and (b) of Section XV of the Central Excise and Tariff Act, 1985 shows
that the expression "parts of general use" throughout the Schedule, means,
inter a/ia, articles of Heading No. 73.18 and similar articles of other base
metal; and the expression 'part and accessories' in Chapter Heading 87.08 ...... ·-··-i.
·, ..

does not apply to parts or accessories which are not suitable for use solely
E or primarily with articles of Chapter Heading 87.08 which pertains to
parts and accessories of motor vehicles of Chapter Heading Nos. 87.01 to
87.05. For the purposes of classification under Chapter Heading 87.08,
the test to be applied is whether the goods are suitable for use solely or
primarily with articles of Chapter Heading Nos.87.01 to 87.05; if the
answer is in the affirmative,, the goods will be classifiable under Chapter
F Heading 87.08, but if the answer is in the negative, they would have to be
classified under Chapter heading No.73.18. Having regard to the finding
that the goods in question cannot but be regarded as parts of automobiles,
+
they are suitable for use primarily with articles of Chapter Head!ng
Nos.87.01 to 87.05 and the goods in question cannot be treated as falling
under Chapter Heading No.73.18 and that they can properly be class.ified
G under Chapter Heading No.87.08 of the Central Excise Tariff Act, 1985.
[384-F-H; 3~5~A-B)
CIVIL· APPELLATE JURISDICTION : Civil Appeal Nos. 4598-
4612/1994.
H From the Judgment and Order dated 9.1.2001 of the Customs, Excise
G.S. AUTO INTERNATIONAL LTD. v. C.C.E CHANDIGARH [S S.M. QUADRI, J.l 375

and Gold (Control) Appellate Tribunal, New Delhi in Final Order No. 1216/ A
2001-D in Appeal No.E-289 to 293/88D.

S. Ganesh, Rajesh Kumar, Ms. Nisha Bagehi, Dileep Tandon, B. Krishna
Prasad and D.S. Mabra for the appearing parties.

The Judgment of the Court was delivered by B
SYED SHAH MOHAMMED QUADRI, J. This bunch of appeals
raises a common question of classifications of certain goods (thirty two items),
which will be referred to presently, manufactured by the assessee-appellant
in Civil Appeal Nos. 4598-4612 of 1994 (the first set of appeals) which are
directed against the final judgment and order of the Customs, Excise and C
Gold (Control) Appellate Tribunal, New Delhi (for short, 'the C.E.G.A.T.')
in Appeal Nos. E-5455-5469/92-D dated November 22, 1993 and the order
in Rectification Application No.E/41/93-D passed on March 3, 1994. The
second set of appeals, Civil Appeal Nos. 5701-5705 of 200 I, filed by the
Revenue, is from final judgment and order in Appeal Nos. E-289-293.1988- D
D dated January 9, 200 I. AIJ these twenty appeals relates to the Assessment
Years 1979 to 1986, albeit, for different periods. Civil Appeal No. 5711 of
1999 is filed by the Revenue, dissatisfied by the final judgment and order of
the C.E.G.A.T. in Final Order No. 351/99-B in Appeal No. E/2483.1992-B
passed o~·April 6, 1999 and it relates to the Assessment year 1986-87.
E
In the order impugned in the first set of appeals, the Tribunal applied
the functional test and classified those thirty two items, manufactured by the
assessee, under Tariff Item 52 of the First Schedule to the Central Excise Act,
1944. The classification was based on the finding recorded by the Tribunal,
after referring to the findings in the identical case of Mis. Hindustan Motors F
Limited v. Collector of Central Excise, Calcutta Tribunal's Order No.E/333/
93-D dated 6th October, 1993 in Appeal No. E/882/85-D. The finding reads
as follows:

"....... the Tribunal had clearly held that goods, even though used as
component parts of motor vehicles having a fastening function G
primarily, are to be classified under Item 52 C.E.T."

(Emphasis supplied)

Two points may be noted in this finding, (I) the goods in questions are
component parts of motor vehicles; and (2) the function of those goods is the H
376 SUPREME COURT REPORTS [2003) I S.C.R.

A fastening of parts.

For the same assessment years but for a different period, the Tribµnal,
in its order dated January 9, 2001,"(subject-matter of Civil Appeal Nos. 5701-
5705 of 200 I), approved the following findings recorded by the Collector
(Appeals) with regard to the same goods:
B
."I observe that these are specially designed parts for use in automoblie
vehicles, sold in unit and as per part numbers of the original vehicle
manufacturers. They are not inter-changeable· and can be marketed
only by auto-vehicle part dealers. Each and every part in question has
code number, vehicle in which they can be used, their nomenclature,
c description marking and part number. On careful examination of these
samples, I find that some of the items are not even threaded. They are
suitable for use only in different motor vehicles according to their
specifications. As per the sample and catalogue, by no stretch of
imagination these items in question can be termed as general type of
D fasteners. "

(Emphasis supplied.)

Referring to the test applied by this Court in Purewal Associates Limited
v. Collector of Central .Excise, 81 E.L.T. 321, the Tribunal held:

"No one uses these parts as general parts of bolts and nuts. Some
parts are such that they can, if one wants, be used as a general
purpose bolt or nut. This type of stray use of which they may be J?Ut
can not take them out of the category of parts of Automobile. The
materials now made available namely the catalogue, affidavits given
F by dealers in automobile parts and the communications received from
Mis. Maruti Udyog Ltd., Mis. Mahindra & Mahindra, Mis. Daewoo
Motors show that these goods manufactured are specialised· parts
required for automobiles. These parts are manufactured at the instance
ofautomobile manufacturers and they procure it as original equipment
G or replacement parts. No iota of evidence is forthcoming from the
Revenue to show that these parts are ever made available in the
market as bolt nuts or that they are in common use as bolts and nuts
as understood in ordinary or common parlance."

On those findings of fact, it was held that the goods in question did not
H fall under Tariff Item 52 and, being virtually parts of automobile, were
G.S. AUTO INTERNATIONAL LTD. '· C.C.ECHANDIGARH [S.S.M. QUADRI, J.] 377

classifiable under Tariff Item 68. A
On the basis of similar findings and following the principle laid down
in Purewal Associates limited (supra), the Tribunal in the order in question
in Civil Appeal No. 5711 of 1999, having regard to the change of scheme of
classification of goods under the Central Excise Tariff Act, 1985 held, for the
Assessment Year 1986-87, that the said goods were classifiable under Chapter B
Heading 87.07 and not under Chapter Heading 73.18, as contended by the
Revenue.

Mr. S. Ganesh, learned senior counsel appearing for the assessee,
contends that inasmuch as the test laid down in Purewal Associates limited
(supra), namely, the test of commercial identity, was not available to the C
Tribunal when it passed the order, now s~bject-matter of the first set of
appeals, it erred in applying the functional test and holding that the goods in
question are classifiable under Tariff Item 52, as it existed prior to the
commencement of the Central Excise Tariff Act, 1985 and, therefore, the
order of the Tribunal is liable to be set aside. He submits that after having D
the benefit of the law laid down by this Court in Purewa/ Associates Limited
(supra), the Tribunal applied the correct test of commercial identity in its
orders, which are subject matter of the second set of appeals and the third
appeal, which deserve to be upheld.

Ms. Nisha Bagchi, learned counsel appearing for the Revenue, E
vehemently contends that in regard to pre-1986 period, both the findings
recorded by the Tribunal as well as the function of the goods would show
that they are nothing but nuts and bolts classifiable under Tariff Item 52; in
regard to the classification under post-1988 period, she invited our attention
to Notes 2(b) and (3) of Section XVII read with Note 2(a) of Section XV to F
show that Chapter Heading 73.I 8 takes in screws, bolts, nuts, etc. and that
the expressions "parts" and "part and accessories" have been defined in Section
XVII, Note 2(b). Inasmuch Note (2) to Section XV takes away the goods
classifiable under Chapter Heading 73.02, therefore, the goods in question
have to be classified only as nuts, bolts, screws even if they formed parts of
automobile. G
Mr. Dileep Tandon, learned counsel appearing for the Revenue in Civil
Appeal Nos. 4598-4612 of 1994, strenuously contends that nuts, bolts and
screws, etc., are generic terms and notwithstanding the fact that they are parts
of automoblie, they would nonetheless be species of nuts and bolts and ought
to be classified as such under Tariff Item 52. He relies upon the latter part H
378 SUPREME COURT REPORTS [2003] I S.C.R.

A of the judgement in Purewa/ Associates Limited (supra) which deals with
nuts and bolts etc., in support of his contention.

The controversy in these appeals pertains to the classification of the
following goods: (1) Sprint Centre Bolts with Nuts; (2) Spring U Bolt with
Nuts; (3) Spring U Clamps with nuts and plates; (4) Spring Shackle Pin
B (Shackel Bolt) with Nuts; (5) Spring Shackle Pin (Spring Pin); (6) Hub Bolts
& Nut Chevrolest; (7) Hub Bolt & Nut Chev Viking; (8) Hub Bolt & Nut
Tata Diesel Vehicle; (9) Hub Bolt & Nut Dodge B.l.F.; (10) Hub Bolt & Nut
Dodge K.E.W.; (11) Hub Bolt & Nut Dodge Timken; (12) Hub Bolt & Nut
Dodge Rocket; (13) Hub Bolt & Nut Leyland: (14) Hub Bolt & Nut Ford
C V.8.; (15) Hub Bolt & Nut Ford Kekril & Ford Thames; (16) Hub Bolt & Nut
Bedford J-4 & J-6; (17) Hub Bolt & Nut Shaktiman & Jeep; (18) Hub Bolt
& Nut Benz IO Ton; (19) Hub Bolt & Nut Minibus; (20) Hub Bolt & Nut
Square Type; (21) Hub Bolt & Nut Peyken; (22) Genuine Nuts; (23) Azle
Studs with Nuts; (24) Hub Bolt & Washers; (25) Checkouts; (26) Shaft Bolts;
(27) Misc Bolts; (28) Sprint Shackle Assembly; (29) Gun Metal Bushes; (30)
D King Pin & King Pin Unit; (31) Fan Blades; and (32) Spring Hanger &
Brackets.

As the controversy centres round Tariff Item 52 and 68 in the First
Schedule of the Central Excise Act, 1944, it will be apt to refer them here.
They read as follows:
E
Item No. Description of goods Rate of duty

{l) (2) (3)

52. Bolts and nuts, threaded or tapped and Fifteen per
F screws, of base metal or alloys thereof, cent ad
in or in relation to the manufacture of valorem
which any process is ordinarily carried on
with the aid of power
Explanation:- The expression "Bolts and nuts,
G threaded or tapped and screws" used in this
item shall include both ends, screw studs,
screw studding, ·self-tapped screws, screw
hooks and screw rings.

H
G.S. AUTO INTERNATIONAL LTD. v. C.C.E CHANDIGARH [S.S.M. QUADRI, J.] 3 79

Item No. Description of goods Rate of duty A
1
(I) (2) (3)
l

68. All other goods, not elsewhere specified, Twelve per cent
but excluding ad valorem
B
(a) alcohol, all sorts, including alcoholic
liquors for human consumption;

(b) opium, Indian hemp and other narcotic
drugs and narcotics; and
c
(c) dutiable goods as defined in section 2(c)
of the Medicinal and Toilet Preparations
+ (Excise Duties) Act, 1955 (16 of 1955).
Explanation:- For the purposes of this item, goods
which are referred to in any preceding item in this 0
Schedule for the purpose of excluding such goods
from the description of goods in that item (whether
such exclusion is by means of an Explanation to
such item or by words of exclusion in the
description itself or in any other manner) shall be
deemed to be goods not specified in that item.
E

From a perusal of the above excerpts of the Tariff Items, it is clear that
bolts and nuts, threaded or tapped and screws, base metal or alloys thereof,
in or in relation to manufacture of which any process is ordinarily carried on
with the aid of power are classifiable under Tariff Item 52 and liable to duty F
at the rate of fifteen per cent ad valorem. Tariff Item 68 is a residuary entry.
All goods which are not specified elsewhere, except those which are excluded
thereunder, are grouped under this Item. We may note here that nuts and
bolts do not fall in the category of excluded goods under Tariff Item 68. The
rate of duty payable on goods falling under this Item is twelve per cent ad
valorem. G
It may be useful to refer to Tariff Item 34-A of the said First Schedule,
on which reliance was placed by the learned counsel appearing for the Revenue,
which is in the following terms:

H
380 SUPREME COURT REPORTS [2003) I S.C.R.

A Item No. Description of goods Rate of duty
. 't·
(I) (2) (3)

34A. Parts and accessories of Motor Vehicles Twenty per cent
and Tractors, including Trailers, the ad valorem
B
following namely:-

(i) Brake linings;
(ii) Clutch facings;
(iii) Engine valves;
c (iv) Gaskets;
(v) Nozzles and nozzle holders;
(vi) Pistons; _.......
(vii) Piston rings;
(viii) Gudgeon pins;
D (ix) Circlips;
(x) Shock absorbers;
(xi) Sparking plugs;
(xii) Tin-walled bearings;
(xiii) Tie rod ends;
E (xiv) Electric horns;
(xv) Filter elements, inserts and cartridges.
Explanation-I: The expression "Motor vehicles" has the meaning
assigned to it in Item No. 34.

F Explanation II: The expression "Tractors" shall include agricultural
tractors. +
This Tariff Item takes in its fold fifteen parts and accessories of Motor
Vehicles and Tractors. It may be noted here that the goods in question, which
G are claimed to be motor parts, are not included within the specified goods
mentioned in Tariff Item 34-A.

The question that needs to be adverted to is: whether the goods in
question can appropriately be classified under Tariff Item 52 or not having
been specified elsewhere, they fall under Tariff Item 68. In construing these
H items, what is the proper test to be applied? Is it the functional test or is it
G.S. AUTO INTERNATIONAL LTD. v. C.C.ECHANOIGARH [S.S.M. QUAORI, I.] 38\

commercial identity test which would determine the issue. It seems to us that A
this question is no longer res integra. It fell for consideration of this Court
earlier and it was laid down that the true test for classification was the test
of commercial identity and not the functional test. It needs to be ascertained
as to how the goods in question are referred to in the market by those who
deal with them be it for the purposes of selling, purchasing or otherwise.
B
In Jaishri Engineering Co. (P) ltd v. Collector of Central Excise 40
E.L.T 214, this Court considered the question whether High Pressure
Connectors meant for lubricating purposes were classifiable under Tariff Item
52 of the Central Excise Tariff as 'nuts' or under Tariff Item 68 as 'integral
part of diesel engine pipes'. It was found that the said goods were not C
manufactured according to any special specifications as integral parts of
machinery, rather some of these nuts were also purchased from the market
·t- while those being manufactured by the assessee were also sold to outside
buyers as nuts; further, those goods were commercially known and bought
and sold as nuts. On that finding, it was held that they were classifiable under
Tariff Item 52. D
In Purewal Associates limited (supra), two appeals were dealt with by
this Court. The subject-matt.er of the first appeal was classification of screws,
Lid screws, Barrel axle screw, Bridge screw and the Dial Key screw which
were used as parts in manufacturing watches. It was contended that they E
would fall under Tariff Item 52 as they were nothing but screws. It was
observed that the Tribunal had rightly taken note of the test laid down by this
Court in several decisions but misdirected itself in applying it. The test is that
while interpreting the entries in the Schedule, they must be construed and
understood as in common parlance and words used by the Legislature must
be given their popular sense, namely that sense people conversant with the F
subject matter with which the statute was dealing would attribute to it. Applying
the test of commercial parlance for identity of the goods and referring to the
observation of this Court in Plasmac Machine Mfg. Co. Pvt. ltd. v. Collector
of Central Excise 51 E.L.T. 161, it was held that the goods were classifiable
under Tariff Item 68. The other appeal dealt with thirty two articles of different G
kinds of connecting rod bolts (bolt rear wheel, bolt front wheel, etc.) It is on
this part of the judgment that Mr. Dileep Tandon has placed strong reliance
to show that nuts and bolts even if integral parts of machinery would be
falling under Tariff Item 52. It would be useful to notice here the following
observation in paragraph ( 16):
H
382 SUPREME COURT REPORTS (2003) l S.C.R.

A "16. Before us the materials in question were produced and we could
appreciate the conclusion that they are nuts and bolts as commonly
understood though they differ in shape and are manufacutred to order."

The Court approved the conclusion of the Tribunal. It is worth noticing
that whereas in the appeal relating to part of watches, the Tribunal misdirected
B itself in applying the correct test, therefore, it warranted interference with the
conclusion arrived at by the Tribunal but in the appeal dealing with nuts and "i-
bolts as the Tribunal has noted the correct test and properly applied it, there
was no reason to interfere with the result which was arrived on the basis of
the findings of fact.
c In interpreting Tariff Item 52, we may usefully refer to Excise Collector's
Trade Notice No. 127/71dated5th July, 1971. It would be apt to read it here:

"Mere existence of threads would not render an article as a bolt, nut
or screw if it is recognisable as component part of an instrument,
apparatus, appliance or machine. The tariff definition of Item 52 is
D intended to cover only those which are known as bolt, nuts and
screws in the market."

From a persual of the Trade Notice, two aspects become apparent. The
first is that mere existence of threads would not render an article as a bolt,
E nut or screw so long as that is recognisable as component part of an
instrument, apparatus, appliance or machine and the second is that the
expression used in Tariff Item 52 is intended to cover only those which are
known as bolt, nuts screws in the mar/cr!t. The Trade Notice re-affirms the
commercial identity of goods test. Keeping these two aspects in view, if one
applies the afore-mentioned test, one cannot identify, sell or purchase the
F goods in question as nuts, bolts, etc. The decision of this Court in Purewa/
Associates Limited (supra) furnishes a good example of application of the test
on the findings of fact recorded by the Tribunal. With regard to the parts of
the watches, various types of screws were recognised as component parts of
instruments and they were held not.to fall under Tariff Item 52; in regard to.
G bolts and screws used in motors, as it was found that they were not
manufactured as component parts of automobile, so they were ·held .as ·
classisfiable under Tariff Item 52.

In the light of the above discussion, if we read the findings of fact
recorded by the Tribunal in the appeals before us, referred to above, it cannot
H but be concluded that the goods in question, whiCh are found to. be parts of
G.S. AUTO INTERNATIONAL LTD. v. C.C.E CHANDIGARH [S.S.M. QUAD RI, I.] 383 ·

automobile were wrongly classified under Tariff Item 52 by the Tribunal in A
Civil Appeal Nos. 4598-4612 of 1994 and were rightly classified as falling
under Tariff Item 68 in Civil Appeal Nos. 5701-5705 of 2001.

So far as Civil Appeal No. 5711 of 1999 is concerned the classification
of goods was done under the Central Excise Tariff Act, 1985 (for the post-
1986 period), The competing Heading· numbers are 73.18 and 87.08, which B

• read as under:

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

(I) (2) (3) (4)
c
+ 73.18 Screws, bolts, nuts, coach-screws,
screws-hooks, rivets, cotters, cotter-
pins, washers (including spring
washers) and similar articles, of iron D
or steel
7318.10 - Threaded articles 20%

Heading Sub- Description of goods Rate of
No. Heading No. duty E
' (I) (2) (3) (4)

87.08 8708.00 Parts and accessories of the
motor vehicles of heading
F
• Nos. 870 I to 87 .05 20%

Now, we shall refer to the relevant notes under Sections XVII and XV
respectively.

Notes 2(b) and (3) of Section XVII read as follows:
G
"2. The expressions 'parts' and 'parts and accessories' do not apply
... to the following articles, whether or not they are identifiable as for
the goods of this Section:

(a) xxx xxx
H
384 SUPREME COURT REPORTS (2003] I S.C.R.

A (b) Parts of general use, as defined in Note 2 to Section XV, of base
metal (Section XV), or similar goods of plastics (Chapter 39);"

"3. References in Chapters 86 to 88 to 'parts' or 'accessories' do not
apply to parts or accessories which are not suitable for use solely or
principally with the articles of those Chapters. A part or accessory
B which answers to a description in two or more of the headings of
those Chapters is to be classified under that heading which corresponds
to the principal use of that part of accessory."
....
Section XVII deals with Vehicles, Aircraft, Vessel and Associated
Transport Equipment. Note 2 says that the expression "parts" and "parts and
c accessories" do not apply to the articles mentioned in clauses (a) to (1)
thereunder. In clause (b), parts of general use as defined in Note 2 to Section
XV, of base metal (Section XV), or similar goods of plastic (Chapter 39), are ......
mentioned. This takes us to Note 2(a) to Chapter XV, which provides that
throughout that Schedule, the expression "parts o( general use" means:
..
;--

D "(a) Articles of Heading No. 73.07, 73.12, 73.15, 73.17 or 73.18 and
~
similar articles of other base metal;"

Note. 3 says that references in Chapters 86 to 88 to 'parts' or
~·
'accessories' do not apply to parts or accessories which are not suitable for
E use solely or primarily with the articles of those chapters and that a part or
accessory which answers to a description in two or more headings of those
Chapters is to be classified under that heading which corresponds to the
principal use of that part of accessory.

A conjoint reading of the Notes, referred to above, would show that the.·
F expression "parts of general use" throughout the Schedule, means, inter alia,
~
articles of Heading No. 73 .18 and similar articles of other base metal; and the
expression 'part and accessories' in Chapter Heading 87.08 does not apply to
parts or accessories which are not suitable for use solely or primarily with
articles of Chapter Heading 87 .08 which pertains to parts and accessories of
motor vehicles of Chapter Heading Nos. 87.01 to 87.05. for the purposes of
G classification under Chapter Heading 87.08, the test to be applied is; whether
the goods are suitable for use solely or primarily with articles of Chapter
.+
Heading Nos. 87.01 to 87.05; if the answer is in the affinnative, the goods
will be classifiable under Chapter Heading 87.08, but if the answer is in the
negative, they would have to be classified under Chapter Heading No. 73.18.
H Having regard to the finding that the goods in question cannot but be regarded
G.S. AUTO INTERNATIONAL LTD. v. C.C.ECHANDIGARH [S.S.M. QUADRI, J.] 385

as parts of automobiles, it has to be held that they are suitable for use primarily A ·
with articles of Chapter Heading Nos. 87.01 to 87.05. It follows that the
goods in question cannot be treated as fulling under Chapter Heading No.
73.18 and that they can properly be classified under Chapter Heading No.
87.08 of the Central Excise Tariff Act, 1985.

In this view of the matter, the judgements and orders of the Tribunal B
under challenge in the first set of appeals (Civil Appeal Nos. 4598-4612 of
t 1994) are set aside and the appeals filed by."the.assessee are allowed. The
judgment of the Tribunal under challenge in the seeond set of appeals (Civil
Appeal Nos. 5701-5705 of 2001) and the order impugned in the third appeal
~lvil Appeal No. 5711 of 1999) are confirmed and accordingly, the appeals C
filed by the Revenue are dismissed with costs.

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