M/S. SECURE METERS LTD.versusCOMMISSIONER OF CUSTOMS, NEW DELHI

                     (2015] 6 S.C.R. 219


               M/S. SECURE METERS LTD.                           A
                              v.
      COMMISSIONER OF CUSTOMS, NEW DELHI
               (Civil Appeal No.7526 of2004)
                                                                 B
                        MAY05,2015
          [A. K. SIKRI AND R. F. NARIMAN, JJ.]
         Central Excise Tariff Act, 1985- Chapter 90 Note 2(a)
- Chapter Heading 9013. 80 and 9028. 90- Classification of c
Liquid Crystal Display-LCD's under, Chapter Heading
9013.80 or 9028.90 -Assessee importing LCD's and said
devices used in electric supply meter - Clearance sought
under Heading 9013. 80 and claimed assessment at nil rate
basic duty- However, Revenue's case that it would fall in D
tariff item No. 9028. 90 as that entry specifically includes
amongst others, electricity supply meters - Held: LCDs
should not constitute 'articles' provided more specifically in
other headings - LCDs imported by the appellant did not
constitute any such 'article' more specifically provided in other E
headings - Thus, LCDs imported by the appellant were
classifiable under Chapter Heading 9013. 80 and not under
9028.90 and the order passed by the authorities below set
aside - General Rules for the Interpretation of the First
Schedule-Import Tariff- r. 3(c).                                  F
       Allowing the appeal, the Court

      HELD: 1.1 LCDs are specifically provided in tariff
item 9013. The only condition is that such LCDs should G
not constitute 'articles' provided more specifically in
other headings. In the instant case, LCDs imported by
the appellant did not constitute any such 'article' which
is more specifically provided in other headings. On the
contrary, the Revenue wants to include in the same H
                             219
220      SUPREME COURT REPORTS                (2015] 6 S.C.R.


A Chapter, i.e. Chapter 90, though under Entry 9028.90.10
  as "parts and accessories". The only reason for
  including the goods under Chapter Heading 9028 is that
  the LCDs were to be used in the electricity supply meters.
  However, Entry 9028 does not pertain to LCDs but gas,
B liquid, etc. and includes electricity supply meters as well.
  Note 2(a) stipulates that parts and accessories which are
  goods included in the heading of the Chapter 90, are to
  be classified in their respective headings. Going by the
  plain reading of Note 2(a) it is clear that LCDs, which are
C goods and are used as parts in the final product
  mentioned in Chapter 90, namely, electricity supply
  meters, are to be classified in its respective heading.
  Respective heading, which is specifically provided, is
  9013. Note 2(b) relates to 'other parts and accessories',
0
  namely, it would apply to those parts and accessories
  for which Note 2(a) is inapplicable. In the instant case
  Note 2(a) squarely applies, the irresistible conclusion is
  that the goods will be classified in tariff item 9013, which
E is the specific heading for these goods. [Para 15, 16]
  [233-D-G; 234-A-B, D-E]

         1.2 Part Ill of the Chapter Notes to chapter 90
  contains a general explanation to Chapter Note 2 and
F mentions that where parts or accessories identifiable
  as suitable for use solely or principally with the
  machines, appliances, etc., they are to be classified with
  those machines/ap.pliances. However, what is important
  is that immediately thereafter it is clarified that this
G general rule would not apply in certain circumstances.
  Sub-para takes things beyond the pale of any doubt by
  making it crystal clear that those parts and accessories
  which in themselves constitute 'article' falling in any
  particular heading of this Chapter, the general rule will
H not apply and said article would fall in that particular
  M/S SECURE METERS LTD. v. COMMISSIONER OF                 221
             CUSTOMS, NEW DELHI

heading. As per Explanatory Notes issued by the World A
Customs Organization, Volume 4 Second Edn (1996),
covering Chapters 85-97, LCD would be covered by
'other devices' mentioned in 9013.80, which is precisely
the case of the appellant. Thus, the view taken by the
tribunal in the impugned judgment is unsustainable in B
law. The order passed by the authorities below is set
aside and the LCD imported by the appellant were
classifiable under Chapter Heading 9013.80. [Para 19,
20, 21] (236-E-H; 238-8-D]
                                                             c
  CCE, Bombay v. Universal Information Commn.
  Equipment Ltd. 1997 (94) ELT 543; Commissioner of
  Central Excise, Nagpur v. Simplex Mills Co. Ltd. 2005
  (2) SCR 441 : (2005) 3 SCC 51; Collector of Central
  Excise v. Delton Cables Ltd. &Anr. (2005) 12 SCC 284       D
  - referred to.

       Bloomsbury Dictionary of 'Science· for Everyone'
- referred to.
                                                             E
                  Case Law Reference
  1997 (94) ELT 543            Referred to.   Para 3
  2005 (2) SCR 441             Referred to.   Para 13
  (2005) 12 sec 284            Referred to.   Para 17
                                                             F
      CIVILAPPELLATE JURISDICTION : Civil Appeal No.
7526 of 2004

       From the Judgment and Order No. 316/2004-B dated
28.04.2004 of the Customs, Excise & Service Tax Appellate
Tribunal, New Delhi in Appeal No. C/44/2003-NB(B)         G

      V. Lakshmikumaran, M. P. Devanath, Vivek Sharma,
L. Charanaya, Aditya Bhattacharya, R. Ramachandran,
Hemant Bajaj, Ambarish Pandey, Anandl'I K., Rajesh Kumar,
Aman, Disha Jain, RachitJain for the Appellant.              H
222        SUPREME COURT REPORTS                   [2015] 6 S.C.R.


A           Kiran Suri, Shirin Khajuria, Ajay Sharma, B. Krishna
      Prasad for the Respondent.

            The Judgment of the Court was delivered by

          A.K. SIKRI, J. - 1. The appellant is engaged in the
8
  manufacture of electricity meters. In September 2000, the
  appellant imported a consignment consisting of LCD Modules
  (Printed Circuit Boards) and Liquid Crystal Display (LCD) from
  Hong Kong. The classification of the LCD Module is not in
c dispute. The dispute in the instant case relates to classification
  of LCDs. The appellant sought clearance of LCDs under
  Chapter Heading 9013.80 and claimed assessment at Nil rate
  (basic duty), 16% additional duty and 4% SAD. As per the
  appellant, since the LCDs were classifiable under Chapter
D Heading 9013.80, in view of Notification No. 16/2000, and
  particularly Entry/S.No. 304 of the table of the said Notification,
  the goods classified under Heading 9013.80 attracted Nil rate
  of basic custom duty. That was the reason for claiming
  assessment at Nil rate insofar as basic duty is concerned.
E However, the case of the respondent/custom authorities is that
  on verification it was found that the goods were not simple
  liquid crystal. On the contrary, these were LCD Modules and
  Elastomeric LCD Displays and were part of Energy Meter.
  The relevant invoices also described the goods as "electronic
F part for energy meter". The drawing and literature which were
  provided did not specify the purpose.

          3. The Deputy Commissioner, Customs (Adjudicating
  Authority), thus, passed orders dated 31.08.2001 holding
G that LCDs were classifiable under Chapter Heading 9028.90
  and not under 9013.80 as claimed by the appellant. For
  classifying the goods under the aforesaid category, recourse
  to Rule 3(c) of the General Rules forthe Interpretation of the
  First Schedule - Import Tariff was taken by the Adjudicating
H Authority. The Deputy Commissioner observed that even if
     M/S SECURE METERS·LTD. v. COMMISSIONER·OF                   223
          CUSTOMS, NEW DELHI [A.K. SIKRI, J.]

he considered the goods to be devices, then only those LCD A
devices/displays which do not constitute articles provided
for more specifically in other heading would cover in Chapter
Heading 9013 and, accordingly, he took the view that the
goods are specific part of the electricity meter and, thus,
classified the same under Chapter Heading 9028.90 as parts B
of electricity meter.

        3. The aforesaid order of the Adjudicating Authority has
been affirmed by the Commissioner as well as CESTAT
resulting into dismissal of appeals filed by the appellant herein. C
The decision of CESTAT reveals that appellant relied upon its
earlier decision in the case of CCE, Bombay v. Universal
Information Commn. Equipment Ltd.' However, the Tribunal
has held that the aforesaid decision is not applicable to the
facts of the present case. The Tribunal has accepted the D
contention of the Revenue that the invoices issued by the
supplier of the goods specifically mentioned that these were
parts of electronic energy meters and even the appellant had
admitted that these goods had to be issued as parts of energy
meter.                                                             E

        4. Since the appellant claims that the LCDs fall under
Chapter Heading 9013.80 and the argument of the Revenue
is that these are rightly classified under Heading 9028.90,
we may first take note of these Chapter Headings:                 F

Tariff Item                    Description of Goods

        (1)                             (2)

       9013             Liquid Crystal Devices not constituting G
                        articles provided for more specifically in
                        other headings; lasers, other than laser
                        diodes; other optical appliances and
                        instruments, not specified or included H
1
    1997 (94) ELT 543
224         SUPREME COURT REPORTS                    (2015] 6 S.C.R.


A                         elsewhere in this Chapter

         9013.80          Other devices,           appliances   and
                          instruments;

         901380.10        Liquid Crystal Devices (LCD)
B
         9028             Gas, Liquid or electricity supply or
                          production meters, including calibrating
                          meters therefor

c        9028.90          Parts and accessories

         9028.90.10       For electricity meters

          5. One thing is clear. Both the tariff items under which
D classification is sought by the appellant as well as the
  authorities, fall under Chapter 90. Therefore, it would be
  advisable to refer to the relevant provisions of Note 2 to Chapter
  90 as these notes are inserted to guide how the goods are to
  be classified under this Chapter. Heading ofChapter90 is as
E follows:

        "Optical, photographic, cinematographic,
        measuring, checking, precision, medical or surgical
        instruments and apparatus; parts and accessories
        thereof'
F
             6. Note 1 of this Chapter stipulates certain items which
      are not covered under this Chapter. Obviously, this Note
      does not concern us in the present appeal. Note 2, which is
      material for the purposes of this appeal, is reproduced below:
G
        "2. Subject to Note 1 above, parts and accessories for
        machines, apparatus, instruments or articles of this
        Chapter are to be classified according to the following
        rules:
H
  M/S SECURE METERS LTD. v. COMMISSIONER OF                       225
       CUSTOMS, NEW DELHI [A.K. SIKRI, J.]

   (a) Parts and-accessories which are goods included in           A
   any of the headings of this Chapter or of Chapter 84,
   85 or91 (other than heading No.84, 85, 85.48 or90.33)
   are in all cases to be classified in their respective
   headings;
                                                                   B
   (b) other parts and accessories, if suitable for use solely
   or principally with a particular kind of machine, instrument
   or apparatus, or with a number of machines, instruments
   or apparatus of the same heading (including a machine,
   instrument or apparatus of heading No. 90.10, 90.13 or          C    ,,
   90.31) are to be classified with the machines, instruments
   or apparatus of that kind;

   (c) all other parts and accessories are to be classified in
   heading No. 90.33."                                             D

        7. It is not in dispute that the goods in question which
are imported by the appellant are LCDs. It is also not in
dispute that these devices are used in electricity supply
meters. Since the LCDs are used for electronic supply E
meters by the appellant, the Revenue has taken the view
that it would fall in tariff item No. 9028.90 as that entry
specifically includes, amongst others, electricity supply
meters. As LCDs are used as part of the electricity supply
meters, they are held to be covered under sub-heading F
9028.90 by the Revenue. It may be emphasised that in
coming to this conclusion, the authorities below have been
influenced by the fact that the goods imported are actually
used as parts of electronic energy meters and the appellant
has even admitted the same.                                      G

       8. Challenging the aforesaid view of the authorities,
submission of Mr. Lakshmikumaran, learned counsel
appearing for the appellant, is that when the specific
description of the goods in question, namely, LCDs, is distinctly H
226        SUPREME COURT REPORTS                     (2015] 6 S.C.R.


 A covered by another tariff item which is 9013, it has to be
   classified in that entry and the factum of its use as part or
   accessory in the electronic energy meters would be of no
   consequence and, therefore, it cannot be held to be covered
   by tariff item 9028.90. The submission, precisely, was that
 B whenever a particular item of goods falls in a specific tariff
   item, it has to be classified under the said tariff item and not in
   other item where it can be used as part thereof.

          9. Mr. Lakshmikumaran has also placed heavy reliance
 C upon Note 2 attached to Chapter 90 and argued that as per
   Note 2(a), parts and accessories, which has goods included
   in any of the headings of said Chapter 90 (or of Chapter 84,
   85 or 91 ), are to be classified in their respective headings.

 D         10. Ms. Kiran Suri, learned senior counsel appearing
    for the respondent/department, argued, per contra, that in
    the present case goods were specifically meant for use as
    parts in electric meters, which is even accepted by the
    appellant. Therefore, Note 2 would not apply in this case.
· E She submitted that under these circumstances it is the
    General Rule of Interpretation that would apply and referred
    to Rule 3 of the said Rules and contended that if the goods
    are classifiable under two or more headings, on the
    application of Rule 2(b) of the General Rules of Interpretation,
  F then the classification has to be in the manner stipulated in
    Rule 3 of the General Rules. Rules 2 and 3 are as under:

        "2. (a) Any reference in a heading to an article shall be
        taken to include a reference to that article incomplete
 G      or unfinished, provided that, as presented, the
        incomplete or unfinished article has the essential
        character of the complete or finished article. It shall also
        be taken to include a reference to that article complete
        or finished (or falling to be classified as complete or
 H      finished by virtue of this rule) presented unassembled or
M/S SECURE METERS LTD. v. COMMISSIONER OF                      227
     CUSTOMS, NEW DELHI (A.K. SIKRI, J.]

dis-assembled.                                                  A
(b) Any reference in a heading to a material or substance
shall be taken to include a reference to mixtures or
combinations of that material or substance with other
materials or substances. Any reference to goods of a            B
given material or substance shall be taken to include a
reference to goods consisting wholly or partly of such
material or substance. The classification of goods
consisting of more than one material or substance shall
be according to the principles of rule 3.                       C

3. When by application of rule 2(b) or for any other reason,
goods are, prima facie, classifiable under two or·more
headings, classification shall be effected as follows:
                                                                D
  (a) The heading which provides the most specific
 description shall be preferred to headings providing a
  more general description. However, when two or more
  headings each refer to part only of the materials or
. substances contained in mixed or composite goods or           E
  to part only of the items in a set put up for retail sale,
 those headings are to be regarded as equally specific
  in relation to those gods, even if one of them gives a
 more complete or precise description of the goods.
                                                                F
(b) Mixtures, composite goods consisting of different
materials or made up of different components, and
goods put up in sets for retail sale, which cannot be
classified by reference to (a), shall be classified as if
they consisted of the material or component which gives         G
them their essential character, insofar as this criterion
is applicable.

(c) When goods cannot be classified by reference to (a)
or (b), they shall be classified under the heading which
                                                                H
228        SUPREME COURT REPORTS                   [2015] 6 S.C.R.


 A     occurs last in numerical order among those which equally
       merit consideration."

            11. She argued that as per Rule 3(a) of the Rules, it
    was incumbent to classify the goods in that heading which
· B provides 'the most specific description' in contrast with the
    heading providing for a more general description. She also
    referred to the following portion of the assessment order made
    by the Commissioner of Customs to buttress her aforesaid
    submission:
 c     "Even if we ignore the above definition of device and
       consider the imported parts i.e. Liquid Crystal Displays
       to be "devices", only those liquid crystal devices/displays
       which do not constitute article provided for more
 D     specifically in other headings will be covered in CTH
       90.13. In other words, liquid crystal devices/displays
       which do not specifically form part of a specific type of
       equipment will be classified here. General purpose LCD,
       for example the one displaying only 0-9 numbers, which
 E     can be attached to several devices/equipments and
       cannot be specifically covered in any one heading as
       parts are to be classified here if they are considered as
       devices. Had the intention been to cover all Liquid Crystal
       Devices/displays in CTH 90.13 there was no need for
 F     the description -

       "Liquid Crystal Devices not constituting articles provided
       for mor... ->pecifically in other headings."

       And "Liquid Crystal Device" would have been sufficient
 G
       instead. The only way to make Liquid Crystal Device/
       display more specifically covered in other heading is to
       make it a part of a specific articles as in present case.

       There can be an argument whether being part of a
 H
 MIS SECURE METERS LTD. v. COMMISSIONER OF                        229
      CUSTOMS, NEW DELHI [A.K. SIKRI, J.]

  specific goods can make LCD more specifically covered            A
  in that heading as part of the specified equipment as
  compared to CTH 90.13, but there can be no doubt
  that such situation certainly makes it classifiable in other
  heading (e.g. CTH 9029.90 in present case). And when
  any good is classifiable in two or more headings, then           B
  as per Rule 3(c) of General Rules for Interpretation, the
  heading which occurs last in numeric order is to be
  preferred."

      12. We have given due consideration to the aforesaid         C
submissions made by learned counsel for the parties.

       13. We may point out at the outset that Rule 3 of the
General Rules, which is sought to be invoked by the
Department, would be seen and examined ifthe classification D
cannot be determined according to the terms of the headings
and relevant Section and Chapter Notes thereof. It is clearly
provided in Rule 1 of the General Rules itself, which reads
as under:
                                                              E
   "Classification of goods in this Schedule shall be
   governed by the following principles:

  1. The titles of Sections, Chapters and sub-Chapters
  are provided for ease of reference only; for legal
                                                                   F
  purposes, classification shall be determined according
  to the terms of the headings and any relative Section
  or Chapter Notes and, provided such headings or Notes
  do not otherwise require, according to the following
  provisions:                                                      G
              xx             xx             xx"

      It is manifest from the reading of this Rule that we will
have to first undertake the exercise of finding out as to
whether the goods in question can be classified, taking aid        H
230             SUPREME COURT REPORTS                    [2015] 6 S.C.R.


A     of the Chapter Notes on which reliance is placed. This position
      is made amplified in Commissioner of Central Excise,
      Nagpurv. Simplex Mills Co. Ltd. 2 , this Court held that the
      Rules for the Interpretation of the Schedule to the Central Excise
      TariffAct, 1985 have been framed pursuant to the powers under
B     Section 2 of that Act. The relevant para is reproduced below:

            "11. The Rules for the Interpretation of the Schedule to
            the Central Excise Tariff Act, 1985 have been framed
            pursuant to the powers under Section 2 of that Act.
c           According to Rule 1 titles of sections and chapters in the
            Schedule are provided for ease of reference only. But
            for legal purposes, classification "shall be determined
            according to the terms of the headings and any relevant
            section or chapter notes". If neither the heading nor the
D           notes suffice to clarify the scope of a heading, then it
            must be construed according to the other following
            provisions contained in the Rules. Rule 1 gives primacy
            to the section and chapter notes along with terms of the
            headings. They should be first applied. If no clear picture
E           emerges then only can one resort to the subsequent
            rules. The appellants have relied upon Rule 3. Rule 3
            must be understood only in the context of sub-rule (b) of
            Rule 2 which says inter alia that the classification of goods
            consisting of more than one material or substance shall
F
            be according to the principles contained in Rule 3.
            Therefore when goods are prima facie, classifiable under
            two or more headings, classification shall be effected
            according to sub-rules (a), (b) and (c) of Rule 3 and in
G           that order. The sub-rules are quoted:

            "3. (a) The heading which provides the most specific
            description shall be preferred to heading providing a
            more general description. However, when two or more
            headings each refer to part only of the materials or
H
      2
          (2005) 3 sec 51
 M/S SECURE METERS LTD. v. COMMISSIONER OF                        231
      CUSTOMS, NEW DELHI [A.K. SIKRI, J.]

  substances contained in mixed or composite goods or              A
  to part only of the items in a set, those headings are to
  be regarded as equally specific in relation to those
  goods, even if one of them gives a more complete or
  precise description of the goods.
                                                                   B
  (b) Mixtures, composite goods consisting of different
  materials or made up of different components, and
  goods put up in sets, which cannot be classified by
  reference to (a), shall be classified as if they consisted
  of the material or component which gives them their              C
  essential character, insofar as this criterion is applicable.

  (c) When goods cannot be classified by reference to (a)
  or (b), they shall be classified under the heading which
  occurs last in the numerical order among those which             D
  equally merit consideration."

     Before we advert to this core issue, let us understand
  what constitutes LCDs and its functions, with adequate
  ~~                                                               E
        14. In Bloomsbury Dictionary of 'Science for Everyone',
LCD and LED (light emitting diode) are described in the
following manner:

  "LCD AND LED                                                     F

  The two principal methods of forming number sand letters
  on instruments such as calculators and digital watches.
  A basic pattern of seven bars is used to form the digits 0
  to 9 and several letters. To form other letters and symbols,     G
  more than seven bars are required.

  In the LED (light-emitting diode), the bars are made of a
  substance that permits an electric current to flow through
  in one direction only. A substance used in this way is           H
232         SUPREME COURT REPORTS                     (2015] 6 S.C.R.


A        called a diode. As the current flows, the diode gives off
         red, blue, yellow, or other coloured light, depending on
         the compound of which it is made. For example, gallium
         phosphide (GaP) emits a green glow. Electric circuits in
         the instrument selectively turn on the current to the bars
B        to form the various numbers and letters.

         In the LCD (liquid crystal display), the bars are made of
         liquid crystals. These are a kind of hybrid material, not
         quite a liquid and not quite a solid. They can't be poured
C        readily, as with liquids, nor are their molecules locked in
         place, as with true solids. But\ the molecules can be
         rotated slightly by an electric current. When no current
         flows, the bars are not noticeable, because they reflect
         light to the same extent as the rest of the display surface.
D        But when a current flows through a bar, its molecules rotate
         and its ability to reflect light is reduced. That bar appears
         darkerthan the area around it and forms part of a n,umber
         or letter.

E        You can produce a similar darkening effect, called
         polarization, with Polaroid sunglasses. Hold the glasses
         several centimeters from one eye and look through one
         lens at a shiny, sunlit surface. Rotate the lens and
         observe the darkening.
F
        Liquid crystals can be made to order to do a particular
        job. For example, one kind of crystal is sensitive to
        slight temperature changes. It is used in thermometers
        where the number represer.ting the temperature
G       appears, then disappears, to be succeeded by a higher
        or lower number as the temperature changes."
             The basic pattern of digits or letters which is formed in
      these LCDs is as follows:

H
  M/S SECURE METERS LTD. v. COMMISSIONER OF                          233
       CUSTOMS, NEW DELHI [A.K. SIKRI, J.]

                                                                      A
       0123456189
       RCEFHIJLPU
         As is clear from the above, in the LCD the bars are          B
made of liquid crystals which are neither liquid nor solid
entirely, but a hybrid material of the two. The molecules are
rotated slightly by electric current making a particular bar
darker than the area around it thereby forming part of a number
or letter.                                                            c
        15. Keeping in mind the aforesaid nature of product in
question, we revert to the tariff entries. It cannot be disputed
that LCDs are specifically provided in tariff item 9013. The
only condition is that such LCDs should not constitute 'articles'
provided more specifically in other headings. In the present          D
case, it is also not in dispute that LCDs imported by the
appellant did not constitute any such 'article' which is more
specifically provided in other headings. On the contrary, the
Revenue wants to include in the same Chapter, i.e. Chapter
90, though under Entry 9028.90.10 as "parts and accessories".         E
The only reason for including the goods under Chapter Heading
9028 is that the LCDs were to be used in the electricity supply
meters. However, Entry 9028 does not pertain to LCDs but
gas, liquid, etc. and includes electricity supply meters as well.     F
Merely because these LCDs are to be used as parts in the
said electricity supply meters, can it be said that they are to be
included in Entry 9028? Here, Note 2 of this Chapter Notes
becomes important since LCDs are used in the electricity
supply meters only as parts thereof.                                  G

      Note 2(a) stipulates that parts and accessories which
are goods included in the heading of the said Chapter, i.e.
Chapter 90, are to be classified in their respective headings.
Going by the plain reading of Note 2(a) it is clear that LCDs,        H
234        SUPREME COURT REPORTS                   [2015] 6 S.C.R.


A     which are goods and are used as parts in the final product
      mentioned in Chapter 90, namely, electricity supply meters,
      are to be classified in its respective heading. Respective
      heading, which is specifically provided, is 9013.

B           16. It was soughtto be argued by Ms. Kiran Suri that as
  per Note 2(b), when these LCDs are used solely for particular
  instrument, namely, electricity supply meter, it has to be
  classified with the said meter and, therefore, Chapter Entry
  9028 would get attracted. However, this argument loses sight
C of the fact that Note 2(b) relates to 'other parts and
  accessories', namely, it would apply to those parts and
  accessories for which Note 2(a) is inapplicable. Once we find
  that in the present case Note 2(a) squarely applies, the
  irresistible conclusion is that the goods will be classified in
D tariff item 9013, which is the specific heading for these goods.

            17. In Collector of Central Excise v. Delton Cables
  Ltd. &Anr. 3 , this Court has held, while interpreting Notes 2(a)
  and 2(b) of Chapter Heading 85, which is virtually to the same
E effect, that Note 2(b) would apply only if the items in question
  were not specifically classifiable under their respective
  headings. Para 4 of the said judgment, to this effect, reads as
  under:

F       "4. It is clear from a reading of the two clauses to the
        section note that clause (b) would only apply once it
        was found that the items in question were not
        specifically classifiable under their respective headings.
        As has been clearly said by the Collector (Appeals)
G
         ''from the sequence of the paragraphs given under
         Section Note 2 it is clear that the question of
         switching over to Section Note 2(b) can arise only
         after ensuring that the parts are not covered by
H        Section Note 2(b) [sic Section Note 2(a)] which
  'c2oos) 12 sec 2s4
 M/S SECURE METERS LTD. v. COMMISSIONER OF                     235
      CUSTOMS, NEW DELHI [A.K. SIKRI, J.]

     begins with the expression "other parts" meaning           A
     thereby that the parts which are not covered by
     Section Note 2(a) would be considered for
     coverage by Section Note 2(b). One cannot
     therefore directly jump over to Section Note 2(b)
     without exhausting the possibility of Section Note         B
     2(a)."

        18. The aforesaid view of ours gets strengthened from
Part-Ill of Chapter Notes to Chapter 90. We may mention
here that after studying the Chapter Notes, Note 2 whereof C
is reproduced above, there are certain guidelines provided
under the caption 'General'. Part-I thereof deals with General
Content and Arrangement of the Chapter; Part-II deals with
Incomplete or Unfinished Machines, Apparatus, etc.; and
Part-Ill deals with Parts and Accessories. We are D
reproducing here this portion in order to show how it supports
the view which we have proposed to take as indicated above:

  "(Ill) PARTS AND ACCESSORIES
                                                                E
  Subject to Chapter Note 1, parts or accessories
  identifiable as suitable for use solely or principally
  with the machines, appliances, instruments or
  apparatus of this Chapter are classified with those
  machines, appliances, etc.                                    F

  This general rule does not, however, apply to:

  ( 1) Parts or accessories which in themselves constitute
  articles falling in any particular heading of this Chapter
  or of Chapter 84, 85 or 91 (other than the residual          G
  heading 84, 85, 85.48 heading 84.14; transformers,
  electro-magnets, capacitors, resistors, relays, lamps or
  valves, etc., remain classified in Chapter 85; the optical
  elements of heading 90.01 or 90.02 remain in the
                                                                H
236       SUPREME COURT REPORTS                     [2015] 6 S.C.R.


A      headings cited regardless of the instruments or
       apparatus to which they are to be fitted; a clock or watch
       movement is always classified in Chapter 91; a
       photographic camera falls in heading 90.06 even if it
       is of a kind designed for use with another instrument
 B     (microscope, stroboscope, etc.)

       (2) Parts or accessories suitable for use with several
       categories of machines, appliances, instruments Oi
       apparatus falling in different headings of this Chapter
C      are classified in heading 90.33, unless they are in
       themselves complete instruments, etc .. specified in
       another heading (see paragraph (1) above)."

           19. This contains a general explanation to Chapter Note
o 2 and mentions that where parts or accessories identifiable
  as suitable for use solely or principally with the machines,
  appliances, etc., they are to be classified with those machines/
  appliances. However, what is important is that immediately
  thereafter it is clarified that this general rule would not apply in
E certain circumstances. Sub-para of the above takes things
  beyond the pale of any doubt by making it crystal clear that
  those parts and accessories which in themselves constitute
  'article' falling in any particular heading of this Chapter, the
  general rule will not apply and said article would fall in that
F particular heading. To demonstrate this, examples which are
  given, eminently fit into the case at hand.

          20. The aforesaid view of ours gets further cemented
  on going through Explanatory Notes issued by the World
G Customs Organization. Volume 4 of the Second Edition
  (1996), which covers Chapters 85-97, contains explanatory
  note in respect of item mentioned at 90.13, with which we
  are directly concerned herein. Relevant portion thereof reads
  as under:
H
M/S SECURE METERS LTD. v. COMMISSIONER OF                   237
     CUSTOMS, NEW DELHI [A.K. SIKRI, J.]

"90.13 - LIQUID CRYSTAL DEVICES NOT                          A
CONSTITUTING ARTICLES PROVIDED FOR MORE
SPECIFICALLY IN OTHER HEADINGS: LASERS,
OTHER THAN LASER DIODES; OTHER OPTICAL
APPLIANCES AND INSTRUMENTS, . NOT
SPECIFIED. OR INCLUDED ELSEWHERE IN THIS                     B
CHAPTER.

   9013.10    - Telescopic sights for fitting to arms;
                periscopes; telescopes designed to
                form parts of machines, appliances,          C
                instruments or apparatus of this
                Chapter or Section XVI

   9013.20    -   Lasers, other than laser diodes
                                                             D
   9013.80    - Other devices, appliances and
                instruments

   9013.90    - Parts and accessories

In accordance with Chapter Note 5, measuring or              E
checking optical appliances, instruments and machines
are excluded from this heading and fall in heading
90.31. Chapter Note 4, however, classifies certain
refracting telescopes in this heading and not in heading
90.05. It should, moreover, be noted that optical            F
instruments and appliances can fall not only in
headings 90.01 to 90.12 but also in other headings of
this Chapter (in particular, heading 90.15, 90.18 or
90.27). This heading includes:
                                                            G
(1) Liquid crystal devices consisting of a liquid crystal
layer sandwiched between two sheets or plates of glass
or plastics, whether or not fitted with electrical
connections, presented in the piece or cut to special
shapes and not constituting articles described more          H
238          SUPREME COURT REPORTS                 [2015) 6 S.C.R.


A        specifically in other headings of the Nomenclature.
                    lO(           lO(           xx''
            As per this, LCD would be covered by 'other devices'
         mentioned in 9013.80. That is precisely the case of the
B
         appellant.
          21. The upshot of the aforesaid discussion leads to the
  conclusion that the view taken by the Tribunal in the impugned
  judgment is unsustainable in law. We, thus, allow the appeal,
C set aside the orders of the authorities below and hold that LCDs
  imported by the appellant were classifiable under Chapter
  Heading 9013.80.
      Nidhi Jain                                       Appeal allowed.
D