Parts of LCD panel is to be classified as part of LCD panel and not part of final article

The CESTAT, Bangalore in M/s. Xiaomi Technology India Limited v. The Commissioner of Customs [Customs Appeal No. 20653 of 2021dated July 07, 2023] set aside the order of Commissioner (Appeal) and held that the Liquid Crystal Display ("LCD") Panels are classified under tariff entry 9013 8010 and parts of LCD panels are classified under tariff entry 9013 9010 because LCD panels could be used for purposes other than television sets and parts of LCD panels are parts of LCD panel and not part of article.

Facts

M/s. Xiaomi Technology India Ltd. ("the Appellant") is engaged in the business of manufacturing and trading of electronic products. The Appellant has imported parts of LCD panels for manufacturing television and classified such parts of LCD panels under tariff entry 9013 9010.

The Adjudicating Authority vide order in original ("the OIO") classified the parts of LCD panels under tariff entry 8529 9090 by applying Note (2b) of Section XVI which states that goods which are parts and which is solely and principally used in CTH 8528 (Television) are to be classified under CTH 8529. 

Aggrieved thereby, the Appellant appealed before the Commissioner (Appeal), who vide the Order in Appeal ("the Impugned order") upheld the order passed by the Adjudicating Authority.

Aggrieved by the Impugned order the Appellant filed an appeal before the CESTAT, Bangalore.

Issue

Whether parts of LCD panels will be classified as part of television or under heading of LCD panel?

Held

The CESTAT, Bangalore Customs Appeal No. 20653 of 2021 held as under:

• Relied upon the judgement of theHon’ble Supreme courtin case ofCCE, Aurangabad v. M/s. Videocon Industries Ltd. [Civil Appeal No. 8026 of 2022dated March 29, 2023]    wherein the court while interpreting the general rule of interpretation held that, Note 1 (m)to Section XVI excludes Chapter 90 goods(which includes LCD panels) and more importantly, Note 2 opens with the expression "subject to Note 1". Thus, it is clear that when goods are excluded from a particular section, the "pull in" through a note has to be narrowly construed, as otherwise, the basis of exclusion would be defeated and the earlier note (in our case Note 1) rendered redundant. Further, by interpreting Note 2(a) to Chapter 90 the court stated that LCDs, which are goods and are used as parts in the final product mentioned in Chapter 90, are to be classified in its respective heading i.e. as LCD and not under the heading of final product.
• Held that, the LCD Panels are to be classified under tariff entry 9013 8010 and parts of LCD panels are to be classified under tariff entry 9013 9010.
• Set aside the Impugned order.