Summary
Two importers, a television manufacturer and a maker of car audio systems, classified imported LCD panels under tariff item 9013.8010 of the Customs Tariff as liquid crystal devices. The Revenue contended that, being used solely or principally in television sets and car audio systems, the panels were parts under headings 8529 and 8522 by virtue of Note 2(b) to Section XVI. The CESTAT accepted the importers' classification in both cases. The Supreme Court dismissed the Revenue's appeals: under Rules 1 and 3(a) of the General Rules of Interpretation and Note 1(m) to Chapter 85, which excludes articles of Chapter 90, the specific heading for liquid crystal devices prevails; Note 2 operates subject to Note 1 and cannot pull excluded goods back into Chapter 85; and Secure Meters is decisive that LCDs are not articles provided more specifically elsewhere.
Issues
- Whether LCD panels imported for use in television sets or car audio systems are classifiable as liquid crystal devices under tariff item 9013.8010 or as parts of such apparatus under headings 8529 or 8522 of the Customs Tariff.
Provisions considered
- General Rules for Interpretation, Rules 1 and 3(a), Customs Tariff Act, 1975, First ScheduleClassification is governed by the terms of the headings and relative Section and Chapter Notes, and where goods are prima facie classifiable under two headings the more specific description prevails; tariff item 9013.8010 specifically describes liquid crystal devices. (¶¶ 21, 22, 25)
- Note 1(m) and Note 2(b) to Section XVI (Chapter 85), Customs Tariff Act, 1975, First ScheduleNote 1(m) excludes articles of Chapter 90 from Chapter 85; Note 2 opens with the words subject to Note 1, so the sole or principal use test in Note 2(b) cannot bring LCD panels, which are Chapter 90 goods, within headings 8529 or 8522. (¶¶ 23, 25, 28)
- Heading 9013 and tariff item 9013.8010; Note 2(a) to Chapter 90, Customs Tariff Act, 1975, First ScheduleLiquid crystal devices not constituting articles provided for more specifically in other headings fall under heading 9013; as held in Secure Meters, LCDs are goods included in that heading and are classified there even when used as parts of other apparatus. (¶¶ 4, 28, 29)
Held
- The Revenue's argument jumps over the interpretive instructions: Rule 1 requires classification according to the headings and notes, Rule 3(a) prefers the more specific description, and Note 1(m) to Chapter 85 excludes Chapter 90 articles, which include LCD panels. Note 2 to Chapter 85 is expressly subject to Note 1, so the sole or principal use test cannot override the exclusion. (¶¶ 22, 23, 25)
- When goods are excluded from a chapter, a pull-in through a later note must be narrowly construed or the exclusion would be rendered redundant, as illustrated by UNI Products, Delton Cables and Intel Design Systems; Secure Meters is decisive that LCDs are not articles provided more specifically in other headings and that their use in other apparatus, there electricity meters, does not alter their classification under heading 9013. (¶¶ 25, 26, 27, 28)
Result
Revenue's appeals dismissed; CESTAT orders dated 06.01.2009 and 09.11.2021 classifying the imported LCD panels under tariff item 9013.8010 of the Customs Tariff upheld; no order as to costs.