Full Judgment
2. We have heard Shri M.H. Patii for the appellants and Shri K.L.
Ramteke for the Revenue.
3. Heading 76.16 covers other articles of aluminium. This chapter falls under Section XV of the Tariff. Note 1(m) excludes from the purview of this section pencil holders, pen nibs and other articles of chapter 96.
Heading 9609 covers pencils but does not specifically refer to parts thereof. The preceding heading 9608 which covers pens, however, specifically refers to parts as falling under that heading. Note 1(d) to chapter 96 excludes from its coverage parts of general use of base metals falling under Section XV.4. Shri Patii submits that the ferrules are specially designed with the specific purpose of bonding the rubber eraser with the lead pencil and that it has no other use. He draws support from note 1(b) to chapter 96. He also refers to the sub-notes in the HSN to heading 96.08 wherein describing parts of pens etc. the following specifications are made.
"Pen nibs of any design including unfinished nibs roughly cut to shape : clips; refills for ball point pens, comprising the ball point and the ink reservoir; holders for the ball points or felts of marking stylographs; ink-flow regulators; barrels for pens or pencils of this heading; filling or propelling mechanisms; ink sacs of rubber or other materials; point protectors; interchangeable renew nib units comprising nib, feed and collar; nib points (or pen points) which are small balls made from platinum alloys or from certain tungsten alloys used for pointing the tips of pen nibs to prevent premature wear." 5. Shri Ramteke on the other hand submits that the manner in which the two headings are drafted would seem to indicate exclusion of parts from the coverage of heading 96.09. He therefore submits that these ferrules would fall under only alternate classification i.e. 7616.90.
6. The perusal of chapter 96 would show that parts are specifically listed in only some of the headings. There is no guidance given in the chapter note as to the classification of parts. Section XX does not contain any notes thereunder and therefore the guidance is not available from this part also.
7. Section XVI which covers the chapters relating to machinery etc., vide note 2 gives general guidelines as to the classification of parts.
The guiding principles are that where certain parts are suitable for use solely and principally with the particular kind of machine, such parts would deserve to classify along with that particular machine and parts of general purpose would be classifiable as per their parent heading. It appears to us that although other Sections do not contain similar directions, the application of this note could be made to the goods covered under chapters falling under other Sections also. Section XVI refers to note 2 of Section XV. Section XV covers articles of base metals which phrase would apply to ferrules before us. The phrase 'parts of general use' also occurs in Section XVII note 2(b). Chapter XIX vide note 1(b) also refers to parts of general use excluding them from the coverage of that chapter. There are certain other chapters also with similar provisions. The conclusion to be drawn from the coverage of the chapter is where the parts are not of general use but the parts are designed solely for use in a particular article covered under that chapter, then that part would merit classification under that heading which covers the article in which it is used.
8. The clarification given in the HSN which relates not to pencils but to pens would also point to this presumption. Barrels for pens and pencils could be made of metals. Seen by themselves these would be 'tubes'. The unfinished pen nibs would fall under those Tariff headings which cover the base metals. Ink sacs of rubber would ordinarily fall under heading 40.09. They are made to fall under heading 96.08 because they are identifiable parts and are made specifically for use in the manufacture of pens. The same logic should apply to the goods falling under heading 96.09 also although there is no specific nomenclature covering the parts.
9. The guidelines for classification are given in the Interpretative Rules but in a number of judgments the function to be discharged by a particular article has also been taken into account as aid for such classification. The function aspect has prevailed in the following judgments: 10. In their decision in the case of CCE v. A.C.C. Ltd. -1989 (44) E.L.T. 271 the Tribunal considered the primary function of mill bolts as fastening of two articles together and therefore classified the same under item No. 52 in preference to the residual item 68. In a recent judgment of the Supreme Court (J.B.A Printing Inks Ltd. v. CCE - 2000 (115) E.L.T. 24 the sole and principal use of radiator assembly was considered by the Supreme Court. The Court accented the functionality of the product in upholding the department's contention that the radiator assembly merited classification under heading 84.09 in preference to the residuary heading 84.79.
11. On the aspect of functionality we find that the aluminium ferrules are solely designed for use in the pencils and therefore become parts meriting classification under the same entry as the lead pencils.
12. Consequentially the appeal is allowed. Consequential relief is ordered.