Indirect Tax (old) Nov 2010-discussion on some questions

Q. 2 (a) - BCD Auto parts ltd. - rail assembly front seat....... What is the difference between parts and accessories? CCEx., Delhi v. Insulation Electrical (P) Ltd. 2008 (224) ELT 512 (S.C.) The assessee was engaged in the manufacture of Rail Assembly front seat (Omni), Adjuster Assembly slider seat, YF-2, Rear Back Lock Assembly and 1000 CC Rear Lock Assembly. The assessee was classifying it under Chapter Heading no. - 8708.00 - Parts and Accessories of Motor Vehicles - attracting 15% rate of duty. The Department, after physically examining above mentioned goods, contended that goods manufactured by the assessee were integral parts of seats and hence were classifiable under Chapter heading no. – 9401.00 – Seats - attracting 18% rate of duty. Andhra Pradesh High Court, after considering in detail the difference between “accessories” and “parts” in case of Pragati Silicons Pvt. Ltd. v. CCEx., Delhi, concluded that “accessory” is something supplementary or subordinate in nature and not be essential for the actual functioning of the product. A “part” is an essential component of the whole without which the whole cannot function. With regard to rail assembly front seat and adjuster/assembly slider seat manufactured by the assessee, SC held that these were fixed on the floor of the motor vehicles. When seats were affixed on these rails, seats could slide back and forth which enabled the driver or the passenger, to adjust the position of the seat to suit his comfort and convenience. So, it merely improved the efficiency and convenience of the seat and did not form an integral part of the seat. Further, the seat was complete and fully functional without rail arrangement. YE- 2 rear back lock assembly fixed the position of the rear seat of the car in the most comfortable and convenient position. The lock assembly did not form a part of the car seat at all and the seat was complete without it. Hence, SC concluded that the products manufactured by the assessee were accessories to and did not form a part of the seat car. Hence, Department’s appeal was dismissed.