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SUPREME COURT OF INDIA
SANJIV KHANNA, BELA M. TRIVEDI, JJ.
Commissioner Of Customs And Central Excise, Amritsar (Punjab) - Appellant
Versus
M/s D.L. Steels Etc. – Respondent
Civil Appeal Nos. 2360-2376 of 2009
Decided on : 11-07-2022
dried pomegranate seeds - Classification under Customs Tariff Act, 1975 - 0813.40.90, 1209 - The court discussed the classification of dried pomegranate seeds under Heading 0813 of the Tariff entries and Heading 1209 as claimed by the importers. The court examined the relevant General, Chapter, and Explanatory Notes to determine the classification. It considered the common parlance test and the specific characteristics of the goods to conclude that the goods fell under sub-heading 1209.99.90, and not under sub-heading 0813.40.90.
Fact of the Case:
The case involved the classification of dried pomegranate seeds for taxation purposes. The customs authorities contended that the goods must fall under sub-heading 0813.40.90, while the importers classified the goods under sub-heading 1209.99.90. The customs authorities issued show-cause notices, confirmed differential duty, and imposed penalties on the importers. The importers appealed the decision, and the Commissioner (Appeals) and the CESTAT ruled in their favor.
Finding of the Court:
The court found that the dried pomegranate seeds fell under sub-heading 1209.99.90, as they were the dried form of a type of pomegranate not consumed as a fresh fruit. The court considered the common parlance test, the specific characteristics of the goods, and the relevant General, Chapter, and Explanatory Notes to reach its conclusion.
Issues: The main issue was the classification of the dried pomegranate seeds under the Customs Tariff Act, 1975, specifically whether they should be classified under sub-heading 0813.40.90 or sub-heading 1209.99.90.
Ratio Decidendi: The court applied the common parlance test and considered the specific characteristics of the goods, as well as the relevant General, Chapter, and Explanatory Notes to determine the classification. It also emphasized the onus on the Revenue to establish the classification of the goods.
Final Decision: The court dismissed the appeals by the Revenue, ruling in favor of the importers and upholding the classification of the dried pomegranate seeds under sub-heading 1209.99.90. The court also advised the Revenue to take a considered policy decision on the classification of 'anardana' to avoid confusion and litigation.
Certainly. Based on the provided legal document, here are the key points:
The main issue was the classification of dried pomegranate seeds, known as ‘anardana,’ under the Customs Tariff Act, 1975. The dispute centered on whether the goods should be classified under Heading 0813 (dried fruits) or Heading 1209 (seeds of a kind used for sowing) (!) (!) .
The court applied the common parlance test, considering how the goods are understood in trade and common usage, along with their specific characteristics and relevant explanatory notes, to determine their correct classification (!) (!) .
It was established that ‘anardana’ is a dried product of wild pomegranate, specifically prepared by dehydrating the arils of wild pomegranates, which differ from the pomegranate fruit typically consumed as fresh fruit. This distinction is crucial in classification (!) (!) (!) (!) .
The court emphasized that the word ‘edible’ should be interpreted according to its common or trade usage, which in this context refers to fruits that can be eaten without harmful effects. Since ‘anardana’ is derived from wild pomegranates not consumed as fresh fruit, it does not fall under the category of ‘edible fruits’ as understood in common parlance (!) (!) (!) .
The relevant headings and explanatory notes indicate that dried wild pomegranate seeds used as a spice or in Ayurvedic medicine are more appropriately classified under Heading 1209, which covers seeds of a kind used for sowing, rather than under Heading 0813, which covers dried fruits intended for human consumption (!) (!) (!) (!) .
The court examined the nature and typical usage of ‘anardana,’ noting its primary use as a spice and in traditional medicine, which aligns with the classification under Heading 1209. The fact that ‘anardana’ is recognized as a spice under relevant government schedules supports this view (!) (!) (!) .
The court highlighted that the classification should follow the most specific and appropriate heading, considering the essential characteristics of the goods, and that the onus is on the revenue to establish the classification they claim. Since the evidence and characteristics support classification under Heading 1209, the appeals by the revenue were dismissed (!) (!) (!) .
The court also noted that the export data and the recognition of ‘anardana’ as a spice further support its classification outside of the dried fruit category. It advised that the revenue should consider a policy decision regarding the classification and duty structure for ‘anardana’ to prevent future disputes (!) (!) .
Overall, the judgment underscores the importance of interpreting goods based on their common trade understanding, their specific characteristics, and the relevant notes and rules of interpretation, to arrive at a consistent and fair classification (!) (!) .
Please let me know if you need further analysis or specific legal advice regarding this case.
JUDGMENT :
SANJIV KHANNA, J.
These appeals raise a common question – should dried pomegranate seeds, domestically known as ‘anardana’, be classified under Heading 0813 of the Tariff entries issued under the Customs Tariff Act, 1975,1[“the Act”, for short.] as claimed by the Commissioner of Customs, Amritsar, 2[“the appellant”/“the Revenue”, for short.] or under Heading 1209 as claimed by the importers? 3[“the respondent”/“the other respondents”, for short.]
2. For brevity, we will only refer to the specific facts in the case of M/s. D.L. Steels, wherein the respondent had imported two consignments of ‘anardana’4[Hereinafter referred to as “the goods”.] from Pakistan, vide Bills of Entry dated 15th December 2005 and 9th March 2006. For taxation they classified the goods under the tariff sub-heading 1209.99.90, attracting basic custom duty at the rate of 5% plus education cess at the rate of 2%. However, the customs authorities contend that the goods must fall under sub-heading 0813.40.90, and accordingly, are liable for basic custom duty at the rate of 30% plus education cess at the rate of 2%.
3. To this end, the Office of the Assistant Commissioner, Rail Cargo, Amritsar, 5[Hereinafter referred to as “adjudicating authority’”.] issued a show-cause notice dated 27th March 2006, which inter alia stated that fresh pomegranate falls under the Heading 0810, and the goods, being nothing but the dried form of fresh pomegranate fruit seeds, would fall under Heading 0813, an entry which covers the dried form of all items falling under Headings 0807 to 0810. Consequently, sub-heading 0813.40.90 would be applicable to the goods.
4. The goods were released provisionally by the customs authorities on the execution of a bond. By assessment order dated 31st May 2006, the adjudicating authority confirmed the differential duty of Rs.82,136/- under Section 28(2) of the Customs Act, 1962, and imposed a personal penalty of Rs.82,000/- under Section 114-A read with Section 112 of the Customs Act on the respondent. Levy of interest under Section 28AB was directed.
5. Similar orders based on identical grounds classifying the goods under sub-heading 0813.40.90, imposing differential duty, interest, and penalty were passed in the cases of the other respondents as well.
6. First appeals preferred by the respondents were allowed by the Commissioner (Appeals), Central Excise, Jalandhar, on the ground that the goods were the dried form of a type of pomegranate which, when fresh, is not consumed as a fruit. Accordingly, Heading 0810, which applies to the type of pomegranate which is consumed as a fruit, would have no relevance to the type of pomegranate from which the goods are obtained. Additionally, it was observed that the respondents’ contention would also prevail in light of the policy condition attached to sub-heading 1209.99.90 of the Indian Export/Import Policy, 6[“Import Policy”, for short.] which specifically states – “import of pomegranate seeds will be free”. 7[The word “free” here denotes that the import of pomegranate seeds is not subject to licencing restrictions. It does not imply that custom duty is not payable. Reference to the sub-heading is relevant.]
7. Aggrieved, the Revenue preferred appeals before the Customs, Excise and Service Tax Appellate Tribunal, 8[“CESTAT”, for short.] which, in the case of the respondent, was dismissed vide order dated 18th July 2008 inter alia citing the certificate of Dr. Y.S. Parmar University of Horticulture and Forestry, Solan, to hold that the goods do not fall under the ambit of Heading 0813. The CESTAT observed that words in a taxing statute must be construed in the same sense as understood in common or trade parlance, and the Revenue had failed to lead any evidence to support its contention that in trade parlance, the goods are understood as dried fruits. Reference was made to the observation in the Import Policy which had classified the goods under the sub-heading 1209.99.90. Adverting to the Explanatory N
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