Commercial parlance test applied to nylon resin imports, allowing exemption treatment as nylon chips for intended manufacture.

Nylon 6 resin imported in granule form was examined for eligibility as "nylon chips" under the customs exemption for material used in manufacture of nylon filament yarn, subject to the prescribed concessional procedure. Because the tariff material did not define "chips", the term was read in commercial and industry parlance. The evidence indicated that resin, chips and granules were used interchangeably in the relevant trade, and no convincing technical material established a clear distinction between nylon chips and nylon granules. On that basis, the imported goods were treated as nylon chips for exemption purposes, and the duty demand was not sustainable.

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Issues: Whether nylon 6 resin imported in granule form could be treated as "nylon chips" eligible for exemption under the relevant customs notifications.

Analysis: The exemption claimed was for nylon chips used in manufacture of nylon filament yarn, subject to compliance with the prescribed concessional import procedure. The dispute turned on whether the goods described as nylon resin or granules were materially different from chips. The classification note and tariff material did not define "chips", so the expression had to be understood in commercial and industry parlance. The evidence showed that resin, chips and granules were used interchangeably in the relevant trade, and there was no authoritative material showing a clear distinction between nylon chips and nylon granules. The Revenue's reliance on a strict and narrow distinction was not supported by convincing technical material, while the imported goods were in fact used for the intended end use.

Conclusion: The imported goods were eligible to be treated as nylon chips for the purpose of the exemption, and the demand was not sustainable.

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