Tariff classification of germinated oil palm seeds turns on chapter notes, while SAD exemption is construed strictly.

Classification of germinated oil palm seeds was held to depend on the tariff headings read with Chapter Note 3 to Chapter 12, so goods falling under headings 1201 to 1207 could not be moved to heading 1209 merely because they were intended for sowing. On that reasoning, the goods remained outside heading 1209 and the lower classification was sustained. The note also states that exemption notifications are to be strictly construed: additional duty relief under Notification No. 21/2002-Cus had already been granted at assessment, while SAD exemption under Notification No. 20/2006-Cus was unavailable because the exemption covered seeds other than oil seeds falling under heading 1209. The assessments were upheld.

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Issues: (i) Whether germinated oil palm seeds were classifiable under heading 1209 as seeds for sowing, or remained classifiable under heading 1201 in view of Chapter Note 3 to Chapter 12. (ii) Whether the goods were entitled to exemption from additional duty under Notification No. 21/2002-Cus and SAD exemption under Notification No. 20/2006-Cus.

Issue (i): Whether germinated oil palm seeds were classifiable under heading 1209 as seeds for sowing, or remained classifiable under heading 1201 in view of Chapter Note 3 to Chapter 12.

Analysis: Classification is governed by the terms of the headings and the relevant Section or Chapter Notes under the General Rules for the Interpretation of the Import Tariff. Chapter Note 3 expressly excludes products of headings 1201 to 1207 from heading 1209 even if intended for sowing. Since the imported goods were oil seeds, the claim that they must be classified under heading 1209 merely because they were meant for cultivation was not accepted.

Conclusion: The goods were not classifiable under heading 1209 and the classification made by the lower authorities was sustained.

Issue (ii): Whether the goods were entitled to exemption from additional duty under Notification No. 21/2002-Cus and SAD exemption under Notification No. 20/2006-Cus.

Analysis: The exemption under Notification No. 21/2002-Cus had already been granted at the assessment stage. As to SAD, the notification granted exemption only to seeds other than oil seeds falling under heading 1209, and the absence of a specific nil rate in the relevant column did not imply exemption. Exemption notifications are to be construed strictly, and ambiguity cannot be resolved in favour of the assessee. The principle that classification must follow the tariff and chapter notes, not the exemption notification, also defeated the contention.

Conclusion: The goods were not entitled to SAD exemption under Notification No. 20/2006-Cus, and no further relief was available under Notification No. 21/2002-Cus.

Final Conclusion: The assessments were upheld in full and the appeals failed.

Ratio Decidendi: Classification under the Customs Tariff must be determined by the tariff headings read with the relevant chapter notes, and exemption notifications must be construed strictly, with any ambiguity resolved in favour of the Revenue.

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