1981 (11) TMI 63 - HC - Customs

Court Orders Refund of Customs Duty, Classifies Goods as 'Strips' under Indian Customs Tariff

The court allowed the writ petition, quashing the first respondent's order and directing the refund of excess customs duty paid by the petitioner. The ... Classification of goods as strips or sheets - commercial/parlance meaning in fiscal statutes - use of Indian Standards Institution definitions as guiding commercial standard - rejection of foreign nomenclature (Brussel's, AISI) where inconsistent with Indian commercial usage - refund of excess customs duty collected - quashing and refusal to remit where no identifiable standard existsClassification of goods as strips or sheets - use of Indian Standards Institution definitions as guiding commercial standard - commercial/parlance meaning in fiscal statutes - Imported stainless steel of 48' width (AISI 309) is to be classified as 'strip' and not 'sheet' for the purpose of customs duty assessment for the import made in 1971. - HELD THAT: - The Court held that the expressions 'strip' and 'sheet' were not defined in the Indian Tariff Act, 1934 and that, where a taxing statute is silent, the meaning to be adopted is that attached in Indian commercial parlance and by those dealing in the articles during the relevant period. The Indian Standards Institution (ISI) glossary (as in force for the relevant period) provides definitions distinguishing 'wide strip' (600 mm and above, supplied in coil form) from 'sheet' (supplied in straight lengths). The imported goods were AISI 309 supplied in coils and of the widths described, and thus answer the ISI description of 'wide strips'. Reliance by the customs authorities and respondents on Brussel's Nomenclature or AISI dimensions was inappropriate insofar as those classifications conflict with the ISI meanings operative in India during the relevant period. The invoice description and coiled form corroborate classification as strips; the AISI reference denotes material specification, not the commercial classification as sheet or strip. Applying the ISI-based commercial meaning, the goods fall under the entry for strips and thereby attract the concessional rate prescribed by the notification. [Paras 15, 16, 18, 23, 24]The goods imported in 1971 are 'strips' (wide strips) and not 'sheets' for customs classification; the ISI definitions and Indian commercial parlance govern.Rejection of foreign nomenclature (Brussel's, AISI) where inconsistent with Indian commercial usage - commercial/parlance meaning in fiscal statutes - quashing and refusal to remit where no identifiable standard exists - The orders of the customs appellate and revisional authorities which treated the imported goods as 'sheets' and denied refund are quashed and the matter will not be remitted for fresh adjudication because the Court found an identifiable commercial standard (ISI) applicable for the relevant period. - HELD THAT: - The Court found the reasons given by the lower authorities to be inadequate or untenable: mere recital of assessment as 'sheets' in the duty bill did not constitute a reason; the purported notification limitation relied on was a misreading; and reliance on Brussel's or AISI classifications ignored the applicable ISI definitions and Indian commercial practice. Earlier High Court decisions and administrative orders applying ISI definitions were noted. Given the availability of the ISI standard for the relevant period and the absence of any identifiable standard relied upon by the authorities that could override ISI/Indian commercial usage, the Court concluded that remanding the matter would serve no useful purpose. Consequently the revisional order dismissing the petition was quashed and the petitioner entitled to refund of excess duty collected. [Paras 20, 21, 22, 26, 27]The respondents' orders treating the goods as 'sheets' are quashed; no remand is directed and the petitioner is entitled to refund of the excess customs duty collected.Final Conclusion: The writ petition is allowed: Order No. 822 B/77 dated 20-12-1977 is quashed, the imported goods of 1971 are held to be 'strips' under the applicable ISI/commercial meaning and the respondents are directed to refund the excess customs duty collected; no order as to costs. Issues Involved:1. Classification of imported goods under Indian Customs Tariff.2. Applicability of concessional duty rate.3. Interpretation of trade and commercial terms.4. Adoption of definitions from different standards (ISI vs. Brussel's Tariff Nomenclature).5. Refund of excess customs duty paid.Issue-wise Detailed Analysis:1. Classification of Imported Goods under Indian Customs Tariff:The petitioner imported heat-resistant stainless steel strips in coils from Switzerland. The goods were initially classified under Item No. 63(20A) of the Indian Customs Tariff (ICT), which pertains to 'Stainless steel plates, sheets and strips' and carries a 100% ad valorem duty. The petitioner argued that the goods should be classified under Item No. 63(14) of the ICT, which pertains to 'Iron and steel hoops and strips, not otherwise specified,' with a duty of 40% ad valorem. The petitioner sought a refund based on the claim that the goods were incorrectly classified, leading to an overpayment of customs duty.2. Applicability of Concessional Duty Rate:The petitioner contended that under Notification No. 118/65, dated 20-8-1965, as amended by Notification No. 138/65, dated 25-8-1965, the duty on 'cold rolled hoops and strips of stainless steel 250 mm width or more' was reduced to 10% ad valorem. The goods imported were 48' wide, and the petitioner argued that they should benefit from the concessional duty rate applicable to strips.3. Interpretation of Trade and Commercial Terms:The court examined the definitions of 'strip' and 'sheet' as understood in trade and commercial parlance. The court referenced the Supreme Court judgments in *Dunlop India Ltd. v. Union of India* and *India International Industries v. S.T. Commissioner, U.P.*, which emphasized the importance of interpreting terms in fiscal statutes according to their popular meaning in trade and commerce.4. Adoption of Definitions from Different Standards (ISI vs. Brussel's Tariff Nomenclature):The court noted that the definitions of 'strip' and 'sheet' given by the Indian Standards Institution (ISI) should be preferred over those in Brussel's Tariff Nomenclature. The ISI defined 'strip' and 'sheet' based on width and form (coiled or straight lengths). The court found that the first respondent erred in relying on Brussel's Tariff Nomenclature, which defined 'strip' as a rolled product of width not exceeding 500 mm and 'sheet' as a rolled product of a width exceeding 500 mm. The court held that the ISI definitions, which were more relevant to Indian commercial parlance, should prevail.5. Refund of Excess Customs Duty Paid:The court quashed the order of the first respondent, which had dismissed the petitioner's revision application. The court directed the respondents to refund the excess customs duty collected from the petitioner. The court found that the goods should have been classified as 'strips' under Item No. 63(14) of the ICT, and the petitioner was entitled to the concessional duty rate of 10% ad valorem as per the notification.Conclusion:The court allowed the writ petition, quashing the order of the first respondent and directing the refund of the excess customs duty collected. The court emphasized the importance of interpreting trade terms according to their popular meaning in commercial parlance and preferred the definitions provided by the ISI over those in Brussel's Tariff Nomenclature. The court found that the goods imported by the petitioner were 'strips' and not 'sheets,' and thus eligible for the concessional duty rate.