1988 (10) TMI 39 - SC - Customs

Supreme Court Remands Customs Classification Case for Lack of Trade Evidence

The Supreme Court set aside the Tribunal's order in a customs classification case involving an imported Colour Scanner Chromograph C-299. The Court ... Classification on the basis of trade parlance - tariff classification - interpretation in popular or common commercial sense - remand for evidence on trade usageClassification on the basis of trade parlance - interpretation in popular or common commercial sense - Legal principle for construing undefined tariff expressions where no technical definition is provided - HELD THAT: - The Court held that where a Customs Tariff entry uses expressions for which no technical statutory definition is provided, those expressions must be understood in their popular or commercial sense - that is, as used in trade, industry or the market by persons who deal with such goods. The determinative test is how the relevant expressions are used in trade parlance rather than their purely scientific or technical meaning. The judgment relied on established authorities applying commercial understanding to tariff classification and reiterated that revenue statutes embracing diverse products should be interpreted by reference to the meaning attached by those who deal in the goods. [Paras 4]Where tariff terms lack statutory definition, they are to be construed in their popular/commercial sense as used in the trade.Tariff classification - remand for evidence on trade usage - Classification of the imported Colour Scanner Chromograph C-299 and appropriate course of adjudication - HELD THAT: - The Court found that the Tribunal had applied its own view to classify the Chromograph 299 under the photographic laboratory heading without adequate evidence of how the machine is dealt with in trade or industry. Since there was no material before the Tribunal establishing the commercial use or trade parlance for the goods, the Court held that the question of the correct tariff entry could not be finally decided on the existing record. The matter was therefore remitted to the Tribunal with a direction to permit both sides to adduce evidence on how such goods are treated in the trade/industry and to determine classification thereafter in accordance with the legal principle stated above. [Paras 6]Tribunal's order set aside and matter remanded for fresh evidence and adjudication on classification in accordance with trade usage.Final Conclusion: The appeal is allowed; the Tribunal's order is set aside and the matter is remanded to the Tribunal to determine, after giving parties an opportunity to adduce evidence, how the Chromograph C-299 is dealt with in trade and to classify it accordingly. No order as to costs. Issues:Classification of imported goods under the Customs Tariff Act - Proper tariff entry for the goods in question - Classification based on trade parlance - Lack of technical definition in the Act.Analysis:The case involved an appeal under Section 130E(b) of the Customs Act, 1962, concerning the classification of an imported Colour Scanner Chromograph C-299. The appellant imported the scanner under Appendix 2 of the Import Policy for the year 1981-82. The Assistant Collector assessed the scanner under Tariff heading 90.25(i) and levied customs duty. Subsequently, a Less Charge Demand was issued under Section 28 of the Customs Act, contending that the scanner should be assessed under a different heading attracting higher duty. The Tribunal found that the goods could not be classified under Entry 84.35, which refers to 'other printing machinery,' as the scanner's functionality did not align with being ancillary to printing. The Tribunal analyzed various tariff entries, ultimately considering Entry 90.10 as the appropriate classification for the scanner.The Tribunal's decision was based on the principle of classification on the basis of trade parlance. It noted that there was no specific technical definition provided in the Customs Tariff Act for the goods in question. The Tribunal emphasized the importance of understanding how the goods are dealt with in the trade or industry to determine their proper classification. It referred to relevant case law and principles, highlighting the need to interpret tariff items based on their popular meaning in commercial understanding.However, the Tribunal acknowledged the lack of evidence on how the goods were dealt with in the trade or industry in this case. As a result, the Tribunal's approach was deemed inadequate in determining the correct meaning of the tariff items. The Supreme Court allowed the appeal, set aside the Tribunal's order, and remanded the matter back to the Tribunal. The Tribunal was directed to investigate how the goods are dealt with by those in the trade, allowing both sides to present evidence before making a decision based on the findings.In conclusion, the Supreme Court emphasized the importance of determining the proper tariff entry for goods based on how they are understood and dealt with in the trade or industry. The case highlighted the significance of interpreting tariff items in accordance with their popular meaning in commercial understanding, especially in the absence of specific technical definitions in the statute. The remand to the Tribunal aimed to ensure a thorough examination of how the goods in question are handled by those in the trade before reaching a final classification decision.