Customs classification of container handling cranes turns on essential character, with refund available for duty paid under mistaken classification.

Container handling cranes were treated as machinery for lifting and handling under Heading 84.22, not as works trucks under Heading 87.07, because their essential character was that of a crane and the chassis or wheels did not change that classification. Duty collected on the mistaken classification was held refundable, as tax levied without authority cannot be retained. The existence of departmental appellate remedies did not defeat the claim where the appeal period had already expired and delay could not be condoned. Refund was therefore maintainable under the principles governing money paid under mistake, subject to the applicable limitation framework.

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Issues: (i) Whether the imported container handling crane was classifiable under Heading 84.22 of the Customs Tariff Act, 1975 or under Heading 87.07 of the Customs Tariff Act, 1975; and (ii) whether the petitioner was entitled to refund of excess duty despite the availability of departmental appellate remedies and the plea of limitation.

Issue (i): Whether the imported container handling crane was classifiable under Heading 84.22 of the Customs Tariff Act, 1975 or under Heading 87.07 of the Customs Tariff Act, 1975.

Analysis: Heading 84.22 covered lifting, handling, loading or unloading machinery, including cranes and transporter cranes, whereas Heading 87.07 covered works trucks mechanically propelled for short-distance transport or handling of goods. The imported equipment was found to be a crane designed primarily for handling containers over short distances and not a vehicle meant for transporting goods. The fact that it was mounted on a chassis with wheels did not alter its essential character as a crane. Explanatory Notes to the Brussels Nomenclature were treated as only persuasive and not controlling where the tariff entries were clear.

Conclusion: The consignment was held to fall under Heading 84.22 and not under Heading 87.07, in favour of the assessee.

Issue (ii): Whether the petitioner was entitled to refund of excess duty despite the availability of departmental appellate remedies and the plea of limitation.

Analysis: The duty had been paid under a mistaken classification, and a tax collected without authority of law could not be retained. The Court held that the departmental appellate remedy had become futile because the limitation period had already expired and the appellate authorities could not condone the delay. The mistake was discovered upon receipt of the later expert opinion, and the claim was within the time permitted from discovery of the mistake. Refund was therefore maintainable under the principles governing money paid under mistake and the applicable limitation framework.

Conclusion: The petitioner was held entitled to refund of the excess duty, in favour of the assessee.

Final Conclusion: The petition succeeded, the classification under Heading 87.07 was rejected, and the respondents were directed to refund the difference between the duty levied and the duty legally payable under Heading 84.22.

Ratio Decidendi: For customs classification, the essential character and trade understanding of the goods govern, and a duty collected under a mistaken and unauthorized classification is refundable notwithstanding an expired departmental appeal period.

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