2025 (2) TMI 1215 - AT - Customs

Crimp pumps for nasal spray mechanisms classified under mechanical appliances CTI 8413, not scent sprays CTI 9616

Glenmark Pharmaceuticals Limited Versus Commissioner of Customs (Import) Air Cargo Complex, Sahar Andheri (East), Mumbai

CESTAT Mumbai ruled on classification dispute regarding imported crimp pumps used in nasal spray mechanisms. Revenue classified goods under CTI 9616 1020 ... Classification of imported Crimp Pumps of various types and configurations - classifiable under Customs Tariff Heading (CTH) 8413 50 and further under Customs Tariff Item (CTI) 8413 5010/8413 5090 as claimed by the appellants or classifiable under CTI 9616 1020 as determined by the learned Commissioner of Customs, for deciding on the appropriate levy of customs duty? - HELD THAT:- In order to determine the appropriate duties of customs payable on any imported goods, one has to make an assessment of the imported goods for its correct classification under the First Schedule to Customs Tariff Act, 1975 in accordance with the provisions of the Customs Tariff Act by duly following the General Rules for Interpretation (GIR) and the General Explanatory notes (GEN) contained therein. The First Schedule to the Customs Tariff Act, 1975 specifies the various categories of imported goods in a systematic and well-considered manner, in accordance with an international scheme of classification of internationally traded goods, i.e., ‘Harmonized Commodity Description and Coding System’ (HS) - In the absence of any statutory definition, or any guideline provided by HS explanatory notes, the trade parlance theory is to be adopted for ascertaining as to how the goods are known in the common trade parlance for the purpose of dealing between the parties. The dispute in classification therefore lies in the narrow compass of analysis of the appropriate Chapter and its Headings under which the impugned goods are covered as per the Customs Tariff and then classifying the impugned product under the corresponding Sub- heading, Tariff Item - it is found that the chapter heading 8413 deals with “various types of pumps and other similar mechanical appliances for liquids, along with their respective parts”. Whereas, Chapter heading 9616 deals with products of “Scent sprays and similar toiler preparations along with mounts, heads, powder-puffs and pads” as a part of miscellaneous manufactured articles. The scope of coverage of Chapter 8413 is large enough to cover all types of pumps and other similar appliances, irrespective of its application in dispersal of medicament liquid or other use; Whereas the scope of coverage of goods under chapter heading 9616 is restrictive to scent sprays, toilet sprays which are of cosmetics in nature and those items such as mounts, heads, powder-puffs and pads which are essential for its application have alone been included with such items. The Revenue’s contention is that in terms of GIR-2(a), the impugned goods shall be classifiable under CTH 9616 1020 as the description of the goods i.e., ‘crimp pumps’ forms part of the nasal sprayer mechanism and therefore learned adjudicating authority had held that classification under this heading is more specific, and appropriate over the contending heading as claimed by the appellants under 8413 5010/ 8413 5090, which is appropriate for mechanical devices. From the careful reading of the GIRs, it could be seen that these are required to be followed sequentially - As it could be seen that in the present case, when the classification of goods can be arrived at by following GIR-1, by detailed analysis of the specific customs tariff items under the respective headings, then there is no case for invoking GIR-2(a) arbitrarily. Further, the learned Commissioner in the impugned order had not examined and discussed the terms of headings and the scope of contending tariff entries, read with relevant section or chapter notes, before going ahead for adoption of GIR 2(a). Thus, it is not feasible to determine appropriate classification by application of GIR-2(a) alone, by ignoring the terms of headings which alone is sustainable inasmuch as the terms of heading solely determines appropriate classification for legal purposes. It is found that the two contending classification are i.e., one under CTI 8413 50 10 ‘metering and dosing pumps’ as well as CTI 8413 5090 ‘Other’ of ‘Other positive displacement pumps’ as claimed by the appellants; and the other one is under CTI 9616 10 20 ‘mounts and heads’, have to be analysed at the level of ‘terms of headings’, to apply GIR-1 to come to the conclusion as to which of these two classification is more appropriate for classification of impugned goods. Therefore, it is required to examine the specific customs tariff entries under the two contending headings, the scope of coverage of goods under each of the specific tariff entries, in order to arrive at appropriate classification of imported goods. From the plain reading of above HSN explanatory notes to heading 9606, it is understood that this heading covers under its scope, all preparations of a kind used in cosmetics and more specifically scent sprays, toilet sprays. Thus, these are essentially required for applying cosmetics like spray formation of the liquid that is used as scent or other similar perfume etc. This does not cover all types of mounts and heads or pumps or other appliances, for dispersal or spray of liquids as the phrase ‘therefor’ appearing in HSN description of 9606.10 and in the entries at CTH 9616 10 at the six digit level of the First Schedule to the Customs Tariff Act, 1975, is limited in its scope covering such mounts and heads for scent sprays and similar toilet sprays only - The fact that the impugned goods are nasal spray mechanism for dispersing medicament is not under dispute. In view of the above analysis, such spray mechanism including ‘crimp pump’ cannot be brought under entirely different category of goods as the one specifically provided for ‘cosmetics and toilet sprays’, for classifying under CTI 9616 1020. The impugned goods are classifiable under CTI 8413 5010/ 8413 5090 as the imported goods at the time of import remain as ‘appliance used for spraying or dispersion of liquid’ called as ‘Crimp Pump for nasal spray along with its components or parts - the impugned order dated 30.05.2023 classifying imported goods under heading 9616 1020 does not stand the scrutiny of law and therefore is not legally sustainable. Appeal allowed. ISSUES: Whether the imported 'Crimp Pumps' used as part of nasal spray devices are classifiable under Customs Tariff Item (CTI) 8413 5010/8413 5090 (pumps and parts thereof) or under CTI 9616 1020 (mounts and heads for scent sprays and similar toilet sprays) for the purpose of customs duty levy.Whether the classification under CTI 9616 1020 is appropriate given the nature and use of the imported goods as medical dispensing devices rather than cosmetic or toilet sprays.Whether the General Rules for Interpretation (GRI), particularly GRI 1 and GRI 2(a), have been correctly applied in determining the classification of the imported goods.Whether parts of the crimp pump not falling under headings 3901 to 3914 can be classified under CTI 3926 9090.Whether the impugned order imposing differential duty, interest, and penalty based on the revised classification is legally sustainable. RULINGS / HOLDINGS: The imported 'Crimp Pumps' are classifiable under CTI 8413 5010/8413 5090 as 'appliance used for spraying or dispersion of liquid' and not under CTI 9616 1020, which is limited to 'mounts and heads for scent sprays and similar toilet sprays.'The classification under CTI 9616 1020 is not appropriate as the scope of Chapter 9616 is restricted to cosmetic and toilet sprays, whereas Chapter 8413 covers various types of pumps for liquids irrespective of their application, including medical dispensing devices.The General Rules for Interpretation require that classification be primarily determined by the terms of the headings and relative Section or Chapter Notes (GRI 1), and only if classification is not possible under GRI 1 should GRI 2(a) be applied; the impugned order improperly invoked GRI 2(a) without exhausting GRI 1.Parts of the crimp pump not falling under headings 3901 to 3914 are not classifiable under CTI 3926 9090 but should be classified under the respective headings applicable to the main item (i.e., under Chapter 84).The impugned order classifying the goods under CTI 9616 1020 and imposing differential duty and penalty is not legally sustainable and is set aside. RATIONALE: The Court applied Section 12 of the Customs Act, 1962 and the Customs Tariff Act, 1975, along with the General Rules for the Interpretation (GRI) of the First Schedule to the Customs Tariff Act, 1975, emphasizing that classification must be determined according to the terms of the headings and relative Section or Chapter Notes (GRI 1).The Court referred to the Harmonized Commodity Description and Coding System (HSN) explanatory notes, which clarify that Chapter 8413 encompasses various types of pumps and mechanical appliances for liquids, including metering and dosing pumps, irrespective of their use, while Chapter 9616 is limited to scent sprays and similar toilet sprays and their mounts and heads, primarily cosmetic in nature.The Court found that the impugned goods, being components of nasal spray devices used for medicinal purposes, fall squarely within the scope of Chapter 8413 and not Chapter 9616, rejecting the argument that the goods are akin to cosmetic sprays.The Court observed that the impugned order's reliance on GRI 2(a) was premature and improper because classification could be determined under GRI 1 by examining the specific terms of the headings and notes.The Court noted precedents where similar devices such as aerosol valves containing medicaments were held to be classifiable under Chapter 84 and not Chapter 96, reinforcing the position that pumps and valves for medicinal sprays are not cosmetic spray components.The Court declined to address issues related to limitation and penalty since the classification issue was dispositive.