Tolerance limits in tariff testing can determine classification where fibre content crosses the statutory threshold.

Cotton yarn containing polyester staple fibre was examined for tariff classification where the applicable sub-heading depended on a 40% quantitative threshold. The Tribunal applied the accepted tolerance limit to the test results and treated the polyester content as satisfying that threshold, supporting classification under CET sub-heading 5204.21 rather than 5204.29. On that basis, the differential duty demand and penalty were set aside. The governing principle stated is that, where tariff classification turns on a measured percentage, the test result may be assessed with the accepted tolerance margin and classification must follow the entry the goods meet on that basis.

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Issues: Whether cotton yarn containing polyester staple fibre, on application of the tolerance limit to the test results, was classifiable under CET sub-heading 5204.21 or CET sub-heading 5204.29, and whether the demand of differential duty and penalty were sustainable.

Analysis: The yarn was tested and the polyester staple fibre content was found to be between 37.4% and 38.3%. The Tribunal applied the same tolerance approach adopted in the assessee's earlier case, where the retest result, after applying a 3% tolerance, brought the polyester content above the 40% threshold. On the same reasoning, the Court found that the goods satisfied the requirement for classification under CET sub-heading 5204.21.

Conclusion: The goods were classifiable under CET sub-heading 5204.21. The differential duty demand and the penalty were unsustainable and were set aside in favour of the assessee.

Ratio Decidendi: Where the applicable tariff entry turns on a quantitative threshold, the test result may be assessed by applying the accepted tolerance limit, and classification must follow the entry that the goods satisfy on that basis.

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