Composite tariff classification of imported inputs rejected; polyols and isocyanates had to be assessed separately on their own merits.

Polyols and isocyanates imported together for manufacture of polyurethane foam were not covered by the section notes relied on by customs, so they could not be classified as the end-product as a composite set. The appellate body accepted the Board's trade notice and held that, absent clear tariff coverage, the goods had to be assessed separately on their own merits rather than by reference to the finished product. The department's tariff classification was therefore set aside and individual assessment was upheld in favour of the assessee.

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Issues: Whether the imported goods, namely polyols and isocyanates, were to be classified together as the end-product under the relevant tariff heading or assessed individually on merits, and whether they were covered by the section notes relied upon by the customs authorities.

Analysis: The appellate body accepted the trade notice issued by the Board, which clarified that polyols and isocyanates, even when supplied or imported together for manufacture of polyurethane foam, were not covered by the section notes invoked by the department. The imported goods were not treated as forming a set for classification purposes, and the material was required to be assessed according to its own merits rather than by reference to the end-product.

Conclusion: The customs authorities were not justified in classifying the goods as the end-product, and the import was entitled to assessment individually on merits in favour of the assessee.

Final Conclusion: The tariff classification adopted by the department was set aside and the appeal succeeded on the basis that the imported goods were not covered by the section note-based composite classification.

Ratio Decidendi: Goods imported together for manufacture are not to be treated as a classifiable set unless the tariff notes clearly so provide, and in the absence of such coverage they must be assessed separately on their own merits.

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