Customs classification follows tariff notes over trade parlance, while pen-part exemption remained available for steel balls.

Statutory section notes and chapter notes governed classification of polished stainless steel balls used in ball point pens, and trade parlance, functional use, and BTN notes could not override those notes. On that basis, the goods were classified under Heading 73.33/40 rather than Heading 98.03/09, because Chapter 98 did not cover excluded base-metal parts. The same goods were nevertheless treated as eligible for concessional countervailing duty under the cited notifications, which extended to pens and parts thereof, including refills, and did not exclude such steel balls used as pen parts.

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Issues: (i) Whether polished stainless steel balls of 1 mm used in ball point pens were classifiable under Heading 73.33/40 or under Heading 98.03/09 of the Customs Tariff Act, 1975. (ii) Whether the goods were entitled to concessional benefit under Notification No. 234/82-C.E. dated 01-11-1982 and Notification No. 104/82 dated 28-02-1982.

Issue (i): Whether polished stainless steel balls of 1 mm used in ball point pens were classifiable under Heading 73.33/40 or under Heading 98.03/09 of the Customs Tariff Act, 1975.

Analysis: The goods were admittedly stainless steel balls, and the tariff had to be applied primarily on the basis of the section notes and chapter notes. Note 4 of Chapter 84 specifically provided that polished steel balls falling within the prescribed tolerance would fall under Heading 84.62, while other steel balls would be classified under Heading 73.33/40. Note 1(c) of Chapter 98 excluded parts of base metal covered by Section XV. The plea based on trade parlance, functional use, and the BTN notes could not override the statutory notes. On that basis, the goods were not classifiable under Heading 98.03/09.

Conclusion: The goods were correctly classifiable under Heading 73.33/40, and the classification was decided against the assessee and in favour of Revenue.

Issue (ii): Whether the goods were entitled to concessional benefit under Notification No. 234/82-C.E. dated 01-11-1982 and Notification No. 104/82 dated 28-02-1982.

Analysis: The notifications extended exemption to pens, including ball point pens, and parts thereof, including refills. The goods were manufactured for use as parts of ball point pens, and the notifications did not exclude steel balls specifically used for that purpose. The fact that the goods were separately classifiable under Heading 73.33/40 did not by itself take them out of the notification benefit for countervailing duty purposes.

Conclusion: The importers were entitled to the notification benefit for countervailing duty, and this issue was decided in favour of the assessee.

Final Conclusion: The classification dispute was resolved in favour of Revenue, but the concessional exemption for countervailing duty was allowed to the importers, resulting in a partly allowed disposal.

Ratio Decidendi: For customs tariff classification, the statutory section notes and chapter notes prevail over trade parlance, functional use, and explanatory notes, and excluded base-metal parts cannot be brought within Chapter 98 where the tariff notes specifically direct classification elsewhere.

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