TaxTMI 
TaxTMI 
2012 (12) TMI 554
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....ate of customs duty on specified goods imported from Thailand under the Free Trade Agreement between India and Thailand. The assessing officer classified the goods under CTH 84181090 on the ground that the goods under importation were combined refrigerators-freezers, fitted with separate external doors and therefore, not eligible for the aforesaid exemption. The appellant preferred an appeal before the lower appellate authority who rejected their appeals. Hence the appellant is before us. Thus the issue before us for decision is whether the goods under importation are combined refrigerators-freezers classifiable under CTH 84181090 as held by the department or refrigerators, household type classifiable under CTH 84182100 as claimed by the appellant. 3. Shri. Prakash Shah, Advocate, appeared for the appellant and made the following submissions:- (1) The goods, though consist of separate refrigerator and freezer compartments fitted with separate external doors, are nothing but refrigerators, household type as these are used as such in households. The goods are known as refrigerators in commercial parlance. Hence the correct classification is CTH 84182100. (2) The term refrige....
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....ion is combined refrigerator-freezers, fitted with external doors; the second sub-division is refrigerators, household type; the third and fourth sub-division covers freezers of different types; the fifth sub-division covers other furniture for storage and display, incorporating refrigerating or freezing equipment; the sixth sub-division covers other refrigerating or freezing equipment; heat pumps and the last and seventh sub-division covers parts of the above. For the purposes of classification, the product has to be categorized under the sub-division which is the most specific based on the functionality of the product. If this is done, the appropriate classification in the instant case would be CTH 841810. (d) He further submits that the terms refrigeration and freezing are not synonymous. Freezing starts where the refrigeration ends. Refrigeration refers to cooling above the freezing temperature of water. Whereas the freezing refers to temperatures starting from the freezing point of water and below. The purpose of refrigeration and cooling are different. While both are used for preservation of food, refrigeration can ensure non-decay of food materials for a shorter period. I....
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.... PCM - 5.2 From the illustrative product specification given above, it can be easily seen that the equipment consist of separate refrigerator and freezer compartments and there are separate external doors for these two compartments. Further the capacity for these are different. There are different specifications for the refrigerator compartment and the freezer compartment. The catalogue also states that for the 3 door refrigerators, there are three compartments, three temperatures and three humidity levels, implying thereby that the functional parameters are different for refrigeration and freezing. In other words, from the product literature/catalogue available on record, it is crystal clear that the impugned product is not refrigerator simpliciter but a combined refrigerator-freezer fitted with separate external doors. 5.3 The next relevant issue for consideration is whether a refrigerator and a freezer perform the same function. According to Wikipedia, the free encyclopedia - "A refrigerator maintains a temperature a few degrees above the freezing point of water. Optimum temperature range for perishable food storage is 3 to 50 C (37 to 410 F). A similar device which ....
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.... the upright type, not exceeding 900 I capacity: 8418 40 10 --- Electrical - 8418 40 90 --- Other - 8418 50 00 - Other furniture (chests, cabinets, display counters, showcases and the like) for storage and display, incorporating refrigerating or freezing equipment - - Other refrigerating or freezing equipment; heat pumps: 8418 61 00 -- Heat pumps other than air conditioning machines of heading 8415 - 8418 69 -- Other: 8418 69 10 --- Ice making machinery - 8418 69 20 --- Water cooler - 8418 69 30 --- Vending machine, other than automatic vending machine - 8418 69 40 --- Refrigeration equipment or devices specially used in leather industries for manufacturing of leather articles - 8418 69 50 --- Refrigerated farm tanks, industrial ice cream freezer - 8418 69 90 --- Other - - Parts: 8418 91 00 -- Furniture designed to receive refrigerating or freezing equipment - 8418 99 00 -- Other - 5.5 Note 1 to General Explanatory Notes to the First Schedule to the Customs ....
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.... so that the issue becomes clear. General Interpretative Rules reads as follows:_ 1. The titles of sections, chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter notes and, provided such headings or Notes do not otherwise require, according to the following provisions. 2. (a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled. (b) Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or part....
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....ant case, rule 1 of the interpretative rules itself determines the classification. If one wants to invoke Rule 3, that can be invoked only if rule 2(b) is exhausted. Rule 2(b) relates to classification of mixtures or combinations of materials or substances. In respect of an equipment with a specific function, mixtures or combinations of materials which it is made up has no relevance at all. If that be so, going to rule 3 would not arise at all. Assuming but not admitting that rule 3 has to be invoked, before going to sub-rule (c), sub-rules (a) and (b) have to exhausted. Sub-rule (a) of rule 3 says that most specific description should be preferred over a general description. Combined refrigerator-freezers, fitted with separate external doors is the most specific description for the product under import as it performs both the functions of refrigeration and freezing and have separate external doors for the refrigeration compartment and the freezer compartment. Thus even under rule 3, sub-rule (a) will apply. Only in the case of mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, if classification ....
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....he reasons underlying this principle is that revenue laws are neither remedial laws nor laws founded on any permanent public policy. They operate to impose a burden on the public, or to restrict them in the enjoyment of their property and pursuit of occupations and hence have to be strictly construed. Since all taxation must be by legislation, the court can not extend its operation. A rigid application of the tax laws is for the protection of the citizen who should be informed in unambiguous terms of the amount and nature of his duty. 5.11 In Oswal Agro Mills Ltd. vs. CCE [1993 (66) ELT 37 (SC)], the honble apex court was considering the classification of toilet soap, the competing classification being Soap, household and laundry and Soap, other sorts. We are not concerned with the outcome of the decision which was classification under soaps, household and laundry. But the ratio/principle laid down by the honble apex court is very relevant. While examining the matter, the apex court held as follows:- "The provisions of the Tariff do not determine the relevant entity of the goods. They deal whether and under what entry, the identified entity attracts duty. The goods are to be ....
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....re adopted in the Customs Tariff in respect of the impugned goods is Combined refrigerator-freezers, fitted with separate external doors which is classifiable under CTH 841810. Accordingly we hold that the correct classification of the goods under importation in the instant case is CTH 84181090 and not CTH 84182100. Consequently, the appellant is not eligible for the benefit of notification No. 85/04-Cus dated 31-8-2004. 5.14 The Central Board of Excise & Customs had issued a circular No. 23/2008-Cus dated 29-12-2008 regarding classification of combined refrigerator freezer fitted with separate external doors. The relevant portion from the said circular is reproduced below:- "3. The matter has been examined by the Board. For the purpose of classification of Combined refrigerator-frezer with separate external doors it is stated that sub-heading 841810 covers refrigerators which are combined with freezers and have separate doors, whereas, subheading 841821 covers only refrigerators without separate freezers and separate doors. Further sub-heading 841830 covers only freezers. Therefore, a combined refrigerator-freezer with separate external doors merits classification under sub-....