TaxTMI 
TaxTMI 
2022 (7) TMI 471
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....D.L. Steels, wherein the respondent had imported two consignments of 'anardana' Hereinafter referred to as "the goods" from Pakistan, vide Bills of Entry dated 15th December 2005 and 9th March 2006. For taxation they classified the goods under the tariff sub-heading 1209.99.90, attracting basic custom duty at the rate of 5% plus education cess at the rate of 2%. However, the customs authorities contend that the goods must fall under sub-heading 0813.40.90, and accordingly, are liable for basic custom duty at the rate of 30% plus education cess at the rate of 2%. 3. To this end, the Office of the Assistant Commissioner, Rail Cargo, Amritsar, Hereinafter referred to as "adjudicating authority'". issued a show-cause notice dated 27th March 2006, which inter alia stated that fresh pomegranate falls under the Heading 0810, and the goods, being nothing but the dried form of fresh pomegranate fruit seeds, would fall under Heading 0813, an entry which covers the dried form of all items falling under Headings 0807 to 0810. Consequently, sub-heading 0813.40.90 would be applicable to the goods. 4. The goods were released provisionally by the customs authorities on the execution of a bon....
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....of items expressly excluded from sub-heading 1209.99.09, they very well stood included in the sub-heading 1209.99.90. Accordingly, sub-heading 0813.40.90 was not applicable, and the appeal was dismissed. 8. Similar orders were passed by the CESTAT in the cases of other respondents as well. Resultantly, the Revenue is in appeal before us. 9. The Harmonised System of Nomenclature, "Harmonised System" / "HSN" / "the Code", for short developed by the World Customs Organisation, has been adopted in India by way of the Customs Tariff Act, 1975, though there are certain entries in the Schedules to this Act which have not been assigned HSN codes. The Harmonised System is governed by the International Convention on Harmonised Commodity Description and Coding System, which was adopted in 1983, and enforced in January, 1988. This multipurpose international product nomenclature harmonises description, classification, and coding of goods. While the primary objective of the HSN is to facilitate and aid trade, the Code is also extensively used by governments, international organisations, and the private sector for other diverse purposes like internal taxes, monitoring import tariffs, quota ....
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....r reason, the goods are, prima facie, classifiable under more than one Heading, then; (a) the 'most specific description' is preferred, (b) a mixture of different goods will be classified as that good which gives the mixture its 'essential characteristic', and (c) when goods cannot be classified with reference to (a) or (b), they should be classified under the Heading which occurs last in the numerical order. The General Rules of Interpretation 1 and 3 are reproduced below without the Explanatory Notes: "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: Xx xx xx 3. When by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: (a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings e....
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....ple should commend to the authorities as it is a good fiscal policy not to put people in doubt or quandary about their tax liability. The common parlance test is an extension of the general principle of interpretation of statutes for deciphering the mind of the law-maker. However, the above rule is subject to certain exceptions, for example, when there is an artificial definition or special meaning attached to the word in a statute, then the ordinary sense approach would not be applicable. Collector of Central Excise, Kanpur v. Krishna Carbon Paper Company, (1989) 1 SCC 150 13. The two contesting Headings along with the relevant General, Chapter and Explanatory Notes are extracted below: "Chapter 8: Edible Fruit and Nuts; Peel of Citrus Fruit or Melons Chapter Notes. 1.- This Chapter does not cover inedible nuts or fruits. Xx xx xx General: This Chapter covers fruit, nuts and peel of citrus fruit or melons (including watermelons), generally intended for human consumption (whether as presented or after processing). Xx xx xx 08.10 - Other fruit, fresh. 081010 - Strawberries 081020 - Raspberries, blackberries, ....
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....s 12.01 to 12.07 or 12.11. xx xx xx 12.09- Seeds, fruit and spores, of a kind used for sowing. 1209.10 Sugar beet seed -Seeds of forage plants: 1209.21 Lucerne (alfalfa) seed 1209.22 Clover (Trifolium spp.) seed 1209.23 Fescue seed 1209.24 Kentucky blue grass (Poa pratensis L.) seed 1209.25 Rye grass (Lolium multiflorum Lam., Lolium perenne L.) seed 1209.26 Timothy grass seed 1209.29 Other 1209.30 Seeds of herbaceous plants cultivated principally for their flowers - Other: 1209.91 Vegetable seeds 1209.99 - Other This heading covers all seeds, fruit and spores of a kind used for sowing. It includes such products even if they are no longer capable of germination. However, it does not include products such as those mentioned at the end of this Explanatory Note, which, although intended for sowing, are classified elsewhere in the Nomenclature because they are normally used other than for sowing. The heading includes beet seeds, grass or other herbage seeds (lucerne, sainfoin, clover, fescue rye grass, Kentucky blue grass, timothy grass....
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.... xx xx xx (2) Spices, i.e., a group of vegetable products (including seeds, etc.), rich in essential oils and aromatic principles, and which, because of their characteristic taste, are mainly used as condiments. xx xx xx This Chapter further excludes: (a)-(c) (d) Certain fruits, seeds and parts of plants which, although they can be used as spices, are more often employed in perfumery or in medicine (heading 12.11)(e.g., cassia pods, rosemary, wild marjoram, basil, borage, hyssop, all species of mint, rue and sage). xx xx xx 09.09 - Seeds of anise, badian, fennel, coriander, cumin or caraway; juniper berries. 0909.10 - Seeds of anise or badian 0909.20 - Seeds of coriander 0909.30 - Seeds of cumin 0909.40 - Seeds of caraway 0909.50 - Seeds of fennel; juniper berries These fruits or seeds are used for consumption as spices, for industrial purposes (e.g., in distilleries) and for medicinal purposes. They remain in this heading even when, in case of anise seeds in particular, they are put up (e.g., in sachets) for making herbal infusions or herbal "teas". xx xx xx....
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.... (2) whether the good provides nourishment, (3) whether the good's constituent parts are edible, (4) whether the good is principally used as food, (5) whether the good may be eaten without harmful effects, (6) whether the good is "habitually eaten", and (7) whether the good is actually eaten. This Comment argues that a good should be considered edible if it can be eaten without harmful effects, but that whether the good is "habitually eaten" should control if testing the good is dangerous, and if neither of these tests yields a result, the matter should be resolved by whether the good is actually eaten." The author thereafter goes on to argue that an item should be considered edible if it can be eaten without harmful effects, however, the 'habitually eaten' test would apply if the testing of the goods to check for harmful effects is dangerous. If neither of the two tests yield a result, the matter should be resolved by determining if the item was actually eaten. We need not discuss this article in detail but for the purpose to record that the word 'edible' is capable of diverse and multiple meanings, which are plausible. For the purpose of the present case, the word 'edible' mus....
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....specifically in other Chapters. Reference by way of example is made to fruits that are primarily used in pharmacy or perfumery, locust beans, kernels of apricots or of similar fruit contained in Chapter 12. The Chapter Note also excludes from Chapter 8, the products of Chapter 9. 18. In favour of the appellant's claim, it must be highlighted that pomegranates, along with some other fruits, are expressly included in clause 7 to the Explanatory Notes to sub-heading 0810.90. Consequently, it can be argued with some merit that dried pomegranate, if prepared by drying in the Sun or by industrial processes, would fall under sub-heading 0813.40. 19. However, pomegranates are rather unusual fruits and their structure is unlike other fruits. The outer most layer is a hard and inedible shell. The edible part consists of the seeds and arils. Arils are the sweet, juicy, and crunchy covering that encase the seeds. However, the finding of the CESTAT is that wild pomegranates from which 'anardana' is made are different from the pomegranate fruit. This finding of fact is supported by considerable literature which states that 'anardana' is prepared by dehydrating the arils of wild pomegranate....
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....icine. 20. The respondents, in support of their contention, have relied upon a certificate issued by Dr. Y.S. Parmar University of Horticulture and Forestry, Solan, which has been relied upon by the CESTAT and reads: " To Whom It May Concern This is to certify that Anaradana is dried product of local Daru which grows in wild form in mid hill conditions. The fruits of Daru are harvested in the month of July/August and seeds after extraction are dried which is known as Anardana. Whereas, Anar is used for fresh fruit purpose and its seeds are consumed as such which has no suitability to Anardana. Anardana is sour in taste and is used in Ayurvedic Pharacies. However, the botanical name of Daru (Anardana) and Anar is some that is Punica granatum and Anardana is not a dried produce". 21. We will now proceed to examine Heading 12.09, and in particular, sub-heading 1209.99, along with the applicable Notes. Chapter Note 3 of Chapter 12 states that for the purpose of Heading 12.09, the seeds specified therein, which include seeds of fruit trees, are to be regarded as 'seeds of a kind use of sowing'. Chapter Note 3, therefore, creates a fiction when i....
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....luded in the said heading, which include seeds as in the case of Ambrette, Angelica, Burdock, etc., among others. After enumerating the list, the Explanatory Notes state that the list is not exhausted and is given to assist in the identification of the plants. Mention of botanical names of a particular species does not necessarily indicate that other species of the same plant family are not classified in the Heading. It is further stated that products of this Heading which are regarded as narcotic drugs under international instruments, are indicated in the list at end of Chapter 29. 24. The word 'seed' in common parlance and in commercial sense means the grains or ripened ovules of plants used for sowing. The normal function of a seed is to germinate and produce a new plant. Broadly, a seed includes a propagative structure such as a spore, or a small dry fruit. Some fruit and vegetable seeds are edible and are used by human beings as food or even as condiments. However, as explained above, as per the Chapter Note 3 "seeds of forest trees, seeds of fruit trees.......are to be regarded as seeds of a kind used for sowing". 25. In the context of the present case, once we accept t....
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....oduced Heading 12.11 and Heading 09.10 under Chapter 9. There are also several sources which suggests that 'anardana' is primarily used as condiment and in pharmacy for preparation of Ayurvedic medicines. The main application of 'Anardana' as per the Council of Scientific & Industrial Research, Ministry of Science & Technology, Government of India is in "food acidulent, digestive candies, traditional system of medicine". Further, the Spices Board of India, Ministry of Commerce and Industry, Government of India states that "the (pomegranate) seed dried with pulp is used as a spice in many dishes". Refer also to supra footnote 15 However, we would not express any final opinion in this regard as the Revenue has not relied upon said headings and the show-cause notice which resulted in the adjudication orders and the appellate orders was restricted and confined to claim that the goods would be covered under the sub-heading 0813.40.90. 27. As a postscript, it is also worth mentioning that pomegranate seeds are one of the items notified and recognised as a 'spice' under the schedule of the Spices Board Act, 1986. Section 2(n) of this Act states that a 'spice' means any of the items spe....