Summary
Importers of anardana (dried pomegranate seeds) from Pakistan classified it under sub-heading 1209.99.90 of the Customs Tariff (seeds of a kind used for sowing, 5% duty); the Revenue claimed Heading 0813 (dried fruit of Headings 0807 to 0810, 30%), pomegranate being listed under Heading 0810. The Commissioner (Appeals) and the CESTAT accepted the importers' classification on the finding that anardana is made from wild 'daru' pomegranate, a sour hill fruit not eaten fresh, and the Import Policy's note that 'import of pomegranate seeds will be free' under 1209.99.00. The Supreme Court dismissed the Revenue's appeals. Explaining the Harmonised System and its General Rules of Interpretation, the Court held that Chapter 8 covers only edible fruit as understood in common parlance;
Issues
- Whether anardana, dried seeds of wild pomegranate, is classifiable as 'dried fruit' under Heading 0813 of the Customs Tariff Act, 1975 or as seeds under sub-heading 1209.99.90.
- How the Harmonised System headings, Chapter Notes, Explanatory Notes and General Rules of Interpretation are to be applied, and what meaning 'edible' in Chapter 8 bears.
- On whom the burden lies when the Revenue challenges the classification adopted by the assessee.
Provisions considered
- Headings 0810 and 0813 and Chapter Note 1 to Chapter 8, Customs Tariff Act, 1975, First ScheduleChapter 8 covers edible fruit, 'edible' being understood in common parlance; Heading 0813 covers dried forms of fruit falling under Headings 0807 to 0810 when fresh. Though pomegranates are listed in the Explanatory Notes to sub-heading 0810.90, anardana is made from wild pomegranate, which is not consumed as a fresh fruit and is distinct from the table pomegranate, so Heading 0813 did not apply. (¶¶ 13, 15, 16, 17, 18, 19, 25)
- Heading 1209, sub-heading 1209.99 and Chapter Note 3 to Chapter 12, Customs Tariff Act, 1975, First ScheduleChapter Note 3 creates a fiction that seeds of fruit trees are 'seeds of a kind used for sowing'; the Explanatory Notes exclude fruit of Chapter 8 (edible fruit) and spices of Chapter 9, neither of which covered the goods. The Import Policy's condition that import of pomegranate seeds is free under 1209.99.00 reinforced the classification. (¶¶ 21, 22, 24, 25)
- General Rules of Interpretation 1, 3, 4 and 6, Customs Tariff Act, 1975, First ScheduleClassification is governed first by the terms of headings and Section or Chapter Notes; only if conflict persists do GRI 3 (specific description, essential character, last in numerical order) and GRI 4 (most akin) apply. Both supported classification under Heading 1209 rather than 0813. (¶¶ 9, 10, 11, 25)
- Sections 28(2), 28AB, 112 and 114A, Customs Act, 1962Differential duty, interest and penalties imposed by the adjudicating authority on the Heading 0813 classification fell with the classification. (¶¶ 4, 5)
- Section 2(n) and the Schedule, Spices Board Act, 1986Pomegranate seeds are a notified spice, and export data shows anardana is exported as 'other spices' (0910.99.90) or Ayurvedic medicaments (3004.90.11); the Court expressed no final opinion on Headings 0910 and 1211, which the Revenue had not invoked, but suggested a considered policy decision. (¶¶ 14, 26, 27)
Held
- Words in a taxing statute are construed in their commonly accepted trade and popular meaning unless specially defined; 'edible', undefined in Chapter 8, bears its common-parlance sense. Pomegranates are unusual fruits whose edible part is the arils and seeds; the CESTAT's finding, supported by horticultural literature and a university certificate, that anardana is prepared by drying the sour arils of wild pomegranate (daru) grown on Himalayan slopes, which is not eaten fresh and is used as an acidulant and in Ayurvedic medicine, was accepted. (¶¶ 12, 15, 19, 20, 25)
- When the Revenue challenges the classification made by the assessee, the onus is on the Revenue to adduce proper evidence that the goods fall under a different heading (HPL Chemicals, Parle Agro, Garware Nylons); the Revenue led no evidence that anardana is understood in trade as a dried fruit. (¶¶ 7, 25)
- The Import Policy, though delegated legislation, specifically includes pomegranate seeds under sub-heading 1209.99.00, whereas the Tariff Schedule merely reproduces the HSN heading without including or excluding them; the policy condition therefore reinforces the CESTAT's finding. (¶ 25)
- Given that anardana is a notified spice and is exported under spice or medicament headings, the Revenue's claim to Heading 0813 on import was surprising; it should take a considered policy decision after consulting trade associations or fix a specific duty, and until then the CESTAT's classification should continue to avoid litigation. (¶¶ 26, 27)
Result
Revenue's appeals dismissed; classification of anardana under sub-heading 1209.99.90 as held by the Commissioner (Appeals) and the CESTAT upheld. No order as to costs.