'Anardana' Be Classified Under Heading 1209 Of Tariff Entries Under Customs Tariff Act, 1975 & Attract 5% Custom Duty Till Revenue Takes Policy Decision Regarding The Same: Supreme Court

The issue before the Bench comprising Justices Sanjiv Khanna and Bela M. Trivedi was that revenue authorities (appellant) asserted that 'anardana' falls under the Heading 0813 of the Tariff entries, and would incur custom duty at the rate of 30%, while the importers claimed that it is covered by Heading 1209 and attracts duty at the rate of 5%.

Factual Background

D.L. Steels, the respondent (importer) had imported consignments of 'anardana' from Pakistan. They were classified such that they attracted basic custom duty at a rate of 5% . According to the customs authorities 'anardana' falls under the classification which incurs custom duty at the rate of 30%. In view of the same, a show cause notice was issued. Upon confirming of the differential duty of Rs. 82,136 under Section 28(2) of the Customs Act, 1962, the Adjudicating authority imposed a personal penalty of Rs. 82,000 along with interest. Similar orders were passed for other respondents (importers). The first appeal filed by the respondents before the Commissioner (Appeals), Central Excise, Jalandhar was allowed. The Revenue challenged the same. Eventually, it was dismissed by the Customs Excise and Service Tax Appellate Tribunal (CESTAT).

Analysis by the Apex Court

The Tariff entries under the Customs Act are inspired by the Harmonised System of Nomenclature developed by the World Customs Organisation. The Court noted that the title of the Heading 0813 itself notes that it is not applicable to those fruits, which when fresh are covered under the Headings 08.01 to 08.06. Again, if the dried fruits (prepared either by drying or by industrial process) are related to the fresh fruits classified under the Headings 08.07 to 08.10, they would fall under the category of 'other fruits' in Heading 0813.40. As per Explanatory Note to 08.13 products consisting of mixtures of one or more of dried fruits under the said Heading with parts of plants of other chapters or other substances are excluded from its ambit. The Court clarified that the Explanatory Note is not applicable to the concerned 'anardana' as it is not mixed with anything. It further observed that pomegranates are expressly included in Clause 7 to the Explanatory Notes to sub-heading 0810.90. In view of the same the Court noted that it could be said that dried pomegranate would fall under sub-heading 0813.40. However, it was observed that pomegranate is an unusual fruit. It referred to the finding of CESTAT, which stated, 'anardana' is prepared by dehydrating the arils of wild pomegranates and not from the pomegranates which are eaten as fresh fruits. Dried wild pomegranate arils have a sour flavour, and 'anardana' can be precisely referred to as sun dried seeds of ripe sour pomegranate. Upon consideration of the provisions, the Court accepted that 'anardana' is different from the pomegranate included in clause 7 to Heading 08.10 and as the wild pomegranate is not consumed as a fresh fruit, the contention of the Revenue failed to convince the Court. It further noted -

"The finding of fact as recorded by CESTAT gets reinforced by the policy condition attached to the sub-heading 1209.99.00 of the Import Policy which specifically states - 'import of pomegranate seeds will be free'.

The Court accepted the submission of the importers that when the Revenue authorities challenge the classification made by them, the onus is on the Revenue to establish that the 'anardana' falls in the taxing category as claimed by them.

It was quite surprising for the Court that while exporting pomegranate seeds are classified under the sub-heading 0910.99.90 as 'other spices' or under the sub-heading 3004.90.11 as 'medicaments of Ayurvedic system'; the same product when imported, is claimed, by the Revenue, to have been classified under Heading 0813. It advised the Revenue to examine the data and ascertain the views of the trade associations on classification of 'anardana' before taking any policy decision regarding the same. In the interim the classification determined by the CESTAT would operate in order to avoid confusion and further litigation.

[Case Title: Commissioner of Customs And Central Excise, Amritsar (Punjab) v. M/s. D.L. Steels Etc. Civil Appeal Nos. 2360-2376 of 2009]

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