1997 (3) TMI 95 - SC - Customs

Whether stainless steel circles imported by the appellants are classifiable under Customs Tariff Entry 73.15(2) instead under Tariff Entry 73.15(1)? Held that - As appeals deal with Tariff Entry 73.15 as it stood prior to its amendment with effect from 1-1-1981. Therefore, stainless steel circles imported by the importers in all these appeals are classifiable under Tariff Heading 73.15(1) and not under Tariff Heading 73.15(2).

Summary

Issues:
Classification of stainless steel circles under Customs Tariff Entry 73.15(1) or 73.15(2).

Detailed Analysis:

1. Classification Dispute:
The judgment involves a dispute over the classification of stainless steel circles imported by the appellants. The Customs authorities classified the goods under Tariff Heading 73.15(2) with a duty rate of 220%, while the importers contended that the correct classification was under Tariff Heading 73.15(1) with a duty rate of 35%.

2. Interpretation of Tariff Entry:
The relevant Tariff Entry, at the material time, covered stainless steel in various forms. The entry under Heading 73.15 mentioned alloy steel and high carbon steel forms, including coils for re-rolling, bars, rods, wire rods, strips, sheets, and plates of stainless steel. The dispute centered around whether stainless steel circles fell under the specific forms listed in sub-heading (2) or the residuary sub-heading (1) of Heading 73.15.

3. Department's Contention:
The Customs department argued that circles should be classified under sub-heading (2) based on Note 1(n) of the Chapter Notes of Chapter 73, which included sheets or plates cut to non-rectangular shapes. The department contended that a circle is essentially a sheet cut into a non-rectangular shape and, therefore, should be considered a sheet under sub-heading (2).

4. Judicial Interpretation:
The court analyzed the definition of a "sheet" from Webster's Comprehensive Dictionary and emphasized that a circle has a distinct shape and form different from a sheet. The court referred to commercial distinctions between stainless steel sheets and circles, highlighting differences in pricing and manufacturing processes. The judgment cited previous decisions and notifications to support the view that sheets and circles are recognized as distinct forms of metal products.

5. Legislative Amendment:
The Customs Tariff Amendment Act of 1982 subsequently amended Tariff Heading 73.15(2) to explicitly include circles, angles, shapes, and sections of stainless steel. The court noted the retrospective effect of this amendment from January 1, 1981, and highlighted the legislative intent to prevent misclassification for duty rate manipulation.

6. Conclusion and Decision:
The court concluded that prior to the 1982 amendment, stainless steel circles should be classified under Tariff Heading 73.15(1) as they did not fall under the specific forms listed in sub-heading (2). The judgment allowed Civil Appeal Nos. 1744-45 of 1988 while dismissing Civil Appeal Nos. 10334-10336 of 1995. Refund applications by the importers were directed to be processed based on the court's decision, following the precedent set in Mafatlal Industries Ltd. v. Union of India.

This detailed analysis highlights the key legal arguments, interpretations of tariff entries, legislative amendments, and the ultimate decision reached by the court regarding the classification of stainless steel circles under the relevant Customs Tariff Entry.