1992 (12) TMI 58 - CGOVT - Customs

Summary

Issues Involved:
1. Jurisdiction of the Assistant Collector under Rule 14 of the Drawback Rules.
2. Classification of "bright steel bars" under the Drawback Schedule.
3. Interpretation of the term "all types" in sub-serial No. 3606.
4. Whether stainless steel is included under the term "steel" in sub-serial No. 3606.
5. Use of quantum of duty inputs as a guide for classification.
6. Applicability of Rules of Interpretation from the Customs Tariff to the Drawback Schedule.
7. Market parlance and trade classification of the goods.

Detailed Analysis:

1. Jurisdiction of the Assistant Collector under Rule 14 of the Drawback Rules:
The respondents argued that the Assistant Collector lacked jurisdiction to confirm the demand under Rule 14 of the Drawback Rules. However, the appellate authority clarified that once a rate of drawback has been decided and informed, the same authority in the Customs House, under Rule 13, is entitled to revise the decision on the earlier claim and entertain the supplementary claim filed. Conversely, if a higher rate has been erroneously allowed even by incorrect categorization, the same authority can review the claim and serve a demand under Rule 14 to recover the amount of drawback paid erroneously. The government accepted this part of the appellate order, and thus, the respondents' plea on this count failed.

2. Classification of "bright steel bars" under the Drawback Schedule:
The core issue was whether "bright steel bars" of stainless steel should be classified under sub-serial No. 3606 or 3803 of the Drawback Schedule. The Collector (Appeals) had classified them under sub-serial No. 3803, which pertains to articles made of stainless steel, including those of the austenitic variety. However, the government observed that the words "all types" in sub-serial No. 3606 encompass every type of bright steel bar, including those made of stainless steel. Therefore, the classification of "bright steel bars" should fall under sub-serial No. 3606.

3. Interpretation of the term "all types" in sub-serial No. 3606:
The term "all types" in sub-serial No. 3606 was debated. The government concluded that these words qualify both the terms "bright steel" and "bars," meaning that all types of bright steel bars, regardless of their steel composition, are included. This interpretation was necessary to give meaning to the words "all types," which would otherwise become superfluous.

4. Whether stainless steel is included under the term "steel" in sub-serial No. 3606:
The government held that the term "steel" in sub-serial No. 3606 includes stainless steel. This conclusion was supported by standard literature, such as the McGraw-Hill Encyclopedia of Science and Technology and the Britannica Encyclopedia, which define steel broadly to include stainless steel. Therefore, unless a category is specifically excluded, steel shall include stainless steel.

5. Use of quantum of duty inputs as a guide for classification:
The government did not endorse the use of the quantum of duty inputs as a primary guide for classification under the Drawback Schedule. Such considerations can only serve as peripheral or secondary support for a particular classification. The clear wording of entries and accepted principles of interpretation should take precedence.

6. Applicability of Rules of Interpretation from the Customs Tariff to the Drawback Schedule:
While the Rules of Interpretation from the Customs Tariff need not extend to the Drawback Rules, general rules of interpretation, such as the principle that a specific entry overrules a general one, still hold good for classification under the Drawback Schedule. Therefore, the specific description of "bright steel bars" should take precedence over the general term "articles."

7. Market parlance and trade classification of the goods:
The goods were consistently described as "bright steel bars" in shipping bills and other documents, indicating their common understanding in market parlance. The government concluded that the goods exported are known as "bright steel bars" in trade parlance and are thus rightly classifiable under sub-serial No. 3606.

Conclusion:
The grounds for review were found to be valid. The term "steel" includes stainless steel, and "bright steel bars" should be classified under sub-serial No. 3606. The order passed by the Collector (Appeals) was set aside, and the orders-in-original passed by the Assistant Collector (DBK), Bombay, were restored.