1986 (6) TMI 126 - AT - Customs

Summary

Issues Involved:
1. Classification of Incoloy-800 under the Customs Tariff Act, 1975.
2. Determination of whether Incoloy-800 qualifies as "stainless steel" or as "alloy steel not elsewhere specified".
3. Interpretation of statutory definitions and rules of construction in fiscal statutes.

Detailed Analysis:

1. Classification of Incoloy-800 under the Customs Tariff Act, 1975:
The primary issue in the appeal by the Collector of Customs, Bombay, was whether the imported goods, Incoloy-800, should be classified under Item No. 73.15(2) as "stainless steel" or under Item 73.15(1) as "alloy steel not elsewhere specified". The Assistant Collector had classified the goods under Item 73.15(2) based on their conformity to the definition of "stainless steel", while the Collector (Appeals) classified them under Item 73.15(1) as alloy steel sheets.

2. Determination of whether Incoloy-800 qualifies as "stainless steel" or as "alloy steel not elsewhere specified":
The appellant argued that "stainless steel" is a type of alloy steel, and the goods should be classified based on their chromium content. They cited various definitions and standards, including the McGraw Hill Dictionary and ASTM A240-80b, to support their claim that the chromium content is decisive in classifying the goods as "stainless steel".

The respondent countered that the iron content, which was less than 50%, disqualified the goods from being classified as "steel". They relied on sources like the Handbook of Stainless Steels and the Chemical Engineer's Handbook, which classified Incoloy-800 as a nickel alloy rather than stainless steel. They also pointed to Note 3 of Section XV of the Schedule, which states that an alloy should be classified based on the metal predominant by weight.

3. Interpretation of statutory definitions and rules of construction in fiscal statutes:
The tribunal considered various rules of construction for interpreting fiscal statutes. The primary rule is to look at the clear language of the statute without any intendment. If there is ambiguity, the benefit should be given to the taxpayer. They also considered the rule of Parliamentary exposition, which allows subsequent legislation to clarify the meaning of earlier ambiguous legislation, and the rule of popular or commercial usage, which interprets terms as they are understood in common language.

The tribunal found no evidence that Incoloy-800 is treated as "stainless steel" in popular or commercial usage. They relied on scientific treatises and the rule of Parliamentary exposition to conclude that Incoloy-800, with its specific composition, does not fit the description of "stainless steel". They noted that the goods are classified as nickel alloys in scientific literature and do not meet the definitions of "stainless steel" in the Customs Tariff (Amendment) Bill, 1985.

Conclusion:
The tribunal held that the goods in question do not qualify as "stainless steel" under Item No. 73.15(2) of the First Schedule to the Customs Tariff Act, 1975. The appeal was dismissed, and the goods were classified under Item 73.15(1) as "alloy steel not elsewhere specified".