2009 (10) TMI 131 - HC - Central Excise

Whether fibre tip pens exported by the petitioner fall under Chapter Heading 96 of the Drawback Schedule entitling the petitioner to claim a duty drawback. - drawback claims rejected on the ground that the goods exported were not writing instruments, but were parts of a plotter or a plotter used as a marking system - Fibre tip pens are of different colours and the plotter machine uses the fibre tip pens attached to it for drawing graphs and designs in different colours and colour combinations Words fibre tip pens take colour from preceding or subsequent words and all items in that entry denote writing instruments whose object is to write or draw lines whether by hand or by machine - Entry 96.03 under Chapter Heading 96 not restricted to such goods used by hand - We do not find any justification for applying the test of use by hand for determining whether the petitioner s product is fibre tip pens . In our opinion, the respondents applied the test which is unsustainable in law for holding that the petitioner s product was not fibre tip pens . held that impugned goods are entitled to drawback - the rule of ejusdem generis ordinarily apply to an interpretation of a statute or a rule and not to entry in Drawback Schedule - Here, we are interpreting only an entry appearing in the Schedule of Duty Drawback. We are of course conscious of the fact that the general rule that where several words (particularly signifying same genus) are used in a sentence or an entry, the words would take colour from each other.

Summary

Issues:
Classification of goods for duty drawback under Chapter Heading 96 of the Drawback Schedule.

Analysis:
The case involved a dispute regarding the classification of goods for duty drawback under Chapter Heading 96 of the Drawback Schedule. The petitioner, a manufacturer of goods classified as fibre tip pens, claimed duty drawback on export. The Assistant Commissioner of Customs rejected the claim, stating that the goods were not writing instruments but parts of a plotter. The Commissioner of Customs (Appeals) allowed the appeal, but the Government later revised the decision. The Government contended that the goods were not standalone writing instruments and required attachment to equipment. The Court reviewed literature and samples, concluding that the goods fell under Chapter Heading 96.

The Court examined Entry 96.03 of Chapter Heading 96, which includes various types of pens. The petitioner's fibre tip pens were not standard writing instruments but were used with a plotter machine for drawing graphs and designs. Despite being attached to a machine, the goods were labeled and cleared as "fibre tip pens" for export. The petitioner argued that international catalogues described similar products as "fibre tip pens/disposable pens," emphasizing the trade understanding of the product.

The respondents argued that the term "fibre tip pens" should be interpreted in conjunction with other writing instruments listed in Entry 96.03, implying they should be used by hand. However, the Court rejected this argument, stating that the common genus of the listed items was their function of writing or drawing lines, not specifically by hand. The Court noted that the Revenue did not dispute the goods being fibre tip pens, emphasizing the commercial identity and classification of the goods by traders.

Referring to a Supreme Court ruling, the Court emphasized the test of commercial identity over functional use in classifying goods. International catalogues and export branding confirmed the goods as fibre tip pens. The Court criticized the respondents' reliance on the hand-use test, deeming it legally unsustainable. Consequently, the Court allowed the petition, quashed the impugned order, and restored the Commissioner of Customs (Appeals) decision, ruling in favor of the petitioner.