Cus - CTH 90 pertains to medical instruments whereas heading 8421 pertains to goods used for industrial purposes & do not appear to have any medical use - classification of dialyzers should be under 9018 9031 - Circular quashed: HC
By TIOL News Service
KOLKATA, APR 12, 2016: THE petitioner challenges the legality and/or validity of CBEC Circular No. 19/2013-CUS dated 9th May 2013.
By the circular it was directed that 'Disposable Sterilized Dialyzer' and 'Microbarrier' are classifiable under Heading 84.21 Sub-Heading 8421.29 and Tariff Item 84212900, attracting a higher rate of customs duty.
The petitioner has also claimed refund of the differential duty collected by the authorities by classifying the goods viz. 'Hollow Fiber Dialyzer' imported by the petitioner under CTH 84212900.
After considering the elaborate submissions made by both sides, the High Court observed -
++ CTH 90189031 specifically pertains to renal dialysis equipment (artificial kidneys, kidney machines and dialysers).
++ CTH 84212900 talks of 'filtering or purifying machinery and apparatus for gases.'
++ Thus, CTH 90189031 specifically provides for dialysers whereas CTH 84212900 provides for generic description of articles. Heading 9018 under Chapter 90 pertains to medical instruments whereas heading 8421 under Chapter 84 pertains to goods which are generally used for industrial purposes and do not appear to have any medical use.
++ Hence, the natural classification of dialysers should be under CTH 90189031 as it was prior to issuance of the impugned circular.
++ When a specific tariff heading for classification is available, the goods concerned cannot be classified under a generic tariff heading. A heading with a more specific description of the goods in question shall be preferred to and prevail over a heading with a more general description. Just as a special law in a particular field would prevail over a general law that may be operational in that field, a heading with a more specific description would prevail over a heading with a more general description.
++ In this connection, Rule 3(a) of the General Rules for interpretation of the First Schedule to the Customs Tariff Act makes it very clear that the heading which provides the most specific description shall be preferred to headings providing a more general description.
++ In the instant case, the onus was on the department to justify the change of classification sought to be made by the impugned circular, which onus, has not been discharged by the Department. Thus, it is evident that the impugned circular is blatantly contrary to the said Rule and is thus, not sustainable.
++ Section 11A of the Customs Tariff Act specifies the manner in which the first schedule to the Customs Tariff Act may be amended. Such amendment may be carried out by notification in the Official Gazette and such notification must be placed before both the Houses of the Parliament for their approval. It is trite law that where a statute empowers an authority to do a certain thing in a certain way that thing must be done only in that way or not at all. All other methods of exercising such power are forbidden.
++ In the present case, the Department sought to amend the first schedule to the Customs Tariff Act by issuing the impugned circular. This falls foul of S. 11A of the said Act and on this ground also the impugned circular must be set aside.
++ A circular cannot take away the effect of a notification statutorily issued.
++ The impugned circular at best contains executive instructions. It is not issued under any statute and has no force of law. It cannot override the statute. Any notice, circular, guidelines etc. which are contrary to statutory laws cannot be enforced.
++ The method in which the First Schedule has been sought to be amended is contrary to the method prescribed by S. 11A and as such the circular cannot be sustained. Hence, the fact that the petitioner initially agreed with the Department's assessment is not a material fact.
++ The point urged by the Counsel for the Department is that the petitioner has not challenged the show cause cum demand notice dated 21 April, 2014. This is a point without any substance. The said show cause notice is admittedly based on the impugned circular. If the circular is quashed, the show cause notice automatically goes.
Holding that the impugned Circular 19/2013-CUS is bad in law, being without jurisdiction and cannot be sustained, the same was quashed and set aside.
(See 2016-TIOL-753-HC-KOL-CUS)
