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Commissioner of Customs and Central Excise, Amritsar (Punjab) vs. M/S D.L. Steels etc.

Civil Appeal · 2022 INSC 666Decided 11 Jul 2022
Civil Appeal Nos. 2360-2376 of 2009
Sanjiv Khanna · Bela M. Trivedi

Background

Importers brought in "anardana" (dried pomegranate seeds/arils used in Indian cooking and Ayurvedic medicine) from Pakistan and classified it under a customs tariff heading (1209) meant for seeds "of a kind used for sowing," attracting a lower 5% duty. Customs authorities in Amritsar instead classified it as a dried edible fruit under Heading 0813 (attracting 30% duty), reasoning that dried pomegranate should be taxed like other dried fruits. The Commissioner (Appeals) and the CESTAT (tax tribunal) both ruled in favour of the importers, prompting the Revenue's appeals to the Supreme Court.

Decision Breakdown

The Supreme Court undertook a detailed analysis of the Harmonised System of Nomenclature and the Customs Tariff Act's General Rules of Interpretation, and examined what makes a fruit "edible" for tariff purposes. It accepted the CESTAT's factual finding, supported by scientific literature and a university certificate, that "anardana" is made from a distinct wild pomegranate variety ("daru") that is not eaten as a fresh fruit, unlike the edible garden pomegranate, and is used mainly as a sour condiment/acidulant and in Ayurvedic medicine. Since the Revenue bore the burden of proving its classification and failed to show anardana was understood in trade parlance as a "dried fruit," and since an official Export/Import Policy note treated pomegranate seeds as freely importable seeds, the Court upheld the lower duty classification and dismissed the Revenue's appeals, while flagging (without deciding) that anardana might more properly belong under the spice or Ayurvedic-medicine headings for future policy consideration.

Lesson Learnt

In tax and customs classification disputes, the tax department carries the burden of proving its claimed classification is correct, and courts will rely on trade understanding, scientific evidence and consistent government policy documents rather than a superficial or literal reading of a tariff heading.

Official source (sci.gov.in)View Judgment (PDF)

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