5% Customs Duty applicable to Pomegranate Seeds: Supreme Court directs Centre to Consider Import Policy [Read Order]

A two-judge of the Supreme Court comprising Justice Sanjiv Khanna Justice Bela M. Trivedi has held that the product, pomegranate seeds attract Customs Duty at a lower rate of 5% and urged the Centre to consider having a policy decision on the classification of the same.

The assessee, D.L. Steels, had imported two consignments of ‘anardana’ 4 from Pakistan, vide Bills of Entry dated 15th December 2005 and 9th March 2006. For taxation they classified the goods under the tariff sub-heading 1209.99.90, attracting basic custom duty at the rate of 5% plus education cess at the rate of 2%. However, the customs authorities contend that the goods must fall under sub-heading 0813.40.90, and accordingly, are liable for basic custom duty at the rate of 30% plus education cess at the rate of 2%.

The authorities were of the opinion that fresh pomegranate falls under the Heading 0810, and the goods, being nothing but the dried form of fresh pomegranate fruit seeds, would fall under Heading 0813, an entry which covers the dried form of all items falling under Headings 0807 to 0810. Consequently, sub-heading 0813.40.90 would be applicable to the goods.

The two-judge bench has held that “In the context of the present case, once we accept the finding of fact recorded by the CESTAT that ‘anardana’ is a dried product of local ‘daru’ or wild pomegranate, which grows in mid hill conditions and which fruit in its fresh form is different from the pomegranate included in clause 7 to Heading 08.10, as this wild pomegranate is not consumed as a fresh fruit, the contention of the Revenue must fail. GRI 3, which in the absence of the Heading, Section or Chapter Notes, prescribes the order of priority as - (a) specific description, (b) essential character, and (c) the Heading that occurs last in numerical order, and even GRI 4 – the heading appropriate for the goods “to which they are most akin”, supports our conclusion and finding.”

“The finding of fact as recorded by CESTAT gets reinforced by the policy condition attached to the sub-heading 1209.99.00 of the Import Policy which specifically states - ‘import of pomegranate seeds will be free’. Without any doubt, sub-heading 1209.99.00 in the Import Policy correlates to sub-heading 1209.99 to Chapter 12 of the HSN. The contention of the Revenue that the Import Policy is in the nature of delegated legislation albeit correct, would not make any difference in the context of the present case as the policy condition in the Export/Import Policy specifically includes pomegranate seeds – as ‘anardana’ under sub-heading 1209.99.00, whereas the Schedule to the Customs Tariff Act, 1975 merely reproduces the Heading and the sub-heading of the HSN, without specifically including or excluding pomegranate seeds under the sub-heading 1209.99,’ the Court said.

While concluding, the Court observed that “As a postscript, it is also worth mentioning that pomegranate seeds are one of the items notified and recognised as a ‘spice’ under the schedule of the Spices Board Act, 1986. Section 2(n) of this Act states that a ‘spice’ means any of the items specified in the schedule. Furthermore, the data available on the export of ‘anardana’ from India paints a very different picture and contradicts the contention of the Revenue. As per the data available, 18 most of the ‘anardana’ that is exported from India, is exported under the sub-heading 0910.99.90 as ‘other spices’ or under the sub-heading 3004.90.11 as ‘medicaments of Ayurvedic system’. While we express no opinion in this regard, it is surprising that, for the import of the very same goods, the Revenue seek classification under Heading 0813. We are conscious that the above observations may lead to another round of litigation. The Revenue, it may be advisable, should take a considered policy decision after examining the data and ascertaining the views of the trade associations on classification of ‘anardana’ or by fixing a specific customs duty.”

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M/S D.L. STEELS ETC vs COMMISSIONER OF CUSTOMS , 2022 TAXSCAN (SC) 153