CLASSIFICATION OF GOODS I

BACKGROUND OF THE TARIFF

The rate of duty is found out by classifying the production in its appropriate heading under Central Excise Tariff/ Customs Tariff. The Tariff has to be read with appropriate exemption notification, to find actual or effective rate duty. The CETA classifies all the goods under 96 chapters and specific code assigned to each item.

Development of Harmonised System or simply HS by World customs Organisation. HS provides product codes up to 4 digit & 6 digit levels only but WCO member countries can extend it up to any level but condition is nothing changes at the 4 & 6 digit levels. India has developed 8 digit level classification to indicate specific statistical codes for indigenous codes and also to monitor trade vol. CCE V.Wood craft product Ltd. (1995)77 ELT 23 (SC), held that as per Statement of objects & reasons of CET-bill,1985 HSN is a guide for ascertaining true meaning of any expression used in the act unless there is an express different intention indicated in the tariff itself. Entries in HSN & tariff are not aligned, reliance cannot be placed on HSN for purpose of classification of goods. ( Camlin V. CCE (2008) 230 ELT 193 (SC).

TARIFF CONTAINS SCHEDULES

Schedules to central excise tariff : 1) Cenvat duty leviable on various products 2) Second schedule gives list of items on which special excise duty is payable. 3) Third schedule contains all items covered under MRP valuation provisions. Which are covered under deemed manufacture provisions. EXPORT TARIFF UNDER CUSTOMS ACT First Schedule is in respect to import tariff. Second is on export duties leviable. Schedule contains only 49 items (as on 1-3-2011).

SECTION, CHAPTERS & HEADINGS IN TARIFF

CETA is divided into 20 sections, while there are 21 sections in case of custom tariff act. A section is a grouping of a number of chapters which codify a particular class of goods. Ex- Section I is Animal Products. Each of the section is divided in to various chapters and each chapters contains goods of one class. There are 96 Chapters in central excise tariff out of which 77 is blank. In customs Tariff there are 98 chapters out of which chapter 77 is blank, which is kept reserved for future use. Some are divided into sub chapters . Ex Chapter 72 (Iron & Steel) is divided into I primary materials ,II Iron and non alloy steel, III Stainless steel. Grouping Of Goods.

CODING OF DASHES
Single dash (-) at the beginning of description indicates a group. Two dashes at the beginning (- - ) indicates subgroup. Triple dash ( - - - ) & quadruple dash (----) indicates sub-sub-classification of immediately preceding description of article which has _ or - -.

OVERVIEW OF TARIFF
Govt charges lower custom duty in case of import of some specified good from myanmar, Bangladesh, Mauritius, Nepal etc. If preferential rate is not specified for a particular product the standard rate of custom duty will apply. Power to central govt to amend schedule to Custom Tariff- Sec 11 A and Sec-5 of CETA.

RULES FOR INTERPRETATION OF TARIFF [ GIR ]

% abbreviation in column indicates that duty is charged ad valorem on the value of goods as calculated in section 4 of Excise act or Section 12 of Customs Act. Steps in Classification of a product 1) The titles of sections and chapters are provided for ease of reference only, for legal purposes refer the heading & sub heading only. 2) If meaning of a word is not clear refer to trade practice. Can also refer to other standards but trade paralance is most important. 3) If goods are unfinished find if the unfinished good has special characteristics of finished goods, Rule 2 (a) of GIR.

4) If ambiguity persists find out which heading is specific and which heading is more general. Rule-3(a). 5) If problem is not resolved by Rule 3(a) find which material or component is giving essential character to the goods in question. Rule 3(b) 6) If both are equally specific which comes last in the tariff & take it. Rule 3( C ). 7) If unable to find any entry to find out the goods in question, find which are most akin. Rule 4. 7) Packing material is classified along with the goods except when the packing is for repetitive use.