‘Common Parlance’, ‘Popular Meaning’, Marketability Measures Appropriate only when tariffs entry can be categorized in more than one head - Synopsis
Dilpreet Singh 4 May 2020

On Friday i.e. 1st May 2020, the Supreme Court rejected the appeals of the Delhi Central Excise Commissioner against the CESTAT's 2008 decision that 'car matting' should be paid at 8% within the heading ‘Carpets and Other Cloth Floor Coverings' and not at 16% within 'Vehicles other than Railway or Tram Rolling-Stock and Parts and Accessories’.

In the case of ‘Commissioner of Central Excise Delhi-III vs M/s UNI Goods India Ltd’, the Court asked the question if ‘Car Matting’ should fall into Chapter 57 of the First Schedule of the Central Excise Tariff Act, 1985 under the heading ‘Carpets and other woven floor coverings’ or should be listed under Chapter 87, which applies to ‘vehicles other than railway’.

The Bench of Justice Deepak Gupta and Justice Aniruddha Bose quoted the related parts of Chapter 57 of the Central Excise Tariff of India, 2004-2005, which stipulates that the word ‘carpets and other textile floor coverings’ means floor coverings in which textile products serve as the bare surface of the item when in use and includes products having the characteristics of textile floor coverings but intended for use for other purposes.

In presenting its judgment, the Bench of Justice Deepak Gupta and Justice Aniruddha Bose stipulated that the “Common Parlance Test”, “Marketability Test” and “Traditional Significance Test”, all of which are “tools for interpretation in order to reach a decision on the appropriate classification of a tariff entry”, can only be applicable “if a specific tariff entry can be categorized in more than one heaven”.

Conclusions of the Supreme Court

Revenue's case is that the goods are manufactured in such a way that these can be used as accessories of cars. The Tribunal found that though in common parlance the products involved may not be considered as carpets, in view of the wordings of the chapter, section notes, chapter notes and explanatory notes, the goods were classifiable under chapter heading 570390.90”, stated the judgment.

We do not find any error in such reasoning. Chapter 87 of the Central Excise Tariff of India does not contain car mats as an independent tariff entry. We have reproduced earlier the various parts and accessories listed against tariff entry 8708. All of them are mechanical components, and revenue want car mats to be included under the residuary sub-head "other" in the same list. The HSN Explanatory Notes dealing with interpretation of the rules specifically exclude "tufted textile carpets, identifiable for use in motor cars" from 87.08 and place them under heading 57.03”, the bench said.

“Once the subject goods are found to come within the ambit of that sub-heading, for the sole reason that they are exclusively made for cars and not for "home use" (in broad terms), those goods cannot be transplanted to the residual entry against the heading 8708”, the Court said.

...in our opinion, there is no necessity to import the "common parlance" test or any other similar device of construction for identifying the position of these goods against the relevant tariff entries”, the bench added.

"The common parlance test", "marketability test", "traditional sense test" are all methods for interpretation to reach at a conclusion on proper classification of a tariff application. Such checks, however, will be necessary to be applied if a specific tariff entry is worthy of being listed in more than one heads, declared the Court, dismissing the appeals.


C2RMTo Know More

Something Awesome Is In The Work









Sign-up and we will notify you of our launch.
We’ll also give some discount for your effort :)

* We won’t use your email for spam, just to notify you of our launch.

SAARTHTo Know More

Launching Soon : SAARTH, your complete client, case, practise & document management SAAS application with direct client chat feature.

If you want to know more give us a Call at :+91 98109 29455 or Mail info@soolegal.com