Differentiation in the duty between one type of goods and another type of goods which are very similar to each other has been an age long problem with Customs and Central Excise Tariff. Central Excise has now come out of this aberration to a substantial extent (After keeping 16 per cent as the general rate, 14 per cent has now been made the general rate) but the Customs Tariff is still bogged down to the same old bad habit. The Customs Tariff is still based on too much of hair splitting about too little distinction between one product and a similar product.
A Customs Tariff circular[1] has been issued recently which shows that there is an ongoing controversy regarding the classification of ‘combined refrigerator freezer with separate external doors’ and of domestic and commercial type of these goods. There was difference in practice between Custom Houses regarding extending the benefit of a notification[2] for such goods. There was a lot of deliberation on the difference between following types of goods and the rates of duty:
* (8418 10 10) — Combined refrigerator freezer fitted with separate external doors’ - Commercial type – 7.5 per cent
* (8418 10 90) — Combined refrigerator freezer fitted with separate external doors’ — Household type – 10 per cent
* (8418 21 00) — Refrigerator, household type — 10 per cent
There are two issues here. One relates to household type vs commercial type. Commercial type attracts low duty. The other issue is about interpreting the expression fitted with ‘separate external door’. Even a household type can have a separate external door like the commercial type.
In this case, the insufficient wording of the exemption notification has created doubts but even in a normal case where there is no exemption, the different rates of duty namely 7.5 per cent and 10 per cent would create controversy. Even in the case of machinery for eating, cooking, roasting, etc. falling under 8419 11 10 (domestic type — 10 per cent) and 8419 11 19 (commercial type — 7.5 per cent), the rates of duty are different.
Also in the case of washing machines (8450) the same difference continues. 8450 20 00, commercial type attracts 7.5 per cent and household type 8450 90 10 attracts 10 per cent. This difference in rates of duty for two similar things will continue to plague the assessing officer throughout as it has een doing in the long years gone by.
In the case of Central Excise Tariff, commercial type refrigerators (8418 10 10) and household type (8418 10 90) attract same rate of duty of 14 per cent . Machinery for heating, etc (8419) domestic and commercial type both attracts 14 per cent. Washing machines (8450) both household and commercial type attracts 14 per cent.
If the Central Excise Tariff can achieve the same rate of duty for both domestic and commercial types, there is no reason why the Customs Tariff cannot do the same. It is true that the distinction between domestic and commercial type cannot be abolished so far as the tariff description is concerned because the HSN uses this expression. But the rate of duty can certainly be made equal in which case the question of distinguishing them would not be material.
