Introduction on Classification of Goods :
Classification of goods consist of determining the headings or sub headings of central excise tariff under which the said goods are covered. Classification is needed for determining the rate of duty and for determining eligibility to exemptions.
The first schedule to CETA 1985 is the main schedule containing 96 chapters under which the goods are arranged and this arrangement is based on “Harmonized System of Nomenclature” having 8 digits classification. Chapters are grouped under sections and are further sub-divided into headings ( Headings mean classification of goods using 4 digits system) and sub-headings ( Sub-headings mean classification of goods using 6 digits system ). Each chapter handles a different category of items as compared to the preceding and succeeding chapters. The duty rates for the various items are specified in such chapters and the duty would be charged on the goods at the specified rates.
Central excise duty rate is indicated against each tariff item. (Tariff items mean classification of goods using 8 digits system).Central excise tariff has 4 columns namely-
‘Tariff item’ means a description of goods in the list of tariff provisions accompanying either ,8 digit number and the rate of the duty of excise , or 8 digit number with blank in the column of the rate of duty.
Description of Goods
Standard Unit of quantity
Rate of duty
All goods not specified or are not covered in the tariff will be called non-excisable goods. Even full exemption from duty under a notification does not made goods as non-excisable and hence was chargeable to duty if the exemption was removed prior to removal of goods but subsequent to manufacture.
The mere coverage that an item falls in a tarrif entry is not sufficient to impose excise duty on it.There must be manufacture and marketability of product and the burden of proof that there was a manufacture and what was manufactured ,was on the Revenue i.e. on the central excise department. Otherwise, duty levied on it again ,would amount to levying double duty on the same product;( commissioner of central excise ,Chandigarh v. Markfed Vanaspati & Allied Industries ,(2003) 4 SCC184.
Instances of goods/processes not amounting to manufacture:
- Cable joining kits as because putting together different duty paid items not manufacture.
- Cycle as because assembly of cycle parts
Instances of goods/processes amounting to manufacture:
- Audio cassettes as because recording amounts to manufacture as pre-recorded cassette is distinct
- Bagasse as because crushing of sugarcane
- Biris as because rolling of tobacco
- Brass as because mixing of copper and zinc
- Chappals as because assembly of rubber sole & rubber strap mouldings.