Application of Gir in Tariff :
GIR (General Interpretative Rules) are to be applied for interpretation of Tariff, if classification is not possible on the basis of tariff entry and relevant chapter notes and section notes.
Rules to be applied sequentially – The Rules are to be applied sequentially. Rule 1 gives precedence to Section notes/ Chapter Notes while classifying a product – Chapter 4 Para 2.6 of CBE&C’s Customs Manual, 2011.Classification is to be first tested in light of Rule 1. Only when it is not possible to resolve the issuer byapplying this rule, recourse is taken to Rules 2,3 and 4 in seriatim [Though rules nowhere stated that these should be applied sequentially, the general arrangement and wording does clearly indicate that intention].
Titles are for reference – Titles of sections or chapters cannot be used for classification The titles of sections and chapters are provided for use of reference only, and have no legal importance for purposes of classification. (Rule 1)
Rule 1 – The titles of Sections and Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings orNotes do not otherwise require, according to the provisions hereinafter contained.
Section Note and Chapter Notes have overriding effect – Classification is to be determined only on the basis of description of the heading, read with relevant section or Chapter Notes. Since these notes are part of the Act itself, these have full statutory (legal) backing.
If the description read with section or chapter notes is not enough to correctly classify the goods, following further rules have been provided:
Classification of Incomplete or Un-assembled Goods
Any reference to complete goods also includes incomplete or un-finished goods, if such incomplete or un-finished goods have the essential characteristic of finished goods. [first part of Rule 2 (a)]. The heading will also include finished goods removed un-assembled or disassembled i.e., in SKD or CKD packs. [second part of Rule 2 (a)].
Classification of Mixture or Combinations.
Any reference in heading to material or substance will also include the reference to mixture or combination of that material or substance with other materials or substance e.g. ‘Article of Gold’ will include an Article which is made partly of Gold. Reference to goods of a given material or substance shall also include reference to goods consisting wholly or partly of such material or substance [Rule 2 (b)].
Classification in Case of Conflict Between Various Headings
While applying the aforesaid rules, some conflict may arise e.g., (a) a mixture or combination containing more than one material may be classifiable under more than one headings by applying rule 2(b). IF it contains two items A and B, one classification may be on the basis of ‘A’ and other on the basis of ‘B’ (b). There may be two descriptions which may both seems possible.
In such case, rule 3 states as follows –
Rule 3 – When by application of sub-rule (b) of rule 2 or for any other reason goods are, prima facie, classifiable under two or more headings, classification shall be effected as given in rule 3 (a), 3(b) or 3(c).
Classification as per Essential Character
If mixture and composite goods consisting of different materials or different components cannot be classified based on above rule i.e. rule 3(a), it should be classified as if they consisted of the material or component which gives it their
essential character [Rule 3(b].
For example, if a set consists of drawing instruments (90.17), pencil (96.09) and pencil sharpener (82.14), put up in a leather case (4201.90); the set will be classifiable under 90.17 i.e. drawing instrument.
If both are specific – Latter the better
If two or more headings seem equally possible and the dispute cannot be resolved by any of the aforesaid rules, if both the headings appear equally specific, the heading which occurs last in numerical order is to be preferred (i.e. latter the better). [rule 3( c)].