Legal Review and Analysis of Commissioner of Customs vs Welkin Foods 2026 INSC 19
Case Synopsis
Decoding Customs Classification: Aluminium Shelves as Structures, Not Machine Parts
Case: Commissioner of Customs vs. Welkin Foods (2026 INSC 19) settles a pivotal dispute on tariff classification, emphasizing strict adherence to statutory rules over trade jargon. The Supreme Court ruled that aluminium shelving for mushroom farming is classifiable as “aluminium structures” (dutiable) and not “parts of agricultural machinery” (duty-free), reinforcing the primacy of objective characteristics, sequential application of interpretation rules, and the limited role of “use” and “common parlance” in the HSN-based regime.
1. Heading of the Judgment
Classification of imported aluminium shelving for mushroom cultivation under the Customs Tariff Act, 1975 – whether as “aluminium structures” or as “parts of agricultural machinery”.
Judgment Name: Commissioner of Customs (Import) vs. M/S Welkin Foods
Citation: 2026 INSC 19, Civil Appeal No. 5531 of 2025
Judges: Justice J.B. Pardiwala and Justice R. Mahadevan
Date of Judgment: January 06, 2026
2. Relevant Laws and Sections
Customs Act, 1962:
Section 12(1) – Levying of customs duties.
Section 28(1) – Recovery of duties not levied or short-levied.Customs Tariff Act, 1975:
First Schedule – Contains tariff headings, section notes, chapter notes, and General Rules of Interpretation (GRIs).
Chapter Heading 7610: Aluminium structures and parts thereof.
CTI 76109010: Structures (attracts 10% basic customs duty + other duties).
Chapter Heading 8436: Other agricultural, horticultural, forestry, poultry-keeping or bee-keeping machinery.
CTI 84369900: Parts of such machinery (nil duty).
General Rules of Interpretation (GRIs) 1–6 – Govern classification of goods.Harmonized System Nomenclature (HSN):
Internationally standardized classification system.
HSN Explanatory Notes – Used as binding guidance when Indian tariff aligns with HSN.Key Section Notes:
Section XV, Note 1(f): Excludes articles of Section XVI (machinery) from Section XV (base metals).
Section XVI, Note 5: Defines “machine” broadly for the purposes of section notes but does not expand tariff headings.
3. Basic Judgment Details
Facts of the Case
Respondent: M/S Welkin Foods imported aluminium shelving, a floor drain, and an automatic watering system for mushroom cultivation.
Classification Declared: Classified all goods under CTI 84369900 (“parts of agricultural machinery”) – nil duty.
Revenue’s Contention: Aluminium shelving should be classified under CTI 76109010 (“aluminium structures”) – attracting 10% basic duty + additional duties.
Show Cause Notice: Issued for short levy of ₹21,01,983.
Adjudication History:
Joint Commissioner (Original): Classified under CTI 76109010.
Commissioner (Appeals): Upheld original order.
CESTAT: Allowed appeal, classified under CTI 84369900.Supreme Court Appeal: Filed by Revenue against CESTAT order.
Issues Before the Supreme Court
Whether the imported aluminium shelving (subject goods) should be classified as:
“Parts of agricultural machinery” under CTI 84369900 (Chapter 84), or
“Aluminium structures” under CTI 76109010 (Chapter 76).
Ratio Decidendi (Court’s Reasoning)
The Supreme Court set aside the CESTAT order and held in favour of the Revenue. The reasoning is structured as follows:
I. Sequential Application of General Rules of Interpretation (GRIs)
GRI 1 is the primary rule: classification is based on terms of headings and section/chapter notes.
GRI 3 (specific description preferred) applies only if goods are prima facie classifiable under two headings after applying GRI 1 and GRI 2.
CESTAT erroneously applied GRI 3 without first determining classifiability under GRI 1.
II. Role of Common Parlance Test in Classification
Common parlance/trade parlance test is not a first resort in the HSN era.
It can be invoked only when:
No statutory definition or criteria exist in headings/notes.
Terms are not scientific/technical.
Application does not contradict statutory context.In this case, the subject goods are clearly “structures” as per objective characteristics and Explanatory Notes; thus, common parlance test was unnecessary.
III. Consideration of “Use” in Classification
“Use” is relevant only if the tariff heading explicitly or implicitly refers to use/adaptation.
Chapter Heading 7610 is an eo nomine entry (named item) with no reference to use – covers all aluminium structures regardless of use.
Chapter Heading 8436 is also eo nomine (“agricultural machinery”) but inherently refers to use – machinery whose principal use is in agriculture.
Only intended use discernible from objective characteristics (design, function, composition) is considered, not actual use.
Here, the subject goods lacked the objective characteristics of “machinery” or “parts of machinery.”
IV. Analysis of Competing Headings
CTI 76109010 (Aluminium Structures):
Subject goods made of aluminium.
Fit definition of “structure” per Explanatory Notes: once installed, remains in position; made of joined components.
Thus, classifiable under this heading.CTI 84369900 (Parts of Agricultural Machinery):
Not “machinery”: Aluminium shelves are static, non-moving assemblies; not “machinery” in common parlance or as per objective features.
Not “parts”: Shelves are merely platforms for machines (watering system, compost spreader) but not integral to their function. Machines remain operational independently.
Exclusion by Section Notes: Even if classifiable under Chapter 84, Note 1(f) of Section XV excludes such goods from Chapter 76 – but here, classification under Chapter 84 fails at the threshold.
V. Critique of CESTAT’s Flawed Reasoning
CESTAT wrongly relied on “end use” and “trade parlance” without evidence.
No proof that goods had “no other purpose” or were known in trade as “mushroom growing racks.”
Erroneously applied GRI 3 without sequential analysis.
4. Core Principles of the Judgment
A. Classification Methodology in the HSN Era
Primacy of GRIs: GRIs 1–6 must be applied sequentially. GRI 1 is the starting point.
Statutory Guidance First: Headings, section notes, chapter notes, and HSN Explanatory Notes (when aligned) are primary. Common parlance is secondary.
Exclusion Notes: Specific exclusion notes (e.g., Section XV, Note 1(f)) can resolve conflicts by legally barring classification under one heading if goods fall under another.
B. When Can “Common Parlance Test” Be Used?
Only in absence of statutory guidance.
Not applicable if:
Terms are scientifically/technically defined.
Statutory context contradicts common meaning.
Goods are clearly defined by objective characteristics.Burden of Proof: Importer must provide satisfactory evidence to establish distinct commercial identity.
C. Role of “Use” in Tariff Classification
Explicit or Implicit Reference Needed: Use is relevant only if the heading explicitly mentions use (e.g., “for agricultural purposes”) or implicitly refers to it (e.g., “agricultural machinery”).
Intended Use, Not Actual Use: Classification is based on condition at import (“as imported” principle). Intended use must be discernible from objective characteristics (design, function).
Standard of Use: May be “principal use” or “sole use” depending on heading/notes.
Eo Nomine Component Cannot Be Ignored: Even if use is considered, the goods must still satisfy the eo nomine (named item) description.
D. Definition of “Parts” in Customs Law
A “part” must be an integral, essential component without which the machine cannot function.
Mere Support or Platform ≠ Part: Items that only provide a surface for machines to operate are not “parts.”
5. Final Outcome
Appeal Allowed in favour of the Revenue (Commissioner of Customs).
CESTAT Order Set Aside.
Subject Goods Classified under CTI 76109010 as “aluminium structures.”
Duty Liability: Basic customs duty of 10% + countervailing duty, cess, and additional duties as applicable.
6. MCQs Based on the Judgment
Question 1: In Commissioner of Customs vs. Welkin Foods, under what condition can the “common parlance test” be invoked for classifying goods under the Customs Tariff Act, 1975?
A. Whenever the importer claims a distinct trade name.
B. Only when there is no statutory guidance from headings, section notes, or chapter notes.
C. Always, as it is the primary rule of interpretation.
D. Only for agricultural machinery.
Question 2: According to the Supreme Court, why could the aluminium shelving not be classified as “parts of agricultural machinery” under CTI 84369900?
A. Because they were imported from a foreign supplier.
B. Because they are essential for the functioning of the watering system.
C. Because they are merely supportive structures and not integral components essential for the machinery’s operation.
D. Because they are made of aluminium and not steel.