Aluminium Mushroom Racks as “Structures”, Not “Parts”: Sequential GRI Application, Restricted Common-Parlance Use, and Limited “Intended Use” in Customs Classification

Case: Commissioner of CUSTOMS (IMPORT) v. M/S WELKIN FOODS
Citation: 2026 INSC 19 (Supreme Court of India, 06-01-2026)
Bench: J.B. Pardiwala, J. and R. Mahadevan, J.
Subject: Classification of aluminium shelving imported “for mushroom growing” — CTI 76109010 (Aluminium structures) vs CTI 84369900 (Parts of agricultural machinery)

1. Introduction

The dispute arose from the import by M/s Welkin Foods of aluminium shelving described as “Aluminium Shelving for Mushroom Growing,” alongside a floor drain and an automatic watering system. While Customs accepted the drain and watering system under CTI 84369900, the department disputed the shelving, alleging misclassification and short levy of duty (approx. INR 21,01,983).

The adjudicating authority and the Commissioner (Appeals) classified the shelving as aluminium structures under CTI 76109010, applying GRI 1. The CESTAT reversed, treating the shelving as “parts” of agricultural machinery under CTI 84369900, relying on a “more specific” heading analysis under GRI 3, trade parlance, and asserted exclusivity of use in mushroom cultivation.

The Supreme Court’s core task was to decide: whether aluminium shelves/racks, designed to host other mushroom-cultivation devices, are “structures” (Chapter 76) or “parts” of agricultural machinery (Chapter 84).

2. Summary of the Judgment

3. Analysis

3.1 Precedents Cited (and Their Influence)

The Court did not treat prior classification cases as mere citations; it built a structured “doctrinal toolkit” around (i) common parlance, (ii) use/end-use, (iii) “parts” analysis, and (iv) sequencing of GRIs.

A. Common/Trade Parlance — When Applicable, When Not

• Dunlop India Ltd vs Union of India (1976) 2 SCC 241: Used to affirm that tariff terms in fiscal statutes are ordinarily understood as in trade/common parlance, but also to emphasise that technical tests guide only within limits. The Court extracts Dunlop’s deeper constraint: the common parlance approach cannot be used to smuggle in “end-use” unless the entry so permits.
• Oswal Agro Mills Ltd & Ors v. Collector of Central Excise & Ors 1993 Supp (3) SCC 716: Applied as a model for how courts assess “scope” (not dictionary meaning) of a term via ordinary understanding, while warning against over-simplification and recognising limits where legislature enumerates specific categories.
• Union of India & Ors v. Garware Nylons Ltd & Ors (1996) 10 SCC 413: Relied on for two propositions: (i) context decides whether “common parlance” or “trade parlance” governs; (ii) the party asserting trade meaning bears the evidentiary burden.
• Commissioner of Central Excise, New Delhi v. Connaught Plaza Restaurant Private Limited (2012) 13 SCC 639: Central to the Court’s “structured” approach: common parlance is used when headings/notes are non-technical and do not provide determinative criteria; marketing labels cannot change the product’s nature.
• Commissioner of Customs and Central Excise, Amritsar (Punjab) v. D.L. Steels & Ors (2023) 17 SCC 358: Used to reaffirm that ambiguity or lack of definition triggers common parlance, and that such interpretation supports fiscal certainty; also illustrates nuanced words (like “edible”) being resolved by common understanding.
• Akbar Badrudin Giwani v. Collector of Customs, Bombay ., Bombay (1990) 2 SCC 203: Used as a counterweight: common/trade meaning is rejected where it conflicts with statutory context or would make words otiose; technical/scientific meaning prevails where the scheme requires it.
• Commissioner of Central Excise, Salem v. Madhan Agro Industries (India) Private Ltd. 2024 SCC OnLine SC 3775: Deployed to confine “common parlance” in the HSN era: when tariff heading and HSN are aligned and criteria are clear, common parlance is not a first resort.
• Chemical and Fibres of India Ltd & Ors. v. Union of India & Ors (1997) 2 SCC 664 and Reliance Cellulose Products Ltd., Hyderabad & Anr vs Collector of Central Excise, Hyderabad & Anr (1997) 6 SCC 464: Cited for the proposition that technical/scientific terms in tariff entries call for technical interpretation, limiting trade-parlance displacement.
• Indian Tool Manufacturers v. CCE 1994 Supp (3) SCC 632 and O.K Play (India) Ltd v. Commissioner of Central Excise, Delhi-III, Gurgaon (2005) 2 SCC 460: Used to resist classification by mere trade naming/marketing; a subtype doesn’t exit a general heading just because it has a special label.

B. “Use” / End-Use — Permissible Only Within Statutory Bounds

• Dunlop India Ltd vs Union of India: Anchors two enduring ideas: (i) the taxable event is import; classification follows the article’s condition at import; (ii) end-use is irrelevant where the entry does not refer to “use or adaptation.”
• Indian Aluminium Cables Ltd vs Union of India & Ors (1985) 3 SCC 284: Reinforces that use is not necessarily determinative; the key is whether the tariff expression’s broad description fits the article.
• Collector of Customs vs Kumudam Publications (P) Ltd (1998) 9 SCC 339: Cited by the respondent to justify considering end-use; the Court distinguishes it as consistent with Dunlop where the heading’s context and wording inherently connect to printing-purpose machinery/plates.
• Commissioner of Central Excise, Delhi vs Carrier Aircon Ltd (2006) 5 SCC 596: Used to show that even if most units are used in one system, classification follows the product’s primary function and the heading’s scope; “actual use” by buyers cannot hijack classification.
• Medicaments line (used illustratively): Commissioner of Customs, Central Excise and Service Tax v. Ashwani Homeo Pharmacy, Puma Ayurvedic Herbal (P) Ltd v. Commissioner, Central Excise, Nagpur, and Commissioner of Central Excise v. Wockhardt Life Sciences Limited: Used to show how “use” becomes central only when the heading itself is drafted in terms of therapeutic/prophylactic use.

C. “Parts” vs Supporting Structures

• Saraswati Sugar Mills v. Commissioner of Central Excise, Delhi-Iii ., Delhi-III (2014) 15 SCC 625: Highly influential: supporting steel structures for a plant are not “parts” of the plant/machinery. The Court analogises the shelves similarly—as supporting platforms, not functional components.
• M/s Steel Authority India Ltd. v. Commissioner of Central Excise and Customs, Bhubaneswar 2022 SCC OnLine SC 1232: Reinforces that “parts” must be integral/constituent for completeness and functionality.
• Dharti Dredging and Infrastructure Ltd vs Commissioner of Customs and Central Excise, Guntur (2023) 18 SCC 103: Relied upon by the respondent for an “essential for functioning” test; the Court distinguishes it factually because these shelves do not make the individual machines operational, they merely provide a surface.

D. HSN/Notes and Section Exclusions

• Intel Design Systems (India) P. Ltd. v. Commissioner of Customs and Central Excise (2008) 3 SCC 258 and CCE, Aurangabad v. Videocon Industries Ltd. 2023 SCC OnLine SC 357: Used for the proposition that Section Notes and statutory exclusions control classification—particularly exclusion of Section XVI goods from Section XV (base metals).
• “Alignment” with HSN Explanatory Notes (as clarified in Commissioner of Central Excise, Salem v. Madhan Agro Industries (India) Private Ltd.): The Court treats HSN Explanatory Notes as binding guidance where Indian headings align with HSN and no contrary legislative intent appears.

3.2 Legal Reasoning (How the Court Reached the Result)

A. The Court’s Method: Start with GRI 1; Use GRIs Sequentially

The judgment is as much a doctrinal correction as it is a classification decision. It reiterates that GRIs are not optional “tools” but a mandatory sequence: GRI 1 (heading + section/chapter notes) first; GRI 2 next (incomplete/unassembled/mixtures); GRI 3 only if dual prima facie headings remain; and GRI 4 only as a last resort.

CESTAT’s move to “more specific heading” analysis under GRI 3(a) was held erroneous because, in the Court’s view, the dispute should have been resolved within GRI 1 itself: Section XV Note 1(f) and heading 7610 explanatory exclusions make Section XVI classification determinative if it truly applies, without needing “specific vs general” balancing.

B. Heading 7610 (Aluminium Structures): Satisfied on Objective Characteristics

The Court holds that the shelves meet the “structure” characteristics in the HSN Explanatory Notes (via the note to heading 73.08 applied mutatis mutandis): they are fixed/installed, remain in position once erected, and are assembled from prepared metal elements joined by bolts/welding, etc. Therefore, they are structures under CTI 76109010.

Crucially, the Court treats Heading 7610 as an eo nomine (name-based) heading with no use limitation; “agricultural purpose” cannot carve it down unless a statutory hook exists.

C. Heading 8436/84369900 (Parts of Agricultural Machinery): Fails at Multiple Thresholds

1. “Machinery” is the gateway requirement. The Court rejects the notion that static racks can be “machinery” in common understanding; classifying fixed shelves as machinery is described as “patently absurd.”
2. Section Note 5 (Section XVI) does not rewrite headings. The respondent’s reliance on Note 5 (machine includes plant/equipment/apparatus/appliance) is confined “for the purposes of these Notes” and cannot expand a heading that uses “machinery” alone. The Court reads this as an internal drafting convenience, not a substantive expansion of every heading.
3. The “mushroom growing apparatus” is not shown to be a composite machine/functional unit. Applying Section XVI Notes 3 and 4 and their Explanatory Notes, the Court holds the system is a collection of separate machines performing independent tasks within a broad process, not a permanently integrated machine nor a single functional unit with a clearly defined function under one heading.
4. The racks are not “parts” of those machines. Drawing from Saraswati Sugar Mills v. Commissioner of Central Excise, Delhi-Iii ., Delhi-III and the general “parts must be integral/essential for functionality” line, the Court holds: a platform enabling placement/attachment does not become a machine part; the machines are complete and operational without the racks.

D. Common Parlance and “No Other Use”: Evidentiary and Doctrinal Failures at CESTAT

The Court criticises CESTAT’s conclusions that the goods have “no other purpose” and are known in “trade parlance” as mushroom racks: those findings lacked adequate evidence and improperly relied on brochures/vendor specialization. Even if “mushroom rack” were a trade name, it would not transmute a structure into a “part of machinery” without satisfying the statutory and functional “parts” criteria.

3.3 Impact

• Recalibration of tribunal practice: The decision is a pointed warning against skipping straight to “specific vs general” under GRI 3. Classification disputes must be disciplined by GRI sequencing, Section Notes, and Explanatory Notes.
• “Use” arguments narrowed (but not eliminated): The judgment supplies a structured framework (especially at paras 96 and related discussion) that parties will cite to confine end-use claims to cases where headings/notes support it and where intended use is objectively verifiable.
• “Parts” jurisprudence strengthened: Importers attempting to classify building-like or support structures as “parts” of machinery (to access concessional rates) face a higher bar: functional integrality, not facilitation.
• HSN alignment approach extended: By treating Explanatory Notes as “binding guidance” upon alignment, the Court reinforces predictability and international harmonisation, limiting purely domestic, impressionistic interpretation.

4. Complex Concepts Simplified

• HSN (Harmonised System Nomenclature): An internationally standardised coding system for classifying goods. India’s Customs Tariff mirrors HSN at heading/subheading levels.
• GRI (General Rules for Interpretation): Mandatory rules to choose the correct tariff classification. They must be applied in order (GRI 1 → 2 → 3 → 4).
• Eo nomine heading: A heading that names an article/category (e.g., “aluminium structures”). Usually covers all forms of the named article unless the heading/notes restrict it.
• Common/Trade parlance test: Using how goods are understood by ordinary consumers or the relevant trade to interpret an undefined term—used only when the statute/notes do not provide criteria and when it does not conflict with the statutory scheme.
• “As imported” principle: Goods are classified based on their condition at importation (the taxable event), not how they are later used or assembled.
• “Intended use” vs “actual use”: Intended use may matter only where the heading/notes make “use” relevant and where intended use is inherent and objectively discernible; actual post-import use is generally irrelevant.
• “Parts” of machinery: Not everything that helps a machine operate is a “part.” A part is typically an integral component needed for the machine to be complete and function as such; a supporting platform is not a part.
• Composite machine / functional unit: Rules in Section XVI that sometimes allow multiple connected components to be classified as a single machine—only when they are designed to work together as one integrated whole or toward a clearly defined function.

5. Conclusion

The Supreme Court establishes a disciplined, HSN-consistent approach to customs classification: (i) apply GRIs sequentially with primacy to headings/Section Notes/Chapter Notes; (ii) treat HSN Explanatory Notes as authoritative where aligned; (iii) use common parlance only where statutory guidance is absent and never to defeat the statutory scheme; (iv) consider “use” only when the heading/notes make it relevant and then only as objectively evidenced intended use; and (v) treat “parts” as functionally integral components, not supporting structures.

On these principles, aluminium mushroom racks—however specialised—remain aluminium structures under CTI 76109010, not parts of agricultural machinery under CTI 84369900. The decision is likely to shape future disputes where importers seek concessional “parts” classifications for bespoke structures designed to host machinery.