Oou.:R of Tax a?PEA.LS Cluut~ N Oj /National Dental Supply, Inc. vs. Commissioner of Customs

DECISION -

- 2 -· On September 27, 1974, petitioner lodged a formal protest against the Collector of Customs of Manila , and sought the refund of excess duties and taxes due on the alleged erroneous class- ification of its importation of polyclav pressure vessel, which the latter cl~ssified as a kitchen pressure cooke r under Tariff Heading No. 73.38 at 70% ad valorem , instead of under Tariff Heading No . 84 . 59 at 30% ad valorem , resulting in excess duties and taxes in the amount of P468. 00; and the refund of P970.90 due t o the erroneous class- ification of its imported ligual buttons and eye- lets under Tariff Heading No. 73.4 at 70% ad valorem, instead of 10% ad va l orem under Tariff Heading No. 90.19 under which it alleged should Le classified.

In support of its cla~m for refund , petitioner asserted that the polyclav pressure vessel which it imported should be classified under Tariff Heading No. 84.59 at 30 % ad yalorem duty because although the polyclav press1re vessel may look like a common k itchen pressure cooker, there is a great differ ence between it and the latte r, thu s - ' ( 1) _the polyclav pressure vesse l has an "air inlet valve," the heart of the apparatus, to intr:oduce

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- 3 - air pressure , wnile the kitchen pressure cooker does not ha e; ( 2) _the former uses air pressure , while the latter uses steam pre ssure; (3) _the f o rmer uses minimum heat of short duration, while the latter uses high heat a nd of longer duration;

(4) the f orme r eliminates weak e ning of internal bubbles in dentures processed in open vessel with- out air pressure, wh ile this characteristic is not present in the latter ; and (5 ) _the former is evidently used as a denture cooker, while the latte r is used as a kitchen c ooker.

Petitione r further declared that it is not a dealer of domestic appliances, as evidenced by the catalogue it had presented.

Acting on the said protest, the Collector of Customs rendered a decision dated January 2 , 1975, and received by petitioner on January 23, 1975 , dismissing the protest and denying peti- . tioner'~ claim for refund.

On February 27 , 1975, petitioner filed with the Commi ssioner of Customs an appeal from the said decisio n of the Collector of Cus toms.

However, before responden t Commis- sioner of Cus~oms could act on said appeal~ the Collector o f Customs again r e ~d er e d anothe r de c i - sion da ted March 10 , 1975, and received by peti- .. tioner on May 17, 1975 , modifying his pr e v i ous 280 ~----

- 4 - decision of January 2, 1975.

The latter decis i on ordered a re-liquidation as regards t he imported lingual buttons a nd eyelets and t he excess customs d uty and revenue tax collected thereon in the amount of P970. 90 was cr edited in favor of peti- tioner.

However , wi th r e gards to the article polyclav pr e ssure vessel, the Col lector of Cu s toms stood pat on his fo r mer decis i on by classifying it under Tariff Heading No . 73.38 at 70% ad valorem. The Collector of Customs having r esolve d the question on the tax liability of pe titioner with regard s to the artic l es lingual buttons and eye- lets in the l atter ' s fav o r , only the d ecision on the article polyclav p r essure vessel remain unresolved.

Finally , acting on the said appeal, the Com- missione r of Customs rendefed a decision dated October 18, 1979 (Annex G, CTA rec.) ~ affirming the decision of t he Collec t or of Customs.

This

decision having affirmed in ~ the prio r deci- sian of the Collector of Customs , petitioner, on Nov ember 16 , 19 79 , appea l ed to this Court.· After the . issue was joine d with the f tl ing by r esponden t on Fe bruary 11, ~9 8 0 of h i s a nswe r to the peti t ion for review, the case was set for 281

- 5 - trial on the mer its.

During the hearing of this case on June 19, 1981, both parties manifested their willingness to adopt the p l eadings and evi- dence in CTA Case No. 2710.

Re s pondent did not question t he arithmetical computation of pe titioner ' s . claim for ref und in the total amount of ~468.00.

The only issue remaining in this case is whether or not the imported polyclav pressure ve s s el should be classified under Tariff He ading No. 73 .. 38 , subject to 70% ad valorem as ruled by respondent Commiss ioner of Customs, or under Tariff Heading No . 84.59, subject to 30% ad valorem as contende d by petitioner.

Petitioner maintains that the polyc lav pressure vessel h2s a specific use.

Being a laboratory equ i pment for the treatment of material (denture resin) ~ using a process invo lving a change in temperature, the polyclav pressure vessel is designed s pecially for the proc e ss ing of dentur e s. The polyclav pressure vessel dif fe rs essentially from an ordinary pressure cooke r in that the l atter does not have an inlet valve for the introduction of air p r essure .

(Appendix "a" , p . 14, BIR r ec. ) Respondent was prompted to classify the polyclav . 28(..,

- 6 - press ure ves gel under Tariff Heading 73.38 at 7 0% ad valorem, be cause it is such - "Articles of a kind commonly used for domes t ic purposes , sanitary ware for indoor use , and parts of such articles and ware of iron steel ••• ad valo rem 70% ."

Respondent had considered the po lyclav t ressure vessel as a cooker and therefor resolved that the polyclav pressure vessel is synonymous to or t h e s a me as a kitchen p r essure cooke r on the strength of his legal observation that classification mus t be determined by what they actually we r e at the .time of importation . and he reasoned out that it would be impr actical to fo l low up imported mer- chandise to its destined use · and it would be im- pos s ible in most c a ses to p e netrate the intentions o f manufacturers, shipper s and importer s . Petitioner, however, ~n support of its s tand , asserted that being an expe rienced i mporte r of d e ntal supplies having been engaged :i. n this parti- cular busine s s enterprise throughout i t s exis tence, and it having made a careful study and analysis of the article (polyclav press ~ re v e s s el)~ its pracLicality and commer c ial fitness, or th~ use for wh ich i t was impor ted, a nd hav ing p r e sente d unimpeachable documentary evidence in suppor t of 283

DECISION -

CTA CASE NO . 30 43 - 7 - the accuracy of the classif ication of polyclav pressure vessel t o the Collector of Customs a s no t being an article for domes tic or home use, or not a kitchen pr essure cooker , it cla i me d t ha t the article s hou ld be classified as a "r--tach ine and mechanical applia nce s , not fa lling with in any o ther heading of this Chapter -ad valor em 30% (T.H.8 4.59) ".• In support o f its c l aim , petitioner also cited American j uri sprudenc e which states t hat "The c om- mercial designation is o f fir st importance, and if that fails to give the article its pr oper classif- ication, resor t mu s t be had t o the common designa tion ... (Rober t son v. Sal omon, 130 u.s. 412; 32 L. Ed. 995 .) This court conforms t o pe t i tione r's claim that the proper class ification cr the impo r ted articles should be based on what they actually were a t the time of importation.

From the time the importe d polyclav pr e ssure vesse l a r rived under Entr y No. 76599, its complete t echnical designation inc l uding its pertinent lite ratur e wer e furn i shed tlle customs appraiser.

These are e noug h e vidence to show tha t the standard use for which the polyc lav pressur e vessel was designed and catalogue d by the exporter is that of a de ntal equipment and, henc e , petitioner had properly c l assifi ed the article under Tariff Head ing 84.59 at 30% ad valorem.

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DECISION -

CTA CASE NO . 3043 - 8 - It is incorrect , therefore , for r espondent to in s i st , in ~u p port of his positionr tha t it would · be impracticable tb foll6w up the imported article t o its destine d use a nd impossible to pene tr a t e the intentions of manufacturer s , sh i pper and i mpor t er in dete rmining its t ariff heading because this claim wou l d not only be illegal bdt illogic al a s well. "Polyclav pressure ves s el" has a very spec i al and exclusive us e.

It is a dental laboratory equip- ment manufactured for denta l us e and no - for ordina r y kitche n us e.

Furthe rmore , we note that the price which has been placed on this a r ticle is much too high compar e d to t he ordina ry pr essur e cooker in- t e nde d for ordinary purpose s.

We are , the refore, o f the opinion t hat t he polyc lav pressure vessel s hould fall under Ta riff Heading No. 84.53 and s ubj e c t to a tariff duty of 30 % ad valor e m, a nd not under Tariff Heading No·. 73.38 a t 70% ad valor em , which c ove rs article s commonly used for domes tic purposes, and sanitary wa res for indoo r uses whic h said polyc lav pressure vesse l , a dental equ i pment , cannot be s o class ified.

Thi s must be so clear ly since polyc l a v pres s ure vess e l is a laboratory equi pme nt esse ntially des i g ned to treat mater i a l s • (denture res i ns )~ and the a ir pressure introduced is to increase the boiling point of the d e ntur e 28h

DECISION -

CTA CASE NO . 3043 - 9 - resin while in the heating process. Mor e over , it i s within the artic l es in Tariff Heading No. 84.53 to which the polyclav pre s sure ve s sel is mos t akin and , hence , should be c lassified thereunde r . (Sec. 203 , Rule 4 of the Tariff and Customs Code .) In dete rmining the correct classificat ion of an imported article for t a riff duty purposes , resort must be made to the commercial designation of the urticle , a nd if that fails, r e sort must be made to its common designation. It cannot be said that polyclav pressure vesse l, e ven assumi ng t hat the importer had entered it in its import e ntry as kitche n cooker will in no way a ffect the design a tion gi ven to , and the use of, the said article.

As correc t ly pointed out by petitioner , pol yclav has an air inlet valve . Ther e is defi- nite l y no kinship be tween this pressure vessel fitted with an air inle t valve for proce ssing den tur es and the o rdinary pressure cooker dest ined for use in a kitche n .

Finall y , it is very cle ar and can be noted beyond doubt , the inte n tion to manufacture ·the polyclav press~re vessel for dental l aboratory use and not for kitche n cooking . It is also wor t h- while to rei t e rate that a pressure vesse l be ing a 28b -

- 10 - dental laboratory equipment evidently carries a price too expensive than the price used for o rdinary pres- sure cooker.

The polyclav pressure vessel in ques- tion should , therefore , be classified under Tariff Heading No. 84.59 subject to tariff duty at 30 % ad valo~, the tariff heading which appropriately carries the articles to which the polyclav pressure vessel is most akin.

Accordingly , the amount of P468 . 00 paid by petitioner and which corresponds to the excess paymen t o f customs duties due to the erro- neous tariff classification of the imported polyclav pressure vessel by respondent is refundable to peti- tioner.

WHEREFORE , responde nt Commissioner of Customs is hereby ordered t o ref und to petitioner , the National Dental Suppl y , Inc. , the amount of P468. 00 as erroneously paid customs duties .

WE

Without pronouncement as to costs.

Q:~/:2-

)

AHANTE ~

. Presid i ng Judge AAss~ci1~V ~L.- cottsTAN'l'E f . ~QAQUIN Associ£te

Judge

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