Commissioner Of Customs (Import) V. Welkin Foods (2026 INSC 19), Dated 06th January 2025

In this case, Welkin Foods imported aluminium shelving systems, floor drains and an automatic watering system for use in mushroom cultivation. While the floor drains and watering system were accepted as parts of agricultural machinery, the Department later reclassified the aluminium shelving as “aluminium structures” (CTI 76109010) instead of “parts of agricultural machinery” (CTI 84369900), raising a demand for differential duty. The adjudicating authority and Commissioner (Appeals) upheld the reclassification. CESTAT reversed this, holding the shelving to be specifically designed “mushroom growing racks” integral to cultivation and classifiable as parts of agricultural machinery.

The Supreme Court, in this case has authoritatively clarified the limits of the common or trade parlance test in tariff classification disputes, holding that such a test can be invoked only in the absence of explicit or implicit statutory guidance. The Court emphasised that classification must primarily be determined by applying the General Rules for Interpretation (GRIs), tariff headings, Section Notes, Chapter Notes and HSN Explanatory Notes, and that common parlance cannot override clear statutory or technical criteria.

It held that the trade parlance test is not a rule of first resort in the HSN-based regime and is permissible only where the statute is silent and the terms used are non-technical. Applying these principles, the Court ruled that aluminium shelves used in mushroom cultivation could not be classified as agricultural machinery or parts thereof under Heading 8436, as they neither formed a composite machine nor a functional unit, and merely provided support without contributing to the operation of machinery. Consequently, the goods were correctly classifiable as aluminium structures under Heading 7610, and the CESTAT’s contrary view was set aside, reinforcing that statutory interpretation, not commercial perception, governs customs classification.