CTA Case No. 3043 (Decision)

. OOU .:r OF TAX A?PEA.LS ClUUt~ n� OJ � /NATIONAL DENTAL SUPPLY, INC., Petitioner, - versus - C.T . A. CASE NO. 3043 COMMISSIONER OF CUSTOMS , Respondent . X - - - - .- �� � - - - - - - - . X DEC I S I 0 N This is an appeal by petitioner from the dec i sion of respondent Commissioner of Customs dated October 18 , 1979 affirming that of the Collector of Customs and denying petitioner's claim for the refund in the amount of ~468.00 as excess duties and taxes which alleged excess was due to respondent's allegedly erroneous class- ifica tion of petitioner's importation of polyclav pressure vessel unde r Tariff Heading No. 73.38 at 70% ad v alorem inst e ad of under Tariff Heading No. 84.95 at 30% ad va lorem which it alleged should be the correct clas sif ica t ion . As borne out by the pleadings and evi~ence presented, petitioner is a duly registered domes- tic corporation engaged in the importation of dental supplies for resale to local dental com- panies. 276

DECISION - CTA CASE NO. 3043 - 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 lat ter 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 v alorem , 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 suppo rt 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, thus - ( 1) _the polyclav pressure vess'e l has an "a ir inlet valve," the heart of the apparatus, to intr:oduce 27J

DECISION - CTA CASE NO. 3043 -3 - air pressure , wnile the kitchen pressure cooker does not ha e; ( 2) _the former uses air pressure , while the latter uses steam pre ss ure; (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 inter nal bu bbles 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 , 1 975, petitioner filed with the Commi ssioner of Customs an appeal from the said decision 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 a gai n r e ~d er e d anoth e r d e c i - sion da te d March 10 , 1975, and received by peti- .. tioner on May 17, 1975 , modifying his pr e v i ous 280

~---- DECISION - CTA CASE NO. 3043 - 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 u ty and revenue tax collected thereon in the amount of P970. 90 was cr e dited in fa vor of peti- tioner. However , wi th r e gards to the article polyclav pr e ssure vessel, the Co l lector of Cu s tom s stood pat on his fo r mer de cis i on by classifying it under Tariff Heading No . 73.38 at 70% ad valorem. The Co llector of Custo ms having r esolv e d th e question on the tax liability of pe titioner with regards 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 prior deci- sian of the Collector of Customs , petitioner, on Nov e mber 16 , 19 79 , appea l ed to this Court.� After the . issue was joine d with the f tl ing by r espo nden t on Fe b ruary 11, ~9 8 0 of h i s a nswe r to the peti t ion for revie w, the case was set for 281

DECISION - CTA CASE NO. 3043 - 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 pond ent did not question t he arit hmetical 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 v e 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 v alorem as contende d by petitioner. Petitioner maintains that the po lyc 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 e c. ) Respondent was prompted to classify the polyclav . 28(..,

DECISION - CTA CASE NO. 3043 -6 - pres s 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 val o 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 he s a me as a kitchen p r essure cook e r on th e strength of his legal observation that classification mus t be determined by what th ey 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 d estined use � and it would be im- pos s ible in most c a ses to pe netrate the intentions o f manufacturers, shipper s and importer s . Petitioner, however, ~n support of its s ta nd , asserted that being an exp e 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 te nce, 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 n d h av ing p r e sente d unimpeachable documentary evidence in suppor t of 283

DECISION - CTA CASE NO . 30 4 3 - 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 no t a kitchen pr ess ure cook er , it cla i me d t ha t the articl e s h ou ld be classifi ed as a " r--tach in e and mec hanical app li a nce s , not fa lling with in any o th er heading of this Chapter -ad v al or e m 30% (T.H.8 4.59) ". � In support o f its c l aim , petitioner also cited American j u ri sp rudenc e whi ch states t hat "The c om- mer cial designation is o f fir st importance, and if that fails to give the art icle its pr oper classif- ication, resor t mu s t be h ad t o the common design a tion ... (Rober t son v. Sa l omon, 130 u.s. 4 12; 32 L. Ed. 9 95 .) 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 impo rte d polyclav pr e ssure vesse l a r rived under Entr y No. 76599, its complete t echnical designation inc l uding it s 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 pr essur e vessel was designed and catalogue d by the exporter is that of a de ntal equipment and, hence , petitioner had properly c l assified the article under Tariff Head ing 84.59 at 30% ad valorem. '28 4

DECISION - CTA CASE NO . 3043 - 8- It is incorrect , therefore , for r espondent to in s i st , in ~u p port of hi s positi o nr th a 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 laborato ry equip- ment manufactured for denta l us e and no - for o rdina r y kitc he n u s e. Furthe rmore , we not e 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 es sur e cooker in- t e nd e d for ordinary purpos e 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�. 73.3 8 a t 70% ad valo r em , which c ove rs article s commonly used for domes tic purposes, and sa nit ary wa res for indoo r uses whi c h said poly c lav press u re vess e l , a de nt al equ i pment , cannot be s o class ified. Thi s must be so clear ly since polyc l av press ure vess e l is a laboratory equi pme nt ess e ntially d es i g n ed to treat mater i a l s � (denture res i ns )~ and the a ir pressure introduced is to incr ease the boiling point of the de ntur e 28h

DECISION - CTA CASE NO . 3043 - 9- resin while in the h eating process. Mor e over , it i s within the artic l es in Tariff Heading No. 8 4.53 to which the polyclav pre s sure ve s sel is mos t akin and , hence , shou ld 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 , re sort must be made to the commercial designation of the urticle , and 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 designa 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 abora tory 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 28 b

- DECISION - CTA CASE NO. 3043 - 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 , respond e 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 . Without pronouncement as to costs. SO ORDERED . Quezon City , October 19, 1983. f . ~L.- ~QAQUIN cottsTAN'l'E Associ�te Judge WE Q:~/:2- ) ~ AHANTE . Presid i ng Judge AAss~ci1~V 28 '1