Introduction
 
The classification of goods under the correct tariff code is far from a mechanical exercise. Under the Customs Duties Order 2025, goods are classified according to the General Rules for the Interpretation of the Harmonized System (“GRI”), a set of six rules derived from the International Convention on the Harmonized Commodity Description and Coding System¹. The GRI are applied strictly in sequence: resort to any one rule is only permissible where the rules preceding it have failed to resolve the classification.
 
The first rule, GRI 1, provides the starting point for classification. It requires classification to be determined according to the terms of the headings and any relevant Section or Chapter Notes. This is where most straightforward classifications end. GRI 2 addresses goods which are presented in an incomplete or unfinished state, as well as goods consisting of mixtures or combinations of materials or substances. GRI 3 is engaged where goods are prima facie classifiable under two or more headings and operates in three descending steps: 

A recurring difficulty in applying GRI 3(a) is that goods often satisfy more than one heading for different reasons – one heading may describe their physical form, while another may describe their function or intended use. Which of these, if either, is the “most specific” description? This question came before the High Court in Jindar Sdn Bhd v Director General of Customs, Royal Malaysian Customs Department & Anor [2025] 8 AMR 343 (“Jindar”), an appeal under Section 141W of the Customs Act 1967 concerning the classification of imported crawler tractors.
 
In a decision with implications well beyond the tractors in question, the learned High Court Judge Wong Siong Tung held that a heading which is specific only as to the goods’ physical design and mechanism does not, for that reason alone, prevail over a competing heading that is equally specific as to the goods’ intended purpose and function. Where such a tie arises, the High Court Judge held that classification must ultimately be resolved by reference to the essential character of the goods under GRI 3(b), assessed by their function and predominant use, rather than by design features alone.
 
What did the High Court decide in Jindar?
 
The Appellant, Jindar Sdn Bhd, imported two crawler tractors manufactured and designed for agricultural use. The tractors had, prior to importation, been certified by the exporting country, Thailand, as agricultural tractors under the ASEAN Trade in Goods Agreement.
 
Notwithstanding this, the 1^st Respondent, the Director General of Customs, classified the tractors under tariff code 8701.30.0000 ("track-laying tractors") pursuant to the Customs Duties Order 2017², attracting a 5% import duty, on the basis that the tractors moved on tracks rather than on wheels. The Customs Appeal Tribunal upheld this classification, and the Appellant appealed to the High Court, contending that the tractors ought to be classified under tariff codes 8701.91.1000 and 8701.92.1000 ("agricultural tractors"), which are exempt from duty.
 
Before the High Court, the Respondents’ case was that GRI 3(a) required the most specific description to prevail, and that “track-laying tractors” was the more specific description because it precisely matched the tractors’ physical design and mechanism. On the Respondents’ submission, the tractors’ intended agricultural use was irrelevant as there was no ambiguity as to the correct classification based on physical design alone. The Appellant, on the other hand, maintained that the track system is a mere physical characteristic of the tractors, and that classification must follow the essential function and intended agricultural use of the tractors.
  
Working through the GRI in sequence, the High Court Judge found that GRI 1 could not resolve the classification, since the wording of both competing subheadings was capable of covering the tractors. GRI 2 was also inapplicable, as the tractors are complete machines. As such, this left GRI 3 to be considered.³
 
Applying GRI 3(a), the High Court Judge rejected the Respondents’ submission that “track-laying tractors” was the more specific description. In His Lordship’s view, the two competing subheadings were equally specific: “track-laying tractors” was specific as to the tractors’ physical design and mechanism, whereas “agricultural tractors” was equally specific as to the tractors’ intended purpose and function.
 
The analysis accordingly proceeded to GRI 3(b), where the High Court considered which characteristic imparted the essential character of the tractors. In this regard, the High Court Judge held that the application of GRI 3(b) must be guided primarily by the function and predominant use of the tractors, rather than by their design features alone. To hold otherwise, the High Court Judge observed, would elevate form over substance, reducing classification to a mere exercise in mechanical description⁴.
 
On the facts, the High Court Judge found that the tractors were manufactured and intended for agricultural purposes. Their track system was no more than a design feature intended to improve traction on soil and did not alter their essential identity as agricultural machinery. Accordingly, the High Court Judge held that the 1^st Respondent had erred in law by wrongly elevating a secondary attribute of the tractors, namely their mode of movement by tracks, over their essential agricultural purpose.
 
The High Court Judge went on to observe, in the alternative, that even if genuine uncertainty remained as to the tractors’ essential character under GRI 3(b), GRI 3(c) would still point to the same outcome, since the "agricultural tractors" subheadings occur later in numerical order than the "track-laying tractors" subheading.
 
On this basis, the High Court allowed the Appellant’s appeal, holding that the tractors ought properly to have been classified as “agricultural tractors” under tariff codes 8701.91.1000 and 8701.92.1000.
 
Conclusion
 
The decision in Jindar is a significant clarification of how GRI 3(a) and GRI 3(b) operate in practice, and appears to be the first reported Malaysian decision on the sequential, step-by-step approach to be taken in applying the GRI. It confirms that a subheading is not to be treated as “more specific”, and thereby automatically prevailing, simply because it matches the physical design or mechanism of the goods in question. A competing subheading that is equally specific as to the goods’ intended function stands on the same footing, and the tie between them cannot be resolved by GRI 3(a) alone. The classifying authority must move on to GRI 3(b) and resolve the matter by reference to the essential character of the goods, assessed by their predominant function and intended use.
 
For importers, the practical significance of the decision lies in the evidential weight it places on marketing materials, design intent and actual end-use in determining the proper classification of goods, wherever physical design and intended function compete as bases for classifying them under more than one tariff heading.
 
It should be noted that the High Court Judge’s decision in Jindar is currently under appeal before the Court of Appeal. It will be interesting to see how the Malaysian appellate courts interpret the application of GRI 3(a) and GRI 3(b), bearing in mind the significance of such a decision for future classification disputes involving goods with both distinct physical characteristics and specific functional purposes.
 
 
Case Note by Lim Koon Huan (Partner), Manshan Singh (Partner), Ho Pui Yan (Associate) and Lim Shu Yi (Associate) of the Trade and Customs Practice of Skrine.
 
 
 

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