2018 (4) TMI 855 - AT - Customs

Tribunal Upholds 10% Duty on Semi-Precious Stones

The Tribunal upheld the Revenue's contention to classify imported pre-form semi-precious stones as an intermediate stage between 'rough' and 'cut and ... Classification of goods - pre-forms of semi-precious stones - distinction between rough, pre-form and cut-and-polished gemstones - applicability of concessional exemption under Notification No. 12/2012 CUS - interpretation of amendment inserting entry No. 312A - tariff headings CTH 71031029 and CTH 71039990Classification of goods - pre-forms of semi-precious stones - tariff headings CTH 71031029 and CTH 71039990 - Pre-forms of semi-precious stones imported by the appellant are classifiable as 'semi-precious stones otherwise worked' under CTH 71039990 and are not to be treated as rough semi-precious stones under CTH 71031029. - HELD THAT: - The Tribunal accepted the factual and tariff analysis in the adjudicating order which found that a 'rough' semi-precious stone is the stage when the stone is mined, uncut and without regular form, whereas 'otherwise worked' covers stones that have undergone cutting or shaping. Pre-forms were held to be an intermediate stage possessing characteristics of provisional shaping and therefore fall within CTH 71039990. The appellant itself had classified the goods under that heading in its Bills of Entry, and the impugned order correctly treated pre-forms as distinct in character from rough stones. The Tribunal agreed with and adopted the reasoning that pre-forms cannot be equated to rough stones merely because further finishing is done post-importation. [Paras 13]Pre-forms are classifiable under CTH 71039990 as 'semi-precious stones otherwise worked' and not as rough stones.Applicability of concessional exemption under Notification No. 12/2012 CUS - interpretation of amendment inserting entry No. 312A - During the period 17.3.2012 to 28.2.2013, pre-forms of precious and semi-precious stones were not covered by any concessional rate under Notification No.12/2012 and attracted the tariff rate of duty (10%). - HELD THAT: - The Tribunal endorsed the finding that Notification No.12/2012 provided concessional treatment at S. No. 312 for rough semi-precious stones and at S. No. 313 for cut-and-polished coloured gemstones, but did not grant any concession to pre-forms. The subsequent amendment by Notification No.12/2013 (inserting entry No.312A with concessional rate for pre-forms effective 01.03.2013) demonstrated that prior to that amendment pre-forms attracted the general tariff rate. The Tribunal reasoned that if pre-forms had already been within the concession, there would have been no need to insert a separate entry; hence the lower authorities correctly demanded duty at the tariff rate for the relevant period. [Paras 13]For the period 17.3.2012 to 28.2.2013 pre-forms did not avail the concessional rate and were liable to the tariff rate of duty.Final Conclusion: The Tribunal dismissed the appeal, upholding the classification of the imported pre-forms as 'otherwise worked' semi-precious stones and the demand of differential duty at the tariff rate for the period prior to insertion of entry No. 312A; no interference with the findings of the lower authorities was warranted. Issues:Classification of imported semi-precious stones under Customs Tariff Heading (CTH) 71039990 for duty assessment at 2% under Notification No. 12/2012 - Cus dated 17.03.2012 vs. Revenue's contention of classification as intermediate stage between 'rough' and 'cut and polished' stones for duty assessment at 10%.Analysis:The appellant imported pre-form semi-precious stones and claimed classification under CTH 71039990 for a duty rate of 2% under Notification No. 12/2012. The Revenue sought to classify the product as an intermediate stage between 'rough' and 'cut and polished' stones, proposing a duty rate of 10%. The dispute revolved around whether the imported pre-forms should be considered fully eligible for exemption as rough semi-precious stones under the unamended notification. The lower authorities upheld the Revenue's view, citing the characteristics of the pre-forms falling under 'semi-precious stones otherwise worked' under CTH 71039990.The Tribunal analyzed the nature of the product, noting that pre-forms are an intermediate stage between 'rough' and 'cut and polished' stones. The Tribunal found that the pre-forms imported by the appellant did not fall under any concessional duty rate during the import period. The Tribunal held that the later amendment in Notification No. 12/2013 clarified the issue further, supporting the Revenue's classification of the pre-forms for duty assessment at the tariff rate of 10%.Based on the factual findings and the amendment in the notification, the Tribunal concluded that the appellant's claim that the product should be treated as rough gemstones was not sustainable. The Tribunal affirmed the lower authorities' decision, dismissing the appeal and upholding the duty assessment at the tariff rate of 10% on the imported pre-form semi-precious stones.