TaxTMI 
TaxTMI 
2021 (9) TMI 91
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....dents, suo motu impleaded the Director General of Foreign Trade, Department of Commerce, Ministry of Commerce and Industry, Government of India, New Delhi, as the 5th respondent, as this Court felt that the said authority would be necessary party to the present proceeding, since, the issue involved relates to Import policy as issued by the concerned authorities of the Government of India. 4. On 17.06.2021, this Court, by taking note of the clarification dt.14.06.2021, (i.e., after the first date of hearing by this Court), issued by the 5th respondent to the 2nd respondent regarding importability of gold pendants by the petitioner from Indonesia presented for clearance under Bill of Entry No.3892849, dt.10.05.2021, (whereunder it has been clarified that the said import does not contravene the Foreign Trade Policy 20152020 and other RBI regulations), passed interim order in I.A.No.1 of 2021, directing the respondents to release the goods of the petitioner by taking a bond from the petitioner covering the amount of preferential duty of concession, if so required, and also permitted the respondents to take any other proceedings against the petitioner, if permitted by law. 5. Upon....
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.... filed under the Customs Act, 1962, claiming concessional rate of duty of 0%, since, the goods imported were of Indonesian origin eligible for preferential treatment in the form of concessional rate of duty in terms of Free Trade Agreement (FTA) entered into by Union of India with Association of South East Asian Nation (ASEAN), which, inter alia, includes Republic of Indonesia. 13. The petitioner claims that since the imported goods were gold pendants, the petitioner classified the same as falling under Custom Tariff Trading No.7113 19 10. The petitioner further contends that, upon filing of Bill of Entry No.3892849 dt.10.05.2021 under the Customs Act for effecting clearance, a query was issued electronically on the EDA system on 11.05.2021 calling the petitioner herein to "justify the FTA claim, by uploading the gold procurement details"; and that the petitioner submitted its reply enclosing therewith copies of survey report and the pre-export verification report issued by the Surveyor of the country of origin of the goods, namely, Republic of Indonesia. 14. The petitioner contends that, in spite of the petitioner submitting its reply to the query raised by the respondents o....
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....fication under the classification of the goods as provided under Indian Tariff Code (ITC) governing the Export - Import Policy and also the Custom Tariff Act, which are based on Harmonized System of Nomenclature (HSN) followed worldwide for common classification of goods to avoid disputes on classification. 19. According to the petitioner, the ITC classification with Exim code 7108 relating to "non-monitory gold" covers only gold in powder form, gold in unwrought form and gold in semi-finished form. Since, the petitioner imported "gold pendants" in oval shape with a hook and ring for being worn with a chain, and a design of flower etched / imprinted on one side with the purity being specified on the other side, the subject goods are in a fully manufactured form and cannot be considered as falling under any of the three heads specified in Exim Code 7108 of ITC classification and CTH 7108. 20. The petitioner further contends that the subject goods under import are ready for being worn on person without being subjected to any further process, and thus, the same are rightly classifiable as "jewellery" falling under 7113 of the CTH. The petitioner would also contend that even as p....
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....ter XIV of the Customs Act, would come into operation and thus, the goods are liable for confiscation apart from other consequences. 26. Further, the respondents would contend that since the subject import by the petitioner is pure gold bar in oval shape, as per the panchanama drawn up with the help of the Government Assayer, and being non-monitory gold and restricted under the Import policy, the same would be liable for confiscation as per the judgment rendered by the Hon'ble Supreme Court in Union of India V/s. Raj Grow Impex 2021 SCC Online SC 429, rendered on 17.06.2021. 27. It is also contended that since upon adjudication it is found that the import by the petitioner would fall under category of "prohibited goods", the benefit of payment of redemption fine under Section 125(1) of the Customs Act would also not be applicable, and it is for the said reason that the goods under seizure cannot be directed to be released to the petitioner. 28. We have taken note of the above rival submissions. Consideration by the Court : 29. Before we deal with the specific facts of this case, as both the petitioner and the respondents are laying their claim under the Export - Impo....
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....-heading and Items are as under: a. "Heading", in respect of goods, means a description in list of this Schedule accompanied by a four-digit number and includes all subheadings of items the first four-digits of which correspond to that number; b. "Sub-heading", in respect of goods, means a description in the list of this Schedule accompanied by a six-digit number and includes all items the first six-digits of which correspond to that number; c. "Item Description" means a description of goods in the list of this schedule accompanying eight digit EXIM Code as given in the Column 2. 4. ..... 5. The column name and their descriptions are given in the table below : Column No. Column Name Column Description 1. EXIM Code First Column gives the ITC HS Code, also called as EXIM Code. 2. Item Description This Column contains the ITC (HS) description against the respective codes. Some adaptations have been made in the descriptions to comply with existing import policy. 3. Policy : This Column gives the Import Policy regime applicable on the item. Generally, the Import Policy regime is one of the following. Pro....
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....etitioner classified the subject goods as falling under entry 7113 of the policy which reads as under: "Articles of jewellery and parts thereof, of precious metal or of metal clad with precious metal." 37. A reading of the Main note No.9 of Chapter 71 as detailed in para 31 above, makes it clear that the heading 7113 dealing with 'articles of jewellery' would mean any small object of personal adornment and by way of example, various objects are mentioned, including 'pendants'. 38. In the import policy, the goods which are specified against the chapter heading of four digit of '7113' with suffix of sub-heading of '19' i.e. six digit deals with - "Articles of jewellery and parts thereof, of precious metal whether or not plated or clad with precious metal." After classification of the goods with its sub-heading, by suffixing eight digit code of '10' which gives the item description viz., 7113 19 10, the goods are specified as - "Articles of Jewellery and parts thereof, of gold, unstudded". 39. In the Bill of Entry filed by the petitioner for clearance of goods for Home consumption, the description of the goods was mentioned "Articles of jewellery....
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....test in our presence and in the presence of the said persons and given his report dated 05.06.2021 wherein he has certified that there are two hundred and fifty pieces of Oval Shape Gold Bars of 20 Grams each of 999 Purity totally weighing at 5000 Grams and valued at Rs. 2,52,50,000/-." 44. A reading of the panchanama whereunder the seizure has been affected would indicate that the subject goods were - i) bars of 20 grams each, ii) in Oval shape, iii) bearing a flower symbol imprinted/ etched on one side, and iv) on other side stamping of 'FINE GOLD, 999.9'. 45. From the above, it would show that the subject goods under import were subjected to refining and manufacturing process, resulting in getting an oval shape with flower symbol and purity being imprinted thereon. Thus, the subject goods were in fully worked and finished condition. 46. Exim Code and CTH 7108 and with sub-heading and item description 7108-12-00 under which heading the respondents seek to classify the subject import deals with 'Gold - unwrought'. 47. The term 'unwrought' as used in the heading means 'Gold' that is 'not worked upon' thereby meaning "not subjected to ....
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....articles of gold' would get covered and there was no need or necessity in the notification No. 36/2015-2020 to mention the amendment with reference to Exim Code and item description. 55. Secondly, in the notification, when the amendment is specified against a particular item with its Exim code, the same cannot be made applicable to other goods having different Exim code and item description, by widening the scope of notification to apply to other goods not specified therein. 56. Thus, the amendment of policy condition by notification No. 36/2015-2020, dt. 18.12.2019, is applicable only in relation to - Non monetary Gold - i) powder - Exim code 7108 1100, ii) other unwrought forms - Exim code 7108 1200, and iii) Other semi-manufactured forms - Exim code 7108 1300, and not to "finished" forms of gold like 'Articles of Jewellery' falling under Exim Code 7113 of the Import policy. 57. Though it is sought to be contended that the subject import being of gold with purity of 99.9% (considered as 'pure gold') cannot be considered as 'Articles of jewellery' as covered by Exim code 7113, because in order to make jewellery, the gold is required to be alloye....
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....ery with higher purity also, as otherwise there was no need to amend the para 4.32 and 6.01 of the Export policy as noted above. It cannot also be assumed that the Law Makers while amending the policy used the language loosely or superfluously. 62. The further contention of the respondents is that as each of the pendant is weighing 20 grams and in order to wear the same, one would require a chain weighing 60 to 80 grams, so the subject imported pendants cannot be considered as "small objects" as specified under Chapter Heading 7113. 63. In order to appreciate the above contention urged, we refer to Main Note No.9 of Chapter 71 of the Import policy, which reads as under - "For the purpose of heading 7113, the expression "articles of jewellery" means; (a) Any small objects of personal adornment (for example, rings, bracelets, necklaces, brooches, ear-rings, watch-chains, fobs, pendants, tie-pins, cuff-links, dress-studs, religious or other medals and insignia); and (b) ..... These articles may be combined or set, for example, with natural or cultured pearls, precious or semiprecious stones, synthetic or reconstructed precious, or semi preciou....
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....duct remains the same, since classification of goods for Import and Export under the Indian Trade classification (ITC) is by adopting Harmonized System (HS) developed by World Customs Organization, adopted by more than 140 countries in the world. The result of such adoption of HS in ITC would be that the six digit tariff code would be common and would be applicable even in India to goods being imported and exported. Thus, it would be absurd to assume that due to change in policy condition of Foreign Trade Policy of India, the classification of goods under the ITC(HS) and CTH would undergo a change. 70. Further, the claim of the respondents that import of Gold-'in any form', post issuance of Notification No. 36/2015-2020, dt. 18.12.2019 is restricted and only nominated agencies as authorized by DGFT are permitted to import, is belied by the fact of clearances affected at various ports by the importers freely, even as late as in April, 2021. 71. It is also to be seen that initially, on petitioner filing bill of entry by classifying the subject import as 'Articles of jewellery' liable to be assessed under the Customs Tariff Heading 7113 19 10, the respondents did not dispute the....
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....goods are liable to confiscation apart from other consequences." The Hon'ble Supreme Court, while dealing with the option to pay fine in lieu of confiscation under Section 125 of the Customs Act, 1962, held that - "79. As notice, the exercise of discretion is a critical and solemn exercise, to be undertaken rationally and cautiously and has to be guided by law; has to be according to the rules of reason and justice; and has to be based on relevant considerations. The quest has to be to find what is proper. Moreover, an authority acting under the Customs Act, when exercising discretion conferred by Section 125 thereof, has to ensure that such exercise is in furtherance of accomplishment of the purpose underlying conferment of such power. The purpose behind leaving such discretion with the Adjudicating Authority in relation to prohibited goods is, obviously, to ensure that all the pros and cons shall be weighed before taking a final decision for release or absolute confiscation of goods." 75. Before considering the above contention, it is to be noted that from the date of filing of Bill entry by the petitioner on 10.05.2021 till 05.06.2021 i.e., the date of seizu....
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....on of license granted always stood as 'prohibited' goods, which the authorities under the Customs Act, 1962, are empowered to confiscate or levy fine in lieu of confiscation. 79. In the facts of the present case, though it is contended that the subject import is in violation of Import policy condition being 'restricted', but this Court is of the view that the amendment made through Notification No. 36/2015-2020 dt. 18.12.2019 would apply only to the goods specified with their Heading, sub-heading and item description as mentioned against Exim code 7108 in the notification. Since, the goods imported by the petitioner are classifiable under Exim code 711319, the amendment made to the policy condition from 'free' to 'restricted' would not be applicable. If the import of goods is not 'restricted' and is permitted as 'free', the subject import cannot be considered as 'prohibited' goods liable for confiscation. 80. Even the reliance placed by the respondents on the decision of the Karnataka High Court in the case of petitioner's sister concern has no relevance in deciding the issue on hand. The Karnataka High Court in the said case was dealing with gold granules and medallions impo....