TaxTMI 
TaxTMI 
2025 (12) TMI 253
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....ll totalling to 5 kgs, valued about Rs. 2,15,60,883.27/- from a manufacture in Indonesia vide Bill of Entry No. 3892849 dated 10.05.2021 and classified them under CTH 7113 1910. The impugned goods, being covered under the ASEAN-India Foreign Trade Agreement (FTA) at Sl. No. 966 of Notification No. 46/2011-Cus dated 01.06.2011 which was further amended vide Notification No. 82/2018-Cus dated 31.12.2018, the appellant claimed exemption from payment of customs duty since the goods imported were of Indonesian origin and covered under FTA, as notified by the above notification. Thereafter, all documents including survey report and the preexport verification report issued by the surveyor of the Country of Origin of goods, namely, Republic of Indonesia were submitted along with uploading of Form-1 on 17.05.2021 as per Customs (Administration of Rules of Origin under Trade Agreement) Rules, 2020 to claim the benefit. The imported goods were not released by the Department. 3. Appellant had filed a Writ Petition No. 12802 of 2021 before the Hon'ble Telangana High Court. In this regard, on 14.06.2021 a letter was issued by the Directorate General of Foreign Trade (DGFT) clarifying that imp....
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....., gold pendants, under CTH 7108 1300 and rejected the classification under CTH 7113 1910 on the basis of the statement of Government approved valuer, their reports etc. The classification of imported goods can only be determined according to the terms of the headings and any relevant section or chapter notes in the Customs Import Tariff. However, instead of determining the classification according to the terms of the heading of the Customs tariff, the impugned order based on some statements re-determined the classification. 10. Learned Counsel for the appellant submits that they have classified the impugned goods under CTH 7113 1910, i.e., 'of precious metal, whether or not plated or clad with precious metal' as against the classification upheld by the Appellate Authority under CTH 7108 1300, i.e., 'gold in other semi-manufactured form'. The classification adopted by the appellant is consistent with past practices, prevalent market practices as well as COO certificate issued by the competent authority in terms of the FTA. The Learned Commissioner, rejected the said classification solely on the assumption that gold jewellery cannot be of 99.99% purity. The assumption is neither ....
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....shape and have a hook on top. The oval shaped articles have inscription of flower and symbol on one side and are capable of being hung. 14. Learned Counsel for the appellant submits that Department's contention that impugned goods are classifiable under 7108 and not under 7113 is not correct as the goods are not incomplete or unfinished jewellery and moreover, even if it is considered as incomplete or unfinished it will still be considered under 7113 as per explanatory note. Thus, even assuming but not admitting that it is semi-finished or incomplete jewellery, it would still be classifiable under 7113. 15. Learned Counsel for the appellant relied on Vishnu Narain and others Vs CCE, Kanpur [1987 (31) ELT 813 (Tribunal)], in which, it was held that the gold mohars and habib coins are in fully finished form with design and inscription on both sides and therefore, cannot fall within the definition of 'primary gold'. The subject pendants are in finished form, the same could not be classified under sub-chapter I & II, and necessarily fall under sub-chapter III which covers CTH 7113. The Department relied on notification no. 36/2019 dated 18.12.2019 issued by the DGFT to allege tha....
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....ricted'. The import under CTH 7113 became restricted only with effect from 12.07.2023. If such goods were already restricted under Notification No. 36, there would have been no occasion to issue Notification No. 19 again specifically imposing restriction goods falling under CTH 7113. Accordingly, the articles under CTH 7113 were not covered by Notification No. 36 on the date of import. 19. Learned Counsel for the appellant also submits that in the case of Kanak Exports, supra, it was held that DGFT does not have the power to formulate policy under Section 5 as Section 6(3) of the Foreign Trade (Development and Regulation) Act, 1992 does not delegate power to formulate policy under Section 5 to the DGFT. Section 5 does not empower the Central Government to amend the policy retrospectively. Thus, the amendment in the Notification No. 36 was clarificatory and cannot be implemented retrospectively. 20. Learned Counsel for the appellant also submits that the imposition of such restrictions amount to imposing non-tariff barriers in violation of the Indo-ASEAN FTA. Such non-tariff barriers are completely illegal and cannot be sustained as laid down by the judgment of Hon'ble Supreme....
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...., based on which the Department came to conclusion that the subject goods are not used as pendants as such and the goods are for the purpose of investment or manufacturing by melting them. 26. The Customs Tariff Heading (CTH) 7108 & 7113 has been described as follows: 7108 Tariff Item Description of goods Unit Rate of duty Standard Preferential Areas 7108 Gold (including gold plated with platinum) unwrought or in semi-manufactured forms, or in powder form - Non-monetary 7108 11 00 -- Powder Kg 10% - 7108 12 00 --Other unwrought forms Kg 10% - 7108 13 00 --Other semi-manufactured forms Kg 10% - 7108 20 00 -Monetary Kg 10% - 7113 Tariff Item Description of goods Unit Rate of duty Standard Preferential Areas 7113 Articles of jewellery and parts thereof, of precious metal or of metal clad with precious metal - Of precious metal whether or not plated or clad with precious metal: 7113 11 Of silver, whether or no....
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.... 2. (a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this Rule), presented unassembled or disassembled. (b) Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles of Rule 3. 3. When by application of Rule 2 (b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: (a) The heading which provides the most specific description ....
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....ible to be classified under CTH 7113 1910. 32. CTH 7108 described goods as 'Gold (including gold plated with platinum) unwrought or in semi-finished forms or in powder form'. This heading covers the various unwrought, semi-manufactured or powder form of gold or gold alloys. Whereas, subject goods/pendants are in finished condition. Hon'ble Madras High Court in the case of Jewels Magnum Vs Development Commissioner, MEPZ-SEZ, Chennai [2017 (349) ELT 214 (Mad)] defined the pendant as a piece of jewellery. The relevant para of the judgement as thus: 20. The learned counsel for the petitioner also brought to the notice of this Court a letter dated 12-3-2014 addressed by the Customs Department to the Assistant Development Commissioner of MEPZ, SEZ. In the letter dated 12-3-2014, it was stated as follows :- "As per the Oxford Dictionary, the term 'pendant' is described as a piece of jewellery that hangs from a chain worn round the neck and the medallion is a piece of jewellery in the shape of a medal, worn as a pendant. The description of these items by the Oxford English Dictionary substantiates the inclusiveness of medallions under the term pendants. It appears that....
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....t of interpretation of any provision in FTP or in the matter of classification of any item in the ITC (HS) or in the Handbook, the said question or doubt shall be referred to the DGFT, whose decision thereon shall be final and binding. The DGFT clarified vide letter dated 14.06.2021 that there are no restrictions on the goods imported under CTH 7113. The Department cannot go beyond clarification as per Hon'ble Supreme Court's decision. 37. As per Department, by subsequent Notification No. 22/2015-2021 dated 02.09.2021 an explanation in Notification No. 36/2019 dated 18.12.2019 was inserted to provide that "Expression, Gold in any form" includes gold in any form above 22 carats under Chapter 71 of ITC (HS) 2017, Schedule-I (Import Policy). Such import can be made only by nominated agencies as notified by RBI (in case of banks) and DGFT (in case of others). The same is clarificatory in nature, issued with a view to bring out the legislature's intent clearly and hence, the same has retrospective effect. The subject goods had been imported on 10.05.2021 and Notification No. 22/2021 has been issued on 02.09.2021 thereafter. 38. Hon'ble Karnataka High Court, in the case of CC, B....
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....th nominated agencies. Thus, from perusal of the provisions of Foreign Trade (Development and Regulation) Act, 1992 and the Foreign Trade Policy, it is evident that amendments to the Foreign Trade Policy can be made by the Central Government under Section 5 of the Act or by DGFT by issuing a Notification under Para 2.07 of the Foreign Trade Policy. The change in categorization from free to restricted can be made in respect of import of goods, only by an amendment and the same cannot be done by DGFT by issuing a Circular. 8. Now we may advert to the facts of the case. In the instant case, admittedly, the gold medallions and gold granules were imported on 3-7-2017. Thereafter the DGFT by Notification dated 25-8-2017 has restricted the import of gold from South Korea. The relevant extract of Notification dated 25-8-2017 reads as under : In exercise of powers conferred by Section 3(2) of the FT (D&R) Act, 1992 as amended from time to time, read with Paragraph 1.02 and 2.01 of the Foreign Trade Policy, 20152020, the Central Government hereby inserts Policy Condition No. 4 under chapter 71 of the ITC (HS) 2017, Schedule-I (Import Policy) to read as under : "Imp....
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....epartment's view, since, the subject goods are not in raw form and it is also important that the decision is in relation to Income Tax Act, 1961. Therefore, distinguishable. 41. Learned AR has also relied on Hon'ble Supreme Court decision in the case of S. Sundaram Pillai & Ors Vs. V.R. Pattabiraman and Ors [MANU/SC/0387/1985] and stated that where the plain and literal interpretation of a statutory provision produces a manifestly absurd and unjust result, the Court might modify the language used by the legislature or even do some violence to it so as to achieve the obvious intention of the legislature and produce rational construction and just results. This argument cannot be accepted by the Tribunal, since Tribunal is a creature of Statute and being a statutory body cannot go beyond the statute and settle principles of law. It is a case related to taxation. In this regard, it is very important to cite Hon'ble Supreme Court Constitutional Bench decision in the case of CC (Import), Mumbai Vs Dilip Kumar & Company [2018 (361) ELT 577 (SC)], which is very relevant against Department's argument. The relevant portion of the judgment is reproduced below: 61. This proposition....
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....... KUNDAN 2.5 g 5 g FINE GOLD FINE GOLD 999.9 0 3 ANJALI GOLD ANJALI GOLD UAE IHRE GOLE FINE GA ANJALI GOLD 20 5 ANJALIGOL APPELLANT'S PRODUCT PA203 PA203 Document 2 Government of India Ministry of Commerce & Industry Department of Commerce Directorate General of Foreign Trade Notification No. 36 /2015-2020 New Delhi, Dated: | December, 2019 Subject: Amendment in import policy conditions of gold and silver under Chapter 71 of ITC (HS), 2017, Schedule - | (Import Policy). S.O. (E): In exercise of powers conferred by Section 3 of FT (D&R) Act, 1992, read with paragraph 1.02 and 2.01 of the Foreign Trade Policy, 2015-2020, as amended from time to time, the Central Government hereby amends the import policy with conditions of gold in any form, other than monetary gold and silver in any form under Chapter 71 of ITC (HS), 2017, Schedule - I (Import Policy). Exim Code Item Description Policy Present Revised Policy Existing Policy Condition Revised Policy Condition 71061000 Powder Free Restricted Subject RBI Regulations to Import is allowed only through nominated agencies as notified by RBI (in case of banks) and DGFT (....