TaxTMI 
TaxTMI 
2024 (4) TMI 1387
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....t: 2.1 The Applicant is engaged in the business of Engineering, Procurement, and Construction ('EPC') whereby it acts as an EPC contractor and executes various projects pursuant to arrangements with public and private sector undertakings, local bodies as well as the State and Union government(s). 2.2 The Applicant has been appointed as an EPC contractor for the construction of 108 feet tall statue of Shree Adi Shankaracharya called as the 'Statue of Oneness' at Omkareshwar in Madhya Pradesh. The contract for the same is awarded by Madhya Pradesh State Tourism Development Corporation Limited ('MPSTDCL') for an amount of INR 158.5 crores approx. The copy of the contract awarded by MPSTDCL and the letter of acceptance are enclosed as Exhibit 1 and Exhibit 2 to the CAAR-1 application respectively. 2.3 Statue of Oneness is a towering monument of spiritual enlightenment. It will rest atop a 54ft pedestal (made up of concrete cement) supported by a 27-ft lotus petal base, creating an impressive sight to behold. The statue will comprise of a base structure, and including potli (stick), kamandal and rudraksh mala made of steel with an outer surface of bronze....
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....ng and import into India. In fact, substantial activities will be undertaken in India for construction of the eventual statue. The illustrative image of the bronze sheets i.e. BCP proposed to be imported by the Applicant are attached as Exhibit 4 to the CAAR-1 application. The aforesaid bronze sheets and structural steel items will then be used by the Applicant in fabrication and construction of the entire statue; the process carried out by the Applicant for construction of the statue as a whole in India is explained as under: i. Civil foundation - Preparation of civil foundation will involve excavation, building foundation from steel, curing of concrete etc. ii. Carving of stone lotus petals - This involves roughing of the stones, shaping the stones using multiple instruments and providing finishing for smooth surfaces iii. Erection of steel super structures on the foundation and lotus - This involves cutting, fixing, welding, painting and erection of the steel structures into primary and secondary trusses so as to construct the inner skeletal structure of the statue which gives it strength and structural integrity and essential formative character. ....
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....o be imported should be classified under the tariff entry 74093900 or 97039010 or 83062110 of the Custom Tariff Act, 1975" 3. Applicant's Interpretation of Law: 3.1 As discussed above, the Applicant in the present case will import BCP that will be used for construction, fabrication and commissioning of the Statue of Oneness. The statue will have a base of 54 feet pedestal supported by 27 feet lotus petal base carved out of stone, the BCP imported will be affixed, assembled onto the steel super structures that will be cut, fixed and welded to form the base skeletal structure of the statue, which will then be further subjected to painting and finishing. In simple terms, the BCP imported by the Applicant are merely formed/ shaped bronze sheets that amongst other items be used in the construction of the statue. 3.2 Rule 1 of the General Rules for the Interpretation of Import Tariff ('GRI') provides that, classification of goods shall be determined according to the terms of the headings and any relative Section or Chapter Notes. If such headings or notes do not otherwise require, then the classification is to be determined in accordance with the other rules of GRI. ....
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....es that : "This heading covers original sculptures and statuary, ancient or modern. They may be in any material (stone, reconstituted stone, terra-cotta, wood, ivory, metal, wax, etc.) in the round, in relief or intaglio (statute, busts, figurines, groups, representations of animals, etc., including reliefs for architectural purposes). " 3.10 Further, WCO explanatory notes defines the broad process used in creation of statue by an artist, which reads as under: "These works may be produced by various processes including the following: in one of these the artist craves the work directly from hard materials; in another the artist models soft materials into figures; these are then cast in bronze or in plaster, or are fired or otherwise hardened, or they may be reproduced by the artist in marble or in other hard material. " "He begins by roughing out his idea as a model, also known as a maquette, (usually on a reduced scale) in clay or other plastic material; with this as a basis, he then models a "clay form". ... ....... used either as a model for the execution of the work in stone or wood, or for preparing moulds for casting in metal or wax." 3.11 Upon....
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....ary A sculpture is a work of art that is produced by carving or shaping stone, wood, clay, or other materials [https://www.collinsdictionary.com/dictionary/english/sculpture] Merriam webster The action or art of processing (as by carving, modeling, or welding) plastic or hard materials into works of art [https://www.merriam-webster.com/dictionary/sculpture] Cambridge dictionary The art of forming solid objects that represent a thing, person, idea, etc. out of a material such as wood, clay, metal, or stone, or an object made in this way [https://dictionary.cambridge.org/dictionary/english/sculpture] On reading of the above definition, it can be construed that sculpture or statuary is a free- standing statue in which the realistic, full-length figures of persons or animals are carved or cast in a durable material such as wood, metal, or stone. In other words, Chapter heading 9703 essentially applies to a statue as a work of an artist on sculpture which is at, or near to, completion stage. 3.16 In the present case, the Applicant is also importing varied items such as steel structures, BCP as bronze sheets other accessories. It is submitted that the steel structure....
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....ch as civil works, foundation base, cutting and fixing of steel structures, welding of BCP and affixation on steel structures, painting, finishing work, etc.) as discussed in para 1.9 will be required to be undertaken by the Applicant in India. Accordingly, Rule 2(a) of GRI should not be applicable to the facts of the current case to invoke Chapter heading 9703 by treating BCP imported as a part of incomplete an unfinished statue. 3.20 The Applicant further submits to execute the overall contract provided by MPSTDCL for the construction of Statue of Oneness which involves various cost components including but not limited to structural steel, plant and machinery, stone works, Mechanical Electrical and Plumbing ('MEP') works, concrete/ reinforcement works, etc. BCP as a cost component is approx. 26% of the overall project cost (infact the civil and BCP components for the project are almost equivalent). Thus, even in monetary terms BCP does not represent a significant proportion of the cost of the project. Thus, it is hereby submitted that import of BCP cannot be construed and equated with an unfinished or unassembled or incomplete statue by application of Rule 2(a) of GRI.....
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....ssembly with structural steel frames through welding, painting, finishing, etc. by deploying skilled workforce, heavy machineries, cranes, etc. will be required to undertaken over 3-4 months (excluding the foundational civil structure). Thus, it is abundantly clear that Rule 2(a) of GRI is not applicable in the current scenario and accordingly BCP imported are rightly classifiable under Chapter heading 7409 as bronze sheet and cannot by any stretch of imagination be classified under Chapter heading 9703 as sculpture or statue. 3.26 Reliance in this regard is placed on the judgement in case of Commissioner of Customs, New Delhi versus Sony India Ltd [2008 (9) TMI 19 - Supreme Court] wherein the Supreme Court has held that the components being imported should not be subject to further processing for the applicability of Rule 2(a) of GRI. The relevant extract of the judgement is reproduced below: " ... to the conclusion that in view of Section Note 2 to Section XVI Rule 2 (a) would not apply and confirmed the import of goods as components. While interpreting Explanatory Note to Rule 2(a), the Tribunal had held that this Rule would apply only when the imported articles pres....
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....e the castings have the 'essential character' of products under Chapters 84, 85 or 87, such 'castings' should be deprived of their most appropriate and only classification. Such an interpretation of Rule 2(a) is untenable. It will create clashes within different headings and disturb their harmony." 3.31 Given the above factual and technical submissions, the BCP imported by the Applicant being bronze sheets to be used for construction of the statue would merit classification under tariff entry 74093900 and cannot be classified as sculpture or statue under tariff entry 97039010 by invoking Rule 2(a) of GRI. 3.32 Classification under tariff entry 83062110: As submitted above, the Applicant had also similar imported BCP for execution of Statue of Unity project and had classified the same under tariff entry 83062110 as 'Statuettes' in the past. 3.33 It is submitted that WCO notes provide the characteristics for the classification of the goods falling under Chapter heading 8306. The key characteristics of goods classifiable under the aforesaid heading include statuettes and other ornaments plated with precious metal. According to the explanatory notes, the group ....
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.... it is evidently clear that it is not a situation where a complete statue is imported (whether in an assembled or disassembled form). 3.37 Without prejudice to our above submission that statuettes covers small decorative items and not large statue as the one under consideration; qualification under Chapter heading 8306 would only merit deliberation upon application of Rule 2(a) of GRI. As already discussed above, Rule 2(a) will not have any application as the items imported do not have an essential characteristic of a finished product (statuettes in the current situation). 3.38 Further, it has already been discussed in the ruling of M/s CS India Steel Private Limited that classification should be determined based on the actual condition of the goods at the point of assessment and not based on the anticipated future use. Thus, BCP imported for construction of Statue of Oneness should not be classified under tariff entry 83062110 as Statuettes. 3.39 In the light of the above, the applicant has sought Ruling from the Authority as below: "Whether Bronze Cladding Panels (BCP) to be imported should be classified under the tariff entry 74093900 or 97039010 or 83062110 of....
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....halingam, Head Exim (L&T), Sh. B. Prakash appeared on behalf of the applicant for the hearing. The representative pleaded that the subject goods merit classification under Heading 7409 and more particularly under tariff entry 74093900 (other). They however agreed to clarify that whether the subject goods are a part of computer aided design of a broader statue of Shree Adi Shankaracharya. Meanwhile during pending application, the goods were already imported and the subject B/E was provisionally assessed. The photographs of the subject goods were sought from the applicant which was submitted by them to this office. The phonographs were examined. On being specifically asked that these photograph appeared to have certain shapes and designs they contended that they are sheets itself and are serially numbered. On being asked whether 290 such pieces of subject imported goods could be assembled at random basis they affirmed in negative. As against the additional submission (filed online on 27/02/2024), the department sought some time to submit the rebuttal which was granted. The applicants are also given time to submit the rebuttal if any. 5.3 The applicant has submitted additional subm....
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....ding one- tenth of the width; - of a shape other than rectangular or square, of any size, provided that they do not assume the character of articles or products of other headings. Headings for plates, sheets, strip, and foil apply, inter alia, to plates, sheets, strip, and foil with patterns (for example, grooves, ribs, chequers, tears, buttons, lozenges) and to such products which have been perforated, corrugated, polished or coated, provided that they do not thereby assume the character of articles or products of other headings. The relevant portion of the HSN explanatory notes is also reproduced for ease of reference: This heading covers the products defined in Note 9 (d) to Section XV when of a thickness exceeding 0.15 mm. Plates and sheets are usually obtained by the hot- or cold-rolling of certain products of heading 7403; copper strip may be rolled, or obtained by slitting sheets. All such goods remain in the heading if worked (e.g., cut to shape, perforated, corrugated, ribbed, channelled, polished, coated, embossed or rounded at the edges) provided they do not thereby assume the character of articles or of products of other headings (....
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....ly for decoration, e.g., in homes, Offices, assembly rooms, places of religious worship, gardens. It should be noted that the group does not include articles of more specific headings of the Nomenclature, even if those articles are suited by their nature or finish as ornaments. The group covers articles which have no utility value but are wholly ornamental, and articles whose only usefulness is to contain or support other decorative articles or to add to their decorative effect, for example: (1) Busts, statuettes and other decorative figures; ornaments (including those forming parts of clock sets) for mantelpieces, shelves, etc. (animals, symbolic or allegorical figures, etc.); sporting or art trophies (cups, etc.); wall ornaments incorporating fittings for hanging (plaques, trays, plates, medallions other than those for personal adornment); artificial flowers, rosettes and similar ornamental goods of cast or forged metal (usually of wrought iron); knick-knacks for shelves or domestic display cabinets. (2) Articles for religious use such as reliquaries, chalices, ciboriums, monstrances or Crucifixes. (3) Table-bowls, vases, pots, jardini....
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....uette, (usually on a reduced scale) in clay or other plastic material; with this as a basis, he then models a "clay form". This "clay form" is seldom sold, but is usually destroyed after it has served for moulding a very limited number of copies decided in advance by the artist, or it is placed in a museum for study purposes. These reproductions include, firstly, the "plaster model" produced directly from the "clay form". This "plaster model" is used either as a model for the execution of the work in stone or wood, or for preparing moulds for casting in metal or wax. The same sculpture may therefore be reproduced as two or three "copies" in marble, wood, wax, bronze, etc., and a few in terra-cotta or in plaster. Not only the preliminary model, but also the "clay form", the "plaster model" and these "copies" constitute original works of the artist; the copies are in fact never quite identical as the artist has intervened at each stage with additional modelling, corrections to casts, and for the patina imparted to each article. Only rarely does the total number of replicas exceed twelve. The heading therefore covers not only the original models made by the sculptor ....
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....oes not have any other utility other than in assembling the same to complete the statue of Shree Adi Shankaracharya called as 'Statue of Oneness'. 7.3.2 On going through the above details and process involved, it is apparent that the subject goods are work of art under Chapter 97 and more particularly under Heading 9703 as a sculpture. 7.3.3 It therefore appears that original sculpture and statuary in any material are covered under the scope of Chapter heading 9703 and more particularly under tariff entry 97039010 if they are made of metal and does not exceed the age of 100 years. 8.1 Classification of imported goods is governed by the principles set forth in the General Rules of Interpretation (GRI). Rule 1 of GRI provides that for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not other-wise require, according to the following provisions [that is, GRIs 2 to 6]. This is the first Rule to be considered in classifying any product. In other words, if the goods to be classified are covered by the words in a heading and the Section and Chapter No....
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....e carved, modeled, molded, cast, wrought, welded, sewn, assembled, or otherwise shaped and combined. 8.4 In the present scenario, from the image of the BCP it is evident that they are not sheets or plate as claimed by the applicants in terms of Chapter Note 9(d) of Chapter 74. Rather, the subject goods are art work in form of sculpture of Statue of Shree Adi Shankaracharya made through Computer Aided Design, having a relief on surface which is carefully shaped, foam modelled, carved, casted, sand mounded, cut into pieces with no utility other than assembling the same to complete and to give shape of 'Statue of Oneness'. The said goods are imported in unassembled form and they are marked and numbered in a way that the assembly of such parts are pre-defined and pre-determined and clearly fall under the meaning and scope of sculpture. During the course of personal hearing the technical person/engineer (representative) accepted that these are a kind of disassembled part of the subject final goods i.e. Statue of Oneness. It is aptly clear that such goods have no other use but to be a specific located part of the 'Statue of Oneness'. Thus it can be safely assumed that ....
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....erwise classifiable under CTH 9703 in such tariff entry also the IGST Rate is 12% and therefore, there will be no revenue implication. Though alternate classification suggested by the appellant appears to be prima facie correct but since we have already taken a view that Revenue's claim of classification under CTH 8311 is absolutely incorrect. And it is nobody's case in the Show Cause Notice that the goods are classified under CTH 9703 we are not addressing this issue. However, since the Revenue's claim of classification is held to be incorrect the entire proceeding of the Revenue is quashed. The impugned order is set aside. The appeal is allowed with consequential relief, if any arise, in accordance with law. 9.3 In view of the above, I find that the applicant itself made an alternate submission that the goods Bronze Cladding Panel (BCP) are otherwise classifiable under CTH 9703 and the Rule 2(a) of the GRI is squarely applicable and that the Hon'ble CESTAT approved the same. However the proceeding before Hon'ble CESTAT was quashed on different ground other than that of merit. I find that GRI 2 (a) provides that complete or finished articles presented unasse....