TaxTMI 
TaxTMI 
2026 (6) TMI 1479
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.... 30.06.2017. 2. The Company is equipped with cutting edge technology for processing of rough Diamond in to Cut and Polished Diamond at its factory premises located at 4th Floor, Southern Portion, Plot No. 2 & 3, The Puroshottam Ginning Mills Compound Khand, Surat- 395 008 and is one of the leading manufacturers and exporters of Cut and Polished Diamond. 2.2 Rough Diamond, a key raw material for its manufacturing activities, is essentially sourced by the company from international markets. Thus, the Applicant is regularly importing 'Natural Rough Diamonds' from the Global market. The consignments of 'Natural Rough Diamond' are either cleared at Precious Cargo Customs Clearance Center, Bharat Diamond Bourse, Bandra-Kurla Complex, Bandra (East), Mumbai or at Surat Diamond Bourse & Surat Hira Bourse located at Surat (Gujarat). 2.3 'Natural Rough Diamonds' is covered under Chapter 71 of the Section-XIV of the Harmonized System of Nomenclature (HSN) developed by World Customs Organization (WCO). Heading, sub-heading and tariff entry for the 'Natural Rough Diamond is tabulated hereunder: Table-I Heading Sub- heading Sub-heading dashes. D....
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....shed diamond. However, the process does not involve any activity amounting to 'simply sawn', 'cleaved' or 'bruted". In fact the technology is a non-invasive scanning process. Therefore, the natural rough diamond remains unworked and therefore, classifiable at CTH-7102 3100 and eligible for exemption under Sr. No. 345 of the Notification No. 50/2017-cus dated 30.06.2017. However, learning from the past experiences, the applicant made this application for advance ruling on the classification and eligibility under Sr. No. 345 of the Notification No. 50/207-cus dated 30.06.2017 to avoid future litigation, if any. 2.6 NATURE OF ACTIVITY (PROPOSED/PRESENT) ON WHICH ADVANCE RULING IS SOUGHT (6) The applicants propose to import Natural Rough Diamonds duly mapped (line, dots & numbers) on the surface using Sarine Galaxy(r) system. That means rough, uncut natural diamond has undergone a detailed analysis using advanced scanning and imaging technology to create a precise 3D map of its internal structure. This mapping process allows expert diamond cutters to plan the optimal way to cut and polish the stone to maximize its value, yield (the amount of usable diamond), a....
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....process; they are not permanent engravings. Instead, they are typically temporary marks designed to guide the manufacturing process and are removed during the polishing and cutting stages. In the light of the nature of marking, the classification of the such diamonds and applicability of the exemption notification are stated hereunder: 3.2 Statement containing the applicant's interpretation of law and/or facts, as the case may be, in respect of the aforesaid question(s) Classification of Natural Rough Diamond: Sub-heading 7102.31 covers: (i) Diamonds in their natural state, i.e., as they occur in deposits or extracts from the parent rock, sorted into lots or parcels; (ii) Diamond simply sawn, cleaved (by splitting along the natural plane of the layers), bruted or which have only a small number of polished facets (e.g. so-called windows, which are mostly made to allow expert examination of the internal characteristics of the rough diamonds), stones which have only a provisional shape and clearly have to be further worked; (iii) Tumbled diamonds of which the surface has been rendered glossy and shiny by chemical treatment, also known a chemi....
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....stone. A flowchart has been prepared for ready reference below: 4.2 Legal Framework Tariff Heading 7102 CTH 7102 covers diamonds "whether or not worked, but not mounted or set." However, the HSN Explanatory Notes clarify that rough diamonds under sub-heading 7102.31 are: "Diamonds in their natural state.". Any activity that alters the natural state-physically or commercially-removes the stone from this category. Therefore, once the diamonds go through scanning and planning phase and marked by laser, the same stop falling under the category of being in natural state. 4.4 Exemption Notification No. 50/2017 dated 30.06.2017 dated 30.06.2017. Sr Chapter Description of goods Std rate Integrated Condition No. Heading goods and service tax No. 345 71 Rough diamonds (industrial or non-industrial) Nil - - 350 71 Diamonds including lab grown diamonds-semi- processed, half- cut or broken 5% - - Sr. No. 345 grants NIL duty only to: "Rough diamonds (industrial or non-industrial)." Exemptions must be interpreted strictly, and the burden lies on the applican....
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...., the Notification No. 50/2017 dated 30.06.2017 was amended and Sr. No. 345A of the with a policy condition as mentioned therein was inserted. On the same line, since there is no clear notification Sr No. for the said goods and the nature of the goods are not in their natural state at the time of importation, this office opines that the benefit of Sr. No. 345 of the Notification No. 50/2017 dated 30.06.2017 should not be extended to such goods. For the reasons stated above, it is submitted that: ▪ Galaxy/DiaExpert-marked diamonds should not be considered as rough diamonds in their natural state. ▪ They have undergone processing and physical alteration. ▪ They do not appear to qualify for exemption under Sr. No. 345. ▪ They are appropriately assessable on merit duty against Sr. No. 350 of Notification No. 50/2017 dated 30.06.2017. The application for advance ruling should therefore be rejected, and the goods should be assessed on merit duty as per Sr. No. 350 of Notification No. 50/2017 dated 30.06.2017. Details of Hearing 5.1 A hearing was held on 13.02.2026 wherein the authorised representative appeared for th....
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....ay fixed for hearing or any other day to which the case is adjourned, the applicant or the Principal Commissioner or Commissioner does not appear in person or through an authorised representative when the application is called for hearing, the Authority may dispose of the application ex parte on merits : Provided that where an application has been disposed of under this rule and the applicant or the Principal Commissioner or Commissioner, as the case may be, applies within seven days of receipt of a copy of the order or advance ruling and the Authority is satisfied that there was sufficient cause for his non-appearance when the application was called for hearing, the Authority may, after allowing the opposite party a reasonable opportunity of being heard, make an order setting aside the ex parte order or advance ruling and restore the application for fresh hearing. It is observed that adequate opportunities of personal hearing were granted to the applicant. However, none appeared on behalf of the applicant despite the opportunities so afforded. Therefore, in terms of the powers conferred under the CAAR Regulations, 2021, the application is being taken up for decision on....
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....atural or Cultured Pearls, Precious or semi-precious stones, precious metals, metals clad with precious metal and articles thereof; imitation jewellery; coin 7102 Diamonds, whether or not worked, but not mounted or set. 7102 3100 - Non-industrial: -- Unworked or simply sawn, cleaved or bruted 7102 39 - -- Other 7102 3910 --- Diamond, cut or otherwise worked but not mounted or set 71023990 --- Other The relevant HSN explanatory notes are reproduced here: The heading covers unworked stones, and stones worked, e.g., by cleaving, sawing, bruting, tumbling, faceting, grinding, polishing, drilling, engraving (including cameos and intaglios), preparing as doublets, provided they are neither set nor mounted. Sub-heading 7102.31 and 7102.39: These subheadings cover natural diamonds which, because of their characteristic features (colour, clarity or purity;, transparency, etc.) are suitable for use by jewellers, goldsmiths or silversmiths. Sub-heading 7102.31 covers: (i) Diamonds in their natural state, i.e., as they occur in deposits or extracts from the parent rock, sorted into lots or parcels; ....
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....modity. Its commercial identity is that of a pre-processed stone, prepared for cutting. In view of the above, it is implied that the subject goods cannot be considered as diamond in their natural state. The jurisdictional Commissionerate commented that- Any activity that alters the natural state physically or commercially removes the stone from this category. Therefore, once the diamonds go through scanning and planning phase and marked by laser, the same stop falling under the category of being in natural state. Further, in the diamond industry; planning is the first step of processing. The markings are not incidental; they are functional manufacturing inputs. Once a diamond is marked for cutting, it has entered the production workflow, and cannot be treated as an untouched rough stone. I also concur with the above findings and reasoning that scanning and planning is an important part of obtaining a finished diamond from the raw diamonds. It is also observed that the term "engraving" is not defined in chapter 71. According to Oxford Dictionary the word "Engrave" means cut (a design) as lines on a metal plate for printing. Also, reference is taken from the HSN exp....