Whether the imported gold mountings and gold findings are "gold in any form" are covered under the Notification No. 62/2004-Cus. and hence, eligible for this exemption notification, or as contended by the department, are items of jewellery or its parts, e

PJ/Case Laws/2012-13/1146

Case:- COMMISSIONER OF CUSTOMS, JAIPUR VS V.K. INTERNATIONAL
Citation: - 2012 (279) E.L.T. 441 (Tri-Del)
Issue: Whether the imported gold mountings and gold findings are "gold in any form" are covered under the Notification No. 62/2004-Cus. and hence, eligible for this exemption notification, or as contended by the department, are items of jewellery or its parts, excluded from the purview of this notification.

Brief fact: -The respondents imported mountings and findings of Gold jewellery and claimed the benefit of duty exemption under Notification No. 62/2004-Cus., dated 12-5- 04. This exemption notification prescribes concessional rate of duty for –
(a) Gold bars other than tola bars bearing manufacturers/refineries engraved serial number and weight expressed in metric units, gold coins
(b) Gold in any form other than those specified in (a) above including liquid gold and tola bars
(c) Silver in any form.
Explanation to this notification explains that for the purpose of this notification, the expression "gold in any form" or "silver in any form" shall include in medallions and coins but shall not include jewellery made of gold or silver as the case may be and foreign currency coins.
Appellant Contention: - The Learned Senior Departmental Representative, assailed the impugned orders-in-original passed by the Commissioner by reiterating the grounds of appeal in the Revenue's appeal and emphasized that scrutiny of the bills of entry and invoices reveals that the goods imported and cleared as gold mountings were in fact semi-finished gold jewellery in the shape of pendants, necklace, rings, ear rings and bracelets and the same were complete in all respect except for setting of gems and such goods would be classifiable under sub-heading 7113 19 10 as unstudded/semifinished gold jewellery, that findings are nothing, but part of the jewellery which are also classifiable under Heading 7113, and that the gold mountings and findings being semi-finished jewellery and part of the jewellery respectively, are out of the purview of Notification No. 62/2004-Cus., as the Explanation to this notification specifically excludes the gold or silver jewellery from the purview of this notification. He also pleaded that the Circular No. 40 /2004-Cus., dated 4-6-2004 is only in the nature of clarification to the Notification No. 62/2004-Cus., dated 12-5-2004 and the same cannot extend the scope of the notification. He, therefore, pleaded that the impugned "orders-in- original passed by the Commissioners are not correct.
Respondent Contention:- The Respondents, in their oral submissions as well as written submissions submitted later, pleaded that the gold mountings and-findings are not jewellery, that the same are nothing but structures of unfinished articles, that the Board in its Circular No. 40/2004-Cus., dated 4-6-2004 had clarified that findings and mountings of gold would be covered by the exemption Notification No. 62/2004-Cus., dated 12-5-2004 so long as they are classified under 71 of the Customs Tariff, that the same clarification has been given by the Board in its Circular No. 13/2006-Cus., dated 29-3-2006, wherein it has been clarified by the Board that the findings and mountings of gold and silver are covered within the scope of Sl. No. 2 and 3 respectively of the Notification No. 62/2004-Cus., dated 12-5-2004 and the concessional rate of import duty may be extended to these items, that these instructions of the Board are binding on the department, that the duty involved in each of these cases is less than Rs 5,00,000/- while as per the instruction No. 390/Misc./163/2010-JC dated 17-8-11 issued by the Board regarding litigation policy, no appeal to the Tribunal is to be filed in the cases where the duty involved' is less than Rs. 5,00,000/-, that in this regard they rely upon the judgment of Hon'ble Delhi High Court in the case of Commissioner of Income Tax-, Delhi-Ill v. M/s. P.S. Jain and Co. reported in ITR 179/1991, wherein the Hon'ble High Court taking note of the fact that the amount involved being Rs. 52,565/-, did not proceed with the reference in view of the Circular of Central Board of Direct Taxes and that in view of this, there is no merit in the review appeals filed by the Revenue.
Reasoning of Judgment:In terms of Rule 2(a) of the General Rules of Interpretation of Schedule to the Customs Tariff Act any reference in a heading to an article shall be taken to include a reference to that article in complete or finished form, provided that as presented the incomplete or unfinished article has the essential character of the complete or finished article. Applying this rule of interpretation of tariff, the gold mountings, which are nothing but unfinished jewellery, in which either as such or after some scratching, the gems can be set to obtain the fully finished jewellery, have to be classified as gold jewellery under sub-heading 7113 19 10 of the Tariff. When for the purpose of classification the goods are classified as gold jewellery, for the purpose of availing exemption under Notification No. 62/2004-Cus., the same cannot be treated as something other than gold jewellery. It is therefore, hold that the gold mountings, in question, have to be treated as jewellery and, hence, the same would not be eligible for Notification No. 62 /2004-Cus. And the Commissioner's order extending the benefit of this notification by treating the gold mountings as jewellery is not sustainable.

The Board under Section 151(a) of the Customs Act, can issue clarifications with regard to classification of a product or scope of an exemption notification, by such clarifications, the Board cannot expand the scope of an exemption notification issued by the Central Government under Section 25(1) of the Custom Act, 1962 as the Board is after all an office, subordinate to the Government of India. Constitutional Bench of the Hon'ble Supreme Court in the case of C.C.E., Bolpur v. Ratan Melting & Wire Industries reported in 2008 (231) E.L.T. (S.C.) = 2008 (12) S.T.R. 416 (S.C.) has held that Circulars of the Board are binding only when the same are in accordance with the law. In this regard in para 6 of the above-mentioned judgment, the Apex Court has observed as under: - "Circulars and Instructions issued by the Board are no doubt binding in law on the authorities under the respective statutes, but when the Supreme Court or the High Court declares a law on the questions arisen for instruction, it would not be appropriate for the Court to direct that the Circulars should be given effect to not the view expressed in a decision of the Court or the High Court. So far as the clarifications and instructions issued by the Central Government and the State Government are concerned, they represent merely their understanding of the statutory provisions. They are not binding upon the Courts. It is for the Court to declare what the particular provisions of the statute says and it is not for the executive.

In this group of appeals, as discussed above, the gold mountings and findings being items as jewellery are outside the purview of Notification No. 62 /2004-C.E. and, hence, the Board's Circulars No. 40/2004-Cus., dated 4-6-04 and 13/2006-Cus., dated 29-3-06 clarifying that the gold and silver mountings and findings are covered by the Notification No. 62 /2004-Cus. are contrary to the provisions of law and, hence, have no validity.

In view of the above discussion, the impugned orders-in-original passed by the Commissioner are set aside and the duty demands raised against the respondents are confirmed along with interest under Section 28AB of Customs Act, 1962. The Revenue's appeals are allowed.

Decision: -Appeal allowed

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PJ/Case Laws/2012-13/1146

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