2011(05)LCX0195

BEFORE THE GOVERNMENT OF INDIA, MINISTRY OF FINANCE

Shri D.P. Singh, Joint Secretary

IN RE : Golden Peacock Overseas Ltd.

Order No. 88/2011-Cus., dated 18-5-2011 in F.No. 371/43/DBK/2009-RA

Cases Quoted -

Collector v. Wood Polymers Ltd. - 1997(12)LCX0034 Eq 1998 (097) ELT 0193 (S.C.) - Referred [Para 4.9]

Commissioner v. Vicco Laboratories -- 2004(12)LCX0069 Eq 2005 (179) ELT 0017 (S.C.) - Referred [Para 4.8]

Hindustan Ferodo Ltd. v. Collector - 1996(12)LCX0029 Eq 1997 (089) ELT 0016 (S.C.) - Referred [Para 4.7]

Jyoti Industries v. Commissioner - 1999(07)LCX0172 Eq 2000 (115) ELT 0559 (Tribunal) - Referred [Para 4.10]

Speedway Rubber v. Commissioner - 2000 (143) ELT 0008 (S.C.) - Referred [Para 4.10]

UOI v: Garware Nylons Ltd. - 1997 (087) ELT 0012 (S.C.) - Referred [Para 4.8]

Advocated By -

S/Shri, Ranjeet Kumar Singh and Dharmendra
Kumar Singh, Considtants, for the Assessee.

[Order]. -

This revisions application has been filed by M/s. Golden peacock Overseas Ltd., Jamnagar, against the Orders-in-Appeal No. 257/CWC/CFS,D'NODE 2009, passed by the Commissioner of Customs (Appeals), Mumbai-II with respect to Orders-in-Original No. 65/2008/ADC(MS), passed by the Additional Commissioner of Customs, JNCH, Nhava Sheva.


2. Brief facts of the case are that the applicants filed Shipping Bill Nos. 6200532/8-4-2008 and 6213542/13-4-2008 for export of the goods declaring the same as Brass Builder Hardware under Custom Tariff Heading (CTH) 83024900 under drawback schedule Sr. No. 830201A for Drawback @ 18% of F.O.B. with a value cap of Rs. 135/kg. The applicants were issued a Show Cause Notice. The original authority in their Order-in-Original held that the goods are in the form of hollow cylindrical screws with threading inside at one end, four slits/cuts at other end, and embossed outer surface merits classification under CTH 7415 and eligible for Drawback @ of 2.2% with a value cap of 10 Rs./kg. The original authority further imposed fine of Rs. 1,00,000/- and Penalty of Rs. 1,00,000 on the applicant. The said Orders-in-Original was challenged by the Applicant before the Commissioner (Appeals), who rejected the same.


3. Aggrieved by the impugned Order-in-Appeal, the applicant has filed Revision Application before the Central Govt, mainly on the following grounds :

3.1 There is no finding in the Order-in-Original and /or even an allega-tion of violation of any act, omission, revenue implication and/or mala fide on the part of applicant that would attract confiscation and penal provision under Customs Act, 1962. Mere allegation of wrong classification without proving intentional mala fide cannot lead to imposition of penalty,

3.2 CTH 83.02 uses the words 'suitable for' which means 'suitable for use for'. In other words, use of an article is a necessary ingredients for classification under CTH 83.02. Chapter 83 deals with the miscellaneous articles of Base Metals. "Brass Anchors" made of metal claimed to be wall mounting used for placing T.V., Music System, Computer System, etc.. Once, the suitability is admitted, CTH 83.02 would automatically come into play. CTH 7415 reading as 'NAILS, TACKS, DRAWING PINS, STAPLES (OTHER THAN THOSE OF HEADING 8305) AND SIMILAR ARTICLES, OF COPPER OR OF IRON AND STEEL WITH HEAD OF COPPER; SCREWS, BOLTS, NUTS, SCREW HOOKS, RIVETS, COTTERS, COTTER-PINS, WASHERS (INCLUDING SPRING WASHERS) AND SIMILAR ARTICLES, OF COPPER' is a general entry whereas heading 8302 is more specific. Further, a special shape and design has been given to the product for making it suitable for a specific purpose. Therefore, "Brass Anchors" made of metal claimed to be wall mounting used for placing T.V., Music System, Computer System, etc. are correctly classifiable under sub-heading 8302 with sr. no. 8302 of Drawback Schedule.

3.3 The original authority has confirmed the confiscation under Section 113(ii) instead of proposed Section 113(i) under the impugned SCN. As no such action is provided under 113(ii) of the Customs Act, 1962, confiscation should be treated as null and void.


4. The applicant through their advocate submitted additional submis-sions vide letter dated 24-4-2011, wherein, they mainly stated that:

4.1 That the female screw is defined as cylinder with helical groove or thread ruing along with inner surface. However, in our case the Brass Anchors having partial threads on the inner surface & knurled outer surface with four slits/cuts with embroidery work on the outer surfaces. It is made of solid brass and has no contents of iron or any other material. The slits/cuts act like leaves open up outward in the wall when a screw is screwed in to it. Photographs and samples of Brass Anchors and Female Screw is enclosed for your kind reference and marked as Annexure-"A".

4.2 It is also submits that the female screw can be fastened with the male screw independently without any support but in case of Brass Anchors male screw can be only fastened when the Brass Anchors is situated in a wall due to its side cuts made on the same, as without situating the same in wall. Brass anchors cannot be made an grip with the male screw and this specific nature of this product is made the same different from the general female screw.

4.3 That the female screw cannot be use for fastening the house hold ar-ticles with the male screw as the same (female screw) cannot make a grip with the wall and other things where it situated in this situation the Brass Anchors can only be used. That the lower authority has clearly mentioned in their Order-In-Original that (para 4 of OIO) that the export goods have been introduced recently in the market replace teak wood pins/pieces hitherto used, for providing extra grip to screw/bolts. Hence, the said finding of the Lower authority clearly established the specific use of the same instead of general use.

4.4 Brass Anchor is a mounting having partial threads on the inner surface & knurled outer surface with four slits/cuts. It is made of solid brass and has no contents of iron or any other material. The slits/cuts act like leaves open up outward in the wall when a screw is screwed in to it. The Anchor without threads on its outer surface is locked in to the wall/concrete with a tool and hammer into the hole already made and gives good holding to the item to be Anchored.

4.5 "Anchors" cannot be put to any general use as alleged by both the lower authority. Intact, the Anchors have the specific end use of support or mounting used the construction of Building and can be used to serve certain specific end use only, based on the specific requirements of the party placing the order.

4.6 Chapter Heading 8302 covers the following :

Base metal mountings, fittings and similar articles suitable for furniture, doors, staircases, windows, blinds, coachwork, saddler, trunks, chests, caskets or like base metal hat-racks, hat-pegs, brackets and similar fix-tures; castors with mountings of base metal; automatic door closers of base metal.

Chapter Heading 7415 covers the following :

Nails, tacks, drawing pins, staples (other than those of heading 8305) and similar articles, of copper or of iron or steel with heads of copper; screws, bolts, nuts, screw hooks, rivets, cotters, cotter-pins, washers(including spring washers) and similar articles, of copper. We have classified the said item under CH 8302 since its specifically covers this items which is used for buildings and as per interpretative rules the heading which provides the most specific description shall be preferred to the heading providing a general description. Accordingly, the description of CH 8302 being a specific one was preferred to CTH 7415 which gives a general description.

4.7 It is settled law that onus of establishing that an article falls in a par-ticular tariff lay upon the revenue-even if evidence by Assessee is rejected, the appeal of Assessee has to be allowed (as Revenue has not discharged the onus of establishing a classification) as held by Supreme Court in Hindustan Ferodo Ltd. v. C.C.E. [1997 (089) ELT 16].

4.8 Same view has been held by Three Member Bench of Supreme Court in C.C.E. v. Vicco Laboratories [2005 (179) ELT 17] and in UOI v. Garware Nylons Ltd. [1997 (087) ELT 12], the burden of proof for classification lies on the Department.

4.9 That both the lower authorities have clearly erred in following the basic principles of Classification as brought out by the "Rules of Interpretation of Tariff". These are also termed as 'General Interpretative Rules' (GIR). In C.C.E. v. Wood Polymers Ltd. [1998 (097) ELT 193] it was held that classification should be done as per rule of interpretation contained in the tariff and not as per the trade parlance and commercial understanding.

4.10 In Rule 3(a) of the Interpretative Rules it has been brought out that heading which provides the most specific description shall be preferred to heading providing a more general description. This rule has been followed in Speedway Rubber v. C.C.E. [2000 (143) ELT 8] wherein Supreme Court has observed that the heading which provides most specific description shall be preferred to heading providing a general description. In Jyoti Industries v. C.C.E. [2000 (115)ELT 559] it has been held that Kitchen sink is classifiable as sanitary ware which is a specific description and not as 'household articles of iron and steel' which is a general description.

4.11 Without prejudice to the fact that our products are clearly classifiable under Chapter 8302 of the Tariff, if even for argument sake it is contended that there is a possibility that the said goods could be classified under Chapter 7415 also, the authorities should have taken recourse to Rule 3(c) wherein it has been clearly brought out if two or more headings seem equally possible and the dispute cannot be resolved by any of the other rules of interpretation, if both the heading appear equally specific, the heading which occurs last in numerical order is to be preferred(i.e. latter the better).

4.12 That the Brass anchors of same applicant has been classified by the ICD Patparganj, New Delhi as Brass Builder Hardware during the same period and Drawback has been sanctioned as Brass Builder Hardware. A copy of the Shipping Bills and relevant invoices and Packing list is enclosed for your kind reference and marked as Annexure - "B". Same goods have been cleared from other ports also under CTH 8302.


5. Personal hearings held on 6-12-2010 and 4-2-2011, was attended by Shri Ranjeet Kumar Singh, Consultant and Shri Dharmendra Kumar Singh, Consultant on behalf of the Applicant. During the course of Personal Hearing the Applicants re-iterated grounds of Revision Application.


6. Government has considered both oral and written submissions and also perused the orders passed by the lower authorities.


7. Government notes that the issue to be decided is whether the lower authorities were right in reducing drawback claim of the applicant on the ground that their goods are classifiable under CTH 7415 and not under 8302 as claimed by the applicant.

7.1 In this case the original authority has observed that as per literal meaning of Oxford Dictionary, the female screw is a cylinder with helical grove or thread running along inner surface. As the goods are round metallic items with circular threaded inner surface and rough/embossed outer surface, the same merits classification as female screw rather than describing the same as Brass Builder hardware, which is a more general description. The original authority has further observed that even if the subject goods are manufactured as per specification of drawing with highest precision, they still merit to be classified as screw. It is further observed by the original authority that as per Rule 3(a) of the General Rules of interpretation, the heading which provides more specific description shall be preferred to the heading which provides a generic description. The CTH 7415 provides more specific description even if they are tailor made to suit their Customer's requirement as compared to a more general description as "Brass Builder Hardware" under CTH 8302.

7.2 Government observes that the goods in question are round metallic item with circular threaded inner surface and rough/embossed out surface and as per dictionary meaning it is a female screw. This item is used to fix the screw in the wall so it is more akin to a item like screw since it has a characteristics of screw, it is more appropriately classifiable under 7415 as screw and similar articles. Further any reference in this schedule to base metal includes a reference to alloy which, are to be classified as alloy of that metal in terms of note (6) of Section XV. Accordingly Brass being alloy of Copper, is classifiable under chapter 74. Government further observes that the goods in question is better classifiable as similar articles of screw and should not fall under description of brassbuilder Hardware. Under such circumstances it merits classifiable under 7415 and not under 8302, as claimed by the applicant.

7.3 However, Government observes that importer declared the complete description of goods and there is no suppression/mis-declaration and hence, action on the part of lower authorities regarding confiscation and imposition of fine and penalty liable to be set aside. Accordingly, Government sets aside order for confiscation of goods & imposition of Fine and Penalty.


8. Revision Application disposed off in above terms.


9. So ordered.

Equivalent 2012 (278) ELT 0545 (G.O.I.)