1999(08)LCX0088

IN THE CEGAT, COURT NO. IV, NEW DELHI

S/Shri P.C. Jain, Vice President and A.C.C. Unni, Member (J)

RADHIKA STEEL

Versus

COMMISSIONER OF CUSTOMS, NEW DELHI

Final Order No. 677/99-D, dated 3-8-1999 in Appeal No. C/636/98-D

Advocated By : Shri J.M. Sharma, Advocate, for the Appellant.

Shri V.M. Udhoji, JDR, for the Respondent.

[Order per : A.C.C. Unni, Member (J)]. - This is an appeal against the order of the Commissioner of Customs (Appeals) New Delhi dated 21-8-1998 by which the Commissioner (Appeals) directed confiscation of certain porcelain items imported by the appellants under Section 111(d) of the Customs Act, 1962 and imposed a redemption fine of Rs. 1,10,000/- apart from a penalty of Rs. 20,000/ - under Section 112(a) of the said Act on Shri Rakesh Anand, proprietor of Radhika Steel. The question relates to the correct classification of six items of Porcelain namely, (i) Vase, (ii) Champion Cup, (iii) Peacock Champion Cup, (iv) Gourd Pot, (v) Lamp Stand and (vi) Basket imported by the appellants.

2. The Additional Commissioner of Customs after examining the items held that as far as Vases are concerned, they were no doubt ornamental, but they still retain their original utility value, thus they are fully capable of being used as a Vase. He observed that the same argument would hold good for Porcelain Basket as well. However; as regards three items, namely Champion Cup, Peacock Champion Cup and Gourd pot; he observed that these were not items which are of ordinary use in the common household and their main worth is ornamental. Even though these items can be used for filling liquid; that use is only incidental as these items are not intended or designed for any such definite use. He observed that as per clauses (A) and (B) of Heading No. 6913 of the Explanatory Notes to the HSN, if a decorative article serves a useful purpose no less efficiently than their plainer counterparts; they are classified under Heading 6911 or 6912 rather than under Heading 6913. But if the usefulness of the article is clearly subsidiary to its ornamental character, it will fall under 6913. As regards Lamp Stand, Additional Commissioner held that it is clearly excluded from the purview of Chapter 69 by virtue of clause (ii) of Note 2 to Chapter 69. Therefore, it will be classifiable under sub heading 9405.20. The Additional Commissioner held that since Champion Cup, Peacock Champion Cup and Gourd Pot are to be classified under 6913, their import was restricted under the Exim Code. Similarly, Lamp Stand also was restricted under the Export Import Code. In appeal, the Commissioner (Appeals) after examining the articles himself at the time of hearing observed that the articles are not items which are of ordinary use in any household and their main worth is purely ornamental. While upholding the classification of the goods under Chapter Heading 69.13 and the confiscation ordered by the Additional Commissioner and the quantum of redemption fine, Commission of Customs (Appeals) however held the ingredients of mens rea are absent when the dispute was only in relation to the classification of items and the allegation did not relate to any mis-declaration or under-valuation. He therefore, held that invoking of penalty was not called for and the same was set aside.

3. Shri J.M. Sharma, Id. Consultant appearing for the appellants submitted that the imported goods made of Porcelain were items of "tableware and kitchen ware and other household articles of Porcelain or Chinaware" importable against Special Import Licence (SIL). They had imported similar items on a trial basis on 7-1-1998 as per Bill of Entry No. 613714 which were cleared on payment of duty against SIL. When another consignment under Bill of Entry No. 102883 dated 27-2-1998 was filed for clearance under Chapter sub-heading 6911.10 against SIL, excepting the six items aforesaid all the rest were allowed to be cleared. The lower authorities had held that the six items were not importable against SIL on the grounds mentioned above and passed the impugned order. Ld. Consultant submitted that the goods in dispute were merely decorated household articles capable of being used as efficiently as their plain counterparts and decoration on the articles did not make the said article less useful than their plainer counterpart. Further, the decoration on the goods had not impaired their usefulness as containers. He further submitted that the Commissioner (Appeals) had not given any finding based on records or evidence but had passed an arbitrary order. He submitted that the Commissioner (Appeals) only had raised some doubts about such heavily decorated ornamental pieces being used in any household as articles of chinaware, or tableware. Ld. Consultant referred us to HSN notes under Heading 6913. According to the HSN Notes, sub heading 6913 covered (a) statuettes and other ornamental ceramic articles of the type designed essentially for interior decoration of house, office. assembly rooms churches etc. and outdoor ornaments, for example garden ornament. Note (b) covered Tableware and other domestic articles only if the usefulness of the decorated articles is clearly subordinate to their ornamental character for e.g. trays molded in relief i.e. carving or molding in which the design stands out from the general surface (with greater, less approiximation to the depth of the object represented) so that their usefulness virtually is nullified. Note (c) stated that Tableware and domestic utensils designed and decorated in such a manner as to impair the usefulness of the article. Note (d) stated that such decorated articles serve the useful purpose less efficiently than their plainer counterparts. Note (e) further stated that in case the classification under 69.13 is ruled out then the articles will be classifiable under Heading 69.11 or 69.12. Ld. Consultant submitted that the three disputed items namely, Champion Cup, Peacock Champion Cup and Gourd Pot are essentially containers having two parts, namely, the lower part which can be used for keeping dry or liquid items. The upper part, that is, lid, functions as a protection to the contents stored in the lower parts. The decoration of the outer surface in no way impairs the usefulness of the items as containers. Though these are decorated containers, they served the same useful purpose as their plainer counterparts and hence they would stand excluded from Chapter Heading 69.13. They would therefore, be classifiable under Heading 69.11 or Heading 69.12. Further, since the goods in dispute are articles of Porcelain or China, they will be classifiable under Heading 69.11 only. As per HSN Notes sub-heading No. 69.11 would include pots, store jars and preserving jars. It was also contended that Revenue has failed to discharge the onus of establishing that the disputed items fall under Chapter Heading 69.13.

4. Shri V.M. Udhoji, Id. JDR reiterated the findings of the authorities below and submitted that the arguments presently advanced on behalf of the appellants had been considered by the authorities below and they had given clear findings thereon. He submitted that impugned order therefore calls for no interference and the appeal may be rejected.

6. We have considered the submissions. During the proceedings Id. Consultant had also produced before us samples of the items under dispute. The dispute centers around the classification' of six items (i) Vase (ii) Champion Cup (iii) Peacock Champion Cup (iv) Gourd Pot (v) Lamp Stand and (vi) Basket. Appellants seek to classify them under Chapter Heading 6911.10 as Tableware and Kitchenware which are eligible for import under Special Import Licence (SIL). They claim that a previous consignment of the same goods on trial basis had been allowed to be cleared against SIL. However, when they imported another consignment thereof and filed Bill of Entry dated 27-2-1998, the Department had denied them such clearances and the three items, namely Champion Cup, Peacock and Gourd Pot were classified under sub-heading 6913.10 as items of Porcelain or China which did not have the facility of import under SIL. Porcelain Vases however, were allowed to be classified under 6911.10 and allowed as importable under SIL. As regards Lamp Stand, they were classified under 6405.90 and denied the facility of SIL. Arguments have been advanced on behalf of the appellant that Champion Cup, Peacock Cup and Gourd Pot imported by them were nothing but Tableware and Kitchenware with some ornamentation which did not retract their utility as Tableware and Kitchenware. They served the same purpose as ordinary Tableware or Kitchenware. Ld. Consultant had relied on HSN Explanatory Mote to Chapter Sub-heading 69.11, 69.13. Reliance has been placed on Explanatory Notes (A) & (B) to Chapter Heading 69.13 relating to statuettes and other ornamental ceramic articles. It has been argued that the finding of the lower authorities classifying the three items under Chapter 69.13 goes against the HSN Explanatory Notes inasmuch as the articles in dispute were not articles which had no utility value but were only ornamental.

6. We had the benefit of examining the disputed items which were produced before us by the ld. Consultant. The items which are admittedly of Porcelain/China are not of such a type which require technical expertise for determining their classification. Neither side has claimed that they are pieces

of art. They are, as admitted by both sides, articles containing ornamentation and decoration. The question is whether despite such ornamentation decoration, they still retain the character of Tableware, Kitchenware or household articles, or, because of such ornamentation/decoration their usefulness as Tableware Kitchenware other household articles, has been lost. This is an aspect which can be decided only on the basis of visual examination and the general perception of persons who are likely to buy such items. Since it is conceded by both the sides that the items are not to be considered as pieces of art, the test to be applied is only whether the ordinary buyer of such item would still use them as Tableware, Kitchenware or other household articles in spite of their ornamentation/decoration. Even taking into consideration the fact that the buyers of the items may be from a segment who can afford items of luxury, on a visual examination of items we are inclined to agree with the observations of the Commissioner (Appeals) that these items do not belong to the category of items which are put to ordinary use in any household. Despite the fact that the items are capable of being used for the same purpose as Tableware or Kitchenware, we are of the view that because of the highly decorative and ornamental nature of the goods, they would not fit in the category of articles classified under 6911.10 (Tableware and Kitchenware) of the Customs Tariff Act, 1975.

7. Accordingly, we uphold the impugned order and dismiss the appeal.

Equivalent 2000 (119) ELT 383 (Tribunal)

Equivalent 1999 (035) RLT 0142