2001(10)LCX0207

IN THE CEGAT, COURT NO. IV, NEW DELHI

S/Shri V.K. Agrawal, Member (T) and Krishna Kumar, Member (J)

R.L. KHANNA & CO.

Versus

COMMISSIONER OF CUSTOMS, MUMBAI

Final Order No. 211/2001-D, dated 22-10-2001 in Appeal No. C/271/2001-D

Cases Quoted

Collector v. Kanakasabai — 1973 (3) SCR 747 — Referred .................................................... [Para 2]

Commissioner v. Nagahills Tea Co. Ltd. — AIR 1973 SC 2524 — Referred ......................... [Para 2]

J.K. Steel Ltd. v. U.O.I. — 1978 (2) ELT (J 355) (S.C.) — Referred .................................... [Para 2]

Petron Engineering Constructions Pvt. Ltd. v. Central Board of Direct Taxes — AIR 1989 SC 501 — Referred                [Para 2]

Advocated By :   Shri Atul Batra, Advocate, for the Appellant.

Shri R.C. Sankhla, JDR, for the Respondent.

[Order per : V.K. Agrawal, Member (T)]. - The issue involved in this appeal, filed by M/s. R.L. Khanna & Co., is whether table mats and coasters are tableware and kitchenware of wood classifiable under Heading 44.19 of the first Schedule to the Customs Tariff Act as claimed by the Appellants or under Heading 48.23 as confirmed by the Commissioner (Appeals).

2. Shri Atul Batra, learned Advocate, submitted that in the past when the appellants themselves had imported these items, these were classified under Heading 44.19 of the tariff only which is evident from the Bill of Entry No. 300187, dated 30-5-98; that as per normal business practice in U.K. such items are described as household accessories and accordingly U.K. firm described the impugned goods as household accessories in the Shipping Bill; that U.K. firm has given the complete break-up of the different materials used in the manufacture of impugned goods according to which paper constitute only 7.8 percent whereas hard board 80.8 percent; that an item consisting of 80.8% hard board is required to be classified as product of wood only; that hardboard has no component of paper or paper-board but only wood pulp and item made therefrom falls under the items as wooden articles. He, further, submitted that according to the Webster IIIrd New International Dictionary, Kitchenware means, “hardware for kitchen use” and tableware means, “china, glassware, silver & other utensils used for setting a table or serving food or drinks”; that the definition is inclusive definition and will also cover table mats and coasters. He also mentioned, relying upon the decision of the Supreme Court in the case of J.K. Steel Ltd. v. U.O.I. [1978 (2) ELT (J 355) (S.C.) = AIR 1970 SC 1173] that in case of doubt statute has to be interpreted in a manner favourable to the tax payer. Reliance was also placed on the decision in the case of Collector of Estate Duty v. M/s. Kanakasabai & Ors. [1973 (3) SCR 747] wherein it was held that it is a well accepted Rule of Construction that if a taxing provision is ambiguous and is reasonably capable of more than one interpretation, that interpretation which is beneficial to the subject must be adopted. It is impermissible for the Court to read into a taxing provision any word which are not there or exclude words which are there. The words found in the provision must be given their natural meaning. Reliance was also placed on the decision in the case of Commissioner of Income-Tax v. Nagahills Tea Co. Ltd. [AIR 1973 SC 2524] and Petron Engineering Constructions Pvt. Ltd. v. Central Board of Direct Taxes, [AIR 1989 SC 501].

3. Countering the arguments Shri R.C. Sankhla, learned D.R., reiterated the findings contained in Adjudication Order as well as in the impugned Order and submitted that the impugned goods were not made out of wood but were manufactured out of wood pulp and as such will be classifiable under Chapter 48 of the Tariff. He also submitted that the impugned goods are not tableware at all; that the tableware are crockery, cutlery and glassware used for serving and eating meal at a table; that the goods imported are table mats sand coaster sets which cannot he called as tableware at all. Finally he submitted that it is apparent from the statement of facts that the appellants were aware of the requirement of special import licence and as such penalty is imposable on them.

4. We have considered the submissions of both the sides. According to the Explanatory Notes of H.S.N. Heading 44.19 covers only household articles of wood or wood marquetery or inlaid wood which are of the nature of tableware or kitchenware. The notes further provides that the heading includes spoons, forks, salad-servers, plater and serving dishes, jars, cups and saucers; common spice boxes and other kitchen containers. It is evident from the description of the goods mentioned in the Explanatory Notes that table mats or coasters in question cannot be regarded as tableware and kitchenware. Even the definition in Webster Dictionary relied upon by the learned Advocate does not support their case. Accordingly the impugned products are not classifiable under Heading 44.19. It has not been controverted by the appellants that the hardboard is made of wood pulp and as such it cannot be classified under Chapter 44 which covers wood and articles of wood. We, therefore, find no reason to interfere with the findings contained in the impugned order as far as classification of the product is concerned. However, considering the facts and circumstances of the matter we are of the view that the redemption fine should be reduced from Rs. 50,000/- to Rs. 25,000/- and penalty should be reduced from Rs. 10,000/- to Rs. 5,000/- and we order accordingly. The appeal is disposed of in the above terms.

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Equivalent 2002 (139) ELT 324 (Tri. - Del.)

Equivalent 2001 (047) RLT 0780