2012(11)LCX0117

IN THE CESTAT, WEST ZONAL BENCH, MUMBAI

S/Shri Ashok Jindal, Member (J) and P.R. Chandrasekharan, Member (T)

Art Beads Pvt. Ltd.

Versus

Commissioner of Custom (ACC & Import), Mumbai-II

Final Order No. A/890/2012-WZB/C-KCSTB) and Stay Order No. S/1403/2012-WZB/C-KCSTB), dated 14-11-2012 in Application No. C/Stay/849/2012 in Appeal No. C/295/2012

Cases Quoted -

Rajan Kumar & Bros. (Impex) Pvt. Ltd. v. Collector - 1992(07)LCX0001 Eq 1992 (062) ELT 0142 (Tribunal) - Followed [Paras 3,5.4,5.5]

Starlite Corporation v. Union of India - 1985(12)LCX0043 Eq 1989 (039) ELT 0538 (Bom.) - Followed [Paras 3,5.3,5.5]

Advocated By -

Shri Devan Parikh, Advocate, for the Appellant.
Shri Navneet, Additional Commissioner (AR), for the Respondent.

[Order per : P.R. Chandrasekharan, Member (T)]. -

The appeal and stay application are directed against order-in-appeal No. 121(Gr.III)/2012(JNCH)/ IMP-107 dated 29-2-2012 passed by the Commissioner of Customs (Appeals), Mumbai II, JNCH, Nhava Sheva.


2. The issue relates to classification of Glass chatons imported by the appellant, M/s. Art Beads Pvt. Ltd., Mumbai. The appellant imported glass chatons and glass beads vide B/E No. 695419, dated 17-6-2010 and claimed assessment of the same under CTH No. 7018 10 20 as "Beads" and claimed exemption from CVD. The Customs authorities were of the view that as per HSN explanatory notes, glass chatons and glass beads are not one and the same. To be classified as 'beads', the product should be 'pierced' and in trade parlance also, the products are different. Accordingly, they classified the glass chatons imported by the appellant under CTH 7018 90 90 and levied 10% CVD on the said item. The appellant preferred an appeal before the lower appellate authority who rejected their appeal on the ground that chatons are stones set in the head of rings and are different in their use from beads and chatons which are without holes are nothing but imitation precious stones used in rings and other cheap jewellery and accordingly held that they are classifiable under CTH 7018 10 90. Hence the appellant is before us.


3. The LD. Counsel for the appellant submits that the issue of classifica-tion of glass chatons was the subject matter of decisions by the Hon'ble High Court of Bombay in the case of Starlite Corporation [1985(12)LCX0043 Eq 1989 (039) ELT 0538 (Bom.)] and this Tribunal in the case of Rajan Kumar & Bros. (Impex) Pvt. Ltd. [1992(07)LCX0001 Eq 1992 (062) ELT 0142 (Tribunal)] and in these decisions it was held that piercing of a chaton is not essential for it to be called a bead and glass chatons are, therefore, eligible for benefit of duty exemption available to glass beads. As per the information under the RTI Act, 2005 obtained from the C.B.E. & C. vide letter dated 1-2-2011 issued from file No. 390/RTI/14/2011-JC, from the records available no appeals seem to have been filed by the Revenue against these decisions and these decisions have been probably accepted by the department. Accordingly, the LD. Counsel submits that these decisions have become final and accordingly, glass chatons are rightly classifiable as beads eligible for CVD exemption. The LD. Counsel further submits that samples of the Glass chatons (with and without cups) were drawn by the dept. at the time of importation to ascertain, inter alia, nature and composition of the goods and forwarded to the Chemical Examiner attached to the Custom House vide letter dated 22-10-2010 and the Chemical Examiner vide Test Report dated 18-11-2010 has reported the nature of the goods as "Glass beads having shining, flat surface on one side, finised, coated on other side (chatons) and the composition is of glass". Thus the report of the Chemical Examiner also confirms the fact that the goods are importation are glass beads. They have also filed affidavits duly notarized from dealers dealing in these goods which show that in trade parlance glass chatons are one kind of glass beads. In the light of these, he prays for grant of stay against the dues adjudged and allowing their appeal.


4. The LD. Additional Commissioner (AR) appearing for the revenue strongly opposes the plea of the appellant and submits that as per the HSN Explanatory Note, glass beads are usually pierced and in the case of impugned goods, they are not pierced and hence chatons are not beads. He also relies on certain materials downloaded from the internet to show that the impugned goods are Rhinestones (artificial gems made from paste, glass, or gem quartz) with no holes and a foil back to increase reflectivity and therefore, they are different from glass beads. Accordingly he prays for rejecting the appeal.


5. We have carefully considered the submissions made by both the sides. After hearing the arguments made by both the sides, we are of the view that the appeal itself can be disposed of at this stage. Accordingly, we dispense with the requirement of pre-deposit of the dues adjudged against the appellant and take up the appeal itself for consideration and disposal.

5.1 The tariff entry relating to Tariff Heading 70.18 reads as follows:

"70.18 Glass beads, imitation pearls, imitation precious or semi-precious stones and similar glass smallwares, and articles thereof other than imita-tion jewellery, glass eyes other than prosthetic articles, statuettes and other ornaments of lamp-worked glass, other than imitation jewellery; glass microspheres not exceeding 1 mm in diameter

7018.10 - Glass beads, imitation pearls, imitation precious
or semi-precious stones and similar glass small-wares :
70181010 - Bangles
70181020 - Beads
70181090 - other
7018 20 00 - Glass microspheres not exceeding 1 mm in di-
ameter
7018 90 - Other:
7018 90 10 - Glass statues
7018 90 90 - other"
5.2 From a reading of the above tariff description, articles that can be classified under CTH 7018 90 90 are articles (other than imitation jewellery) of Glass beads, imitation pearls, imitation precious or semi-precious stones and similar glass smallwares, glass eyes other than prosthetic articles, and other ornaments of lamp-worked glass, other than imitation jewellery. It is not the case of the revenue that glass chaton under importation fall under any of these categories. Thus the classification adopted by the assessing officer does not seem to have any basis. The lower appellate authority has differed with the assessing officer with regard to classification. He has held that "glass chatons which are without holes are nothing but imitation precious stones used in the rings and other cheap jewellery" and has accordingly sought to reclassify the item under CTH 7018 10 90. The only reason for this classification is that chatons under importation has no holes.

5.3 The question whether piercing of a chaton is essential for it to be called a bead was considered by the Hon'ble Bombay High Court in the Starlite Corporation case cited supra and in the said case it was held as follows :-

"15. There seems to have been no material upon which the Collector of Customs could have come to the tentative conclusion that the petitioner's articles were not glass beads. The material put before me overwhelmingly indicates that the piercing of a chaton is not essential for it' to be called a bead. The petitioners' articles are, therefore, glass beads entitled to exemption under the said notification."

The Hon'ble High Court arrived at this conclusion after taking into account the ISI specifications for glass beads, the opinion of the Dy. Chief Chemist and the trade affidavits presented.

5.4 The issue once again came up before this Tribunal in the Rajan Kumar & Bros. (Impex) Pvt. Ltd. case cited supra and this Tribunal held as follows :-.

"4. We have carefully considered the submissions made by the appellants and also perused the citations relied upon by them. In the case of Sterilite Corporation (supra), the Bombay High Court has considered the same issue pertaining to the classification of glass chatons. The Hon'ble Court, after going through the aspect in great detail, has held that piercing of a chaton is not essential for it to be called a bead and the articles, are, therefore, glass beads entitled to the benefit of exemption notification in question.

We have no reason to differ from these rulings. Applying the ratio of these rulings, the appellant's contention is accepted and the appeal allowed by setting aside the impugned order with consequential relief."

5.5 The Revenue has not adduced before us any new ground by way of change in the tariff description, if any, or change in the trade understanding of the product. On the other hand, from the records, it is seen that the above decisions of the Bombay High Court and this Tribunal has been accepted by the C.B.E. & C. If that be so, the orders passed by the assessing officer and the lower appellate authority smacks of judicial indiscipline and we deplore the same strongly.

5.6 In the present case also, we find that the opinion of the Chemical Examiner to whom the samples were sent for testing clearly show that the nature of the product is of a "glass bead". Further, the affidavits filed by the appellant from the dealers in the impugned goods clearly and unequivocally show that "glass chatons are one kind of glass beads and in trade parlance glass chatons are called Chaton Beads.". Thus by applying the trade parlance test also, the impugned goods are classifiable as 'glass beads'. In para 2.8 relating to Chapter 4 dealing with the Classification of Goods of the Customs Manual brought out by the C.B.E. & C, it is laid that for the purposes of classification the 'trade meaning' should be given due importance unless the Tariff itself requires the terms are to be interpreted in a strict technical sense in which case technical dictionaries should be used. No material has been placed before us to show that the term chaton should be interpreted in a strict technical sense. In fact the tariff description does not refer to chatons at all. Therefore, the question of applying strict technical sense also does not arise. It is a pity that the assessing and appellate authority in the instant case have chosen not to follow the Board's own guidelines in the matter which is very unfortunate.


6. In view of the foregoing, we classify the impugned goods under CTH 7018 10 20 as glass beads and allow the appeal with consequential relief. The stay application also stands disposed of.

(Operative part of the order pronounced in the Court)

Equivalent 2013 (292) ELT 0472 (Tri. - Mumbai)