Commissioner of Customs (ACC), Mumbai Versus Siyaram Silk Mills Ltd.>2008(07)LCX0143

2008(07)LCX0143

In the Customs, Excise & Service Tax Appellate Tribunal, Mumbai

Ms. Jyoti Balasundaram, Vice President Shri A.K. Srivastava, Member (Technical)

Commissioner of Customs (ACC), Mumbai

Versus

Siyaram Silk Mills Ltd.

Final Order No. A/404/WLB/2008-CI/CSTB dt. 11.7.2008 certified on 31.7.2008 in Appeal No. C/392/2002

Cases Quoted -

Soni Chemicals Vs. CCE 1990(11)LCX0056 Eq 1991 (054) ELT 0298 (T)- Relied on [Paras 8,10]

Soni Chemicals 1998(09)LCX0089 Eq 2000 (116) ELT A068 (SC)- Referred [Para 8]

Gujarat State Fertilizers Company Ltd. Vs. CC, Bombay 1997(12)LCX0241 Eq 1998 (099) ELT 0599 (T).-Relied on [Paras 8,11]

Future Innovation Pvt. Ltd. Vs. CC, New Delhi (ICD) 2002 (049) RLT 0895 (CEGAT-Del.) - Distinguished [Paras 9,13]

Future Innovation Pvt. Ltd. 1998(04)LCX0005 Eq 2003 (153) ELT A297 (SC). - Referred [Para 9]

Advocated By -

Shri Manish Mohan, SDR for Appellants
Shri R.K. Tawani, Consultant for Respondents

Per A.K. Srivastava :

This appeal has been filed by the Revenue against the Order dated 22.01.2002 passed by the Commissioner of Customs (Appeals), Airport, Mumbai.

2. Heard both the sides and perused the records.

3. The brief facts of the case are that M/s. Siyaram Silk Mills Ltd. Mumbai (hereinafter called the Importer) filed a Bill of Entry No. 1535 dated 12.11.2001 to clear 2400 P.C. of 'men's long sleeve shirt with tie' for a value of Rs. 5,77,605/-, claiming of Bangladesh origin and classification under 6205 of Customs Tariff Heading with a claim of benefit of Notification 105/99 dated 10.08.99. The goods were examined under the first check and the representative sample got tested from the Textile Committee, Mumbai and found as declared.

4. Since 'Shirt' and 'Tie' are specifically classifiable under CTH 6205 and 6215 respectively, these were classified accordingly and assessed to duty as applicable. The extension of the Notification 105/99 was subject to the fulfillment of certain conditions laid down under Customs Tariff (Determination of origin of goods under agreement on SAARC preferential Trading Arrangement) Rules, 1995 notified by Notification No. 73/95-Cus. (NT) dated 07.12.95 which were interpreted by the lower authority as non fulfilling and denied the benefit of the Notification 105/99 and issued order-in-assessment dated 24.11.2001.

5. Aggrieved by lower authority's order the Importer preferred an appeal before the Commissioner (Appeals), who has set aside the order-in-assessment dated 24.11.2001 and allowed the appeal on the following grounds:

(i) The goods packed together are put up for retail sale and in terms of Rule 3 (b) of Interpretation Rule to CTH, 1975, essential character of the good is provided by Shirt hence should be assessed under CTH 6205.20.

(ii) Classification under CTH 6205.20 is indirectly supported by Note 13 to Section XI, which provides that all textile garments of different headings are to be classified separately even if put up in sets for retail sale and for this purpose textile garments means garment of Heading 6101 to 6114 and Heading 6201 to 6211.

He has held that goods falling under 6212 to 6217 if they are put up for sale, they are to be regarded as one set and classification of which would more appropriately be under chapter heading 6205.

(iii) As far as the extension of the benefit of Notification is concerned, the Commissioner (Appeals) has held that since the country of origin certificate has been issued in terms of the guidelines on the reverse of CO. Certificate, it is not open to the lower authority to look into the criterion provided in the Rules.

6. We have examined the position. We find that the Shirt is classifiable under CTH 6205.20 and the 'Tie' under CTH 6215. Basic Customs Duty on both items is specific i.e. Rs. 85/- per piece and Rs. 55/- per piece respectively. The CVD on Shirt is @ 16% on 60% of M.R.P. CVD on 'Tie' is NIL. Since both the items are specifically covered in the Customs Tariff Act, they are classifiable separately. The Commissioner (Appeals) has decided the classification by adopting and interpreting the provision of Rule 3 (b) of General Rule for Interpretation of the schedule, which is reproduced below:-

(b) "Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3 (a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable".

The note (IX) of Rule 3 (b) of General Rules for Interpretation of the Harmonized Systems as reproduced below:

"For the purpose of this Rule, composite goods made up of different components shall be taken to mean not only those in which the components are attached to each other to form a practically inseparable whole but also those with separable components, provided these components are adapted one to the other and are mutually complementary and that together they form a whole which would not normally be offered for sale in separate parts", suggests that goods made up of different components are adapted to one another and are not normally offered for sale in separate parts. In this case, the Shirts and the Ties are normally offered for sale separately. Hence Rule 3 (b) is not applicable and the Commissioner (Appeals) has erred in adopting Rule 3 (b) and his interpretation is bad in law and, therefore, unacceptable.

7. The Commissioner (Appeals) has taken support of note 13 to section XI for classification under 6205, which read as under "Unless the context otherwise requires, textiles garments of different headings are to be classified in their own headings even if put up in sets of retail sale. For the purpose of this Note, the expression "textile garments" means garments of Heading No. 61.01 to 61.14 and Heading Nos. 62.01 to 62.11." By going through this note, the Commissioner (Appeals) has held that goods falling under 6212 to 6217 if they are to be regarded as one set and classification of which would more appropriately be under chapter 6205 in terms of Rule 3 (b) of Rule of interpretation. Shirt is falling under 6205. Hence in terms of this note, it has to be classified separately. It is not known on what basis the Commissioner (Appeals) has included Tie' in this group, whereas it is classifiable under 6215. Further Rule 3 (b) is not applicable in terms of note IX of the said Rule. Hence, the Commissioner (Appeals) has erred in interpretation of Note 13 to Section XI of CTH and Rule 3 (b) of the Interpretation Rules.

8. The Revenue has relied upon the following case laws in their support:

(i) Soni Chemicals Vs. Collector of Central Excise reported in 1990(11)LCX0056 Eq 1991 (054) ELT 0298 (T). An appeal filed in this case has been dismissed by the Supreme Court as reported in 1998(09)LCX0089 Eq 2000 (116) ELT A068 (SC);

(ii) Gujarat State Fertilizers Company Ltd. Vs. Collector of Customs, Bombay reported in 1997(12)LCX0241 Eq 1998 (099) ELT 0599 (T).

9. The Importer, on the other hand, has relied on the decision of the Tribunal in the case of Future Innovation Pvt. Ltd. Vs. Commissioner of Customs, New Delhi (ICD) reported in 2002 (049) RLT 0895 (CEGAT-Del.)=2002(02)LCX0144 Eq 2002 (142) ELT 0098 (Tri.-Del.), which has been maintained by the Supreme Court as reported in 1998(04)LCX0005 Eq 2003 (153) ELT A297 (SC).

10. We have considered the rival case laws. In the case of Soni Chemicals cited supra, the Tribunal in para 6 has observed as under:

"6. Rule 3 (b) of the Interpretative Rules is applicable for classifying mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets, which cannot be classified by reference to sub-rule (a) of Rule 3 of the Interpretative Rules. Sub-rule (a) of the said rule provides that for classification the heading which provides the most specific description shall be preferred to heading providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set, these headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. In the present case, correcting fluid and diluter are two distinct products and they are specifically covered by the Headings 3823.00 and 3814.00 respectively. When these are cleared separately, they are assessed separately under these headings. These two products though packed in a common container for clearing in some cases for the convenience of the users, these are not mixture nor are composite goods. Therefore, Interpretative Rule 3 (b) is not applicable in this case."

11. In the case of Gujarat State Fertilizers cited supra, the Tribunal in para 12 has observed as under:

"12. The packing in a single carton will have no bearing on the classification of the different products which had to be classified in terms of the Chapter heading and the relevant notes. The Advocate had referred to the Tribunal decision in the case of Shri Ram Pistons & Rings Vs. Collector of Customs, New Delhi, 1997 (092) ELT 598 in which the computer had been imported with the spectrometer. The Tribunal had taken a view that the computer was an essential part of direct reading spectrometer. It was in this context that the Tribunal held that the assessment of computer was to be done along with the main spectrometer. In the case of Larsen and Toubro Ltd. Vs. Collector of Customs, Bombay - 1996(04)LCX0137 Eq 1997 (093) ELT 0234 (T) the issue related the classification of hydraulic cylinder which was considered to be a part meant for use with big excavator. The Tribunal had decided that the hydraulic cylinder was classifiable under the same heading as that of excavator. We find that in this case the camera and the television set were not the essential part of microscope; the microscope was a separate identifiable commodity and was separately classifiable. The camera and the television set are separately described in the Tariff."

12. We are of the opinion that the ratio of the above case laws are squarely applicable to the facts of the present case.

13. In the case of Future Innovations Pvt. Ltd. relied upon by the Importer, the goods in question was the combination of two products and it was held that it is classifiable under Heading 8301.20 which covers 'Locks of a kind used for motor vehicles' and not under 8531.10 which covers 'Burglar or fire alarm and similar apparatus'. The lower authorities, on the basis of the catalogue, held that the item under import is primarily a car alarm system with locking facility as a secondary function and hence classifiable under 8531.10. This was set aside by the Tribunal on the ground that the lock is main line of defence for car coming as normal accessory for cars and alarm is only secondary to security of moving object. Further, most parts related to locking of car and the value of locking component was substantially more than of alarm. Hence, it was held that is classifiable under 8301.20 and not 8531.10. The ratio of this case law cannot be applied to the facts of the present case as it is normal practice to sell car locking system combined with alarm, whereas in the case before us the Shirts and the Ties are normally offered for sale separately. These are not composite goods.

14. The importer has relied upon the examples of Hairdressing sets and Drawing kits in Note (X) 2 and (X) 3 of Rule 3 (b) of General Rules for Interpretation of the HSN which state as under:

"(2) Hairdressing sets consisting of a pair of electric hairclippers (Heading 85.10), a comb (Heading 96.15), a pair of scissors (Heading 82.13), a brush (Heading 96.03) and a towel of textile material (Heading 63.02), put up in a leather case (Heading 42.02):

Classification in Heading 85.10.

(3) Drawing kits comprising a ruler (Heading 90.17), a disc calculator (Heading 90.17), a drawing compass (Heading 90.17), a pencil (Heading 96.09) and a pencil-sharpener (Heading 82.14), put up in a case of plastic sheeting (Heading 42.02):

Classification in Heading 90.17.

For the sets mentioned, above, the classification is made according to the component, or components taken together, which can be regarded as conferring on the set as a whole its essential character."

We are of the view that the above analogy is not apt. The combination of the above assorted items in one case is called 'Hairdressing sets', whereas in the other case, it is called 'drawing kits'. In the case before us, it is a pack of Shirt with Tie and is sold as such. It is not known by any other nomenclature except as Shirt and Tie. Both Shirt and Tie retain their individual identity in the eyes of the customer. Their identities do not merge.

16. We also note that note (X) of Rule 3 (b) of General Rules for Interpretation of the HSN states as under:

"The Rule does not, however, cover selections of products put up together and consisting - for example, of:

-a can of shrimps (Heading 16.05), a can of pate de foie (Heading 16.02), a can of cheese (Heading 04.06), a can of sliced bacon (Heading 16.02), and a can of cocktail sausages (Heading 16.01); or

a bottle of spirits of Heading 22.08 and a bottle of wine of Heading 22.04.

In the case of these two examples and similar selections of products, each item is to be classified separately in its own appropriate heading."

We are of the view that this Note is squarely applicable to the Importer's case. The Commissioner (Appeals) has wrongly considered both the items as Shirt by misinterpreting the terms 'essential character of set'. He has considered both Shirt and Tie as Shirt, whereas both have separate and distinct identity and separate characteristics and use and are specified in different headings in the Customs Tariff Act. Therefore, both the items i.e., Shirt and Tie have to be classified accordingly under their respective headings. We hold so and set aside the order of the Commissioner (Appeals) to this extent.

17. The appeal filed by the Revenue is allowed.

Dictated in Court.

Equivalent 2008 (088) RLT 0623 (CESTAT-Mum.)

Equivalent 2009 (235) ELT 0241 (Tri. - Mumbai)