Custom, Excise & Service Tax Tribunal
Raja & Co Overseas Private Limited vs Principal Commissioner, Customs-New ... on 20 July, 2022
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH
Court No. IV
CUSTOMS APPEAL NO. 50174 OF 2021
[Arising out of Order-in-Original No. 49/2020 dated 21.09.2020 passed by the
Principal Commissioner of Customs, ACC (Import), New Customs House, Near
IGI Airport, New Delhi.]
RAJA & CO OVERSEAS PRIVATE LIMITED APPELLANT
Vs.
PRINCIPAL COMMISSIONER OF CUSTOMS
RESPONDENT
ACC (Import), New Customs House, Near IGI Airport, New Delhi.
WITH CUSTOMS APPEAL NO. 50335 OF 2021 [Arising out of Order-in-Original No. 46/2020 dated 17.09.2020 passed by the Principal Commissioner of Customs, ACC (Import), New Customs House, Near IGI Airport, New Delhi.] R C JEWELLERS PRIVATE LIMITED APPELLANT Vs. PRINCIPAL COMMISSIONER OF CUSTOMS ACC (Import), New Customs House, RESPONDENT Near IGI Airport, New Delhi.
Appearance:
Present for the Appellant : S/Shri Kishore Kunal, Manish Rastogi and Ms Kanak [ Grover Advocate Present for the Respondent: Shri Nagender Yadav, Authorised Representative CORAM:
HON'BLE P. VENKATA SUBBA RAO, MEMBER(TECHNICAL) HON'BLE DR. RACHNA GUPTA, MEMBER(JUDICIAL) C/50174/2021 Date of Hearing : 20/07/2022 Date of Decision : 20/07/2022 FINAL ORDER No. 50730-50731/2022 PER DR. RACHNA GUPTA This order disposes of two appeals as mentioned above for the issue being common to both these appeals. Details of appeals are as follows:
S.No. Appeal No. Show Order in Amount of Customs Bill of
Appellant Cause Original No. duty vs declared Entry
Notice No. and date value
1 C/50174/2021 6328 dated 49/2020 Rs.82,14,038/- 4 BE
Raja & Co. 31.07.2019 dated Vs.
Overseas Pvt 21.09.2020 Rs.7,74,25,181/-
Ltd.
2 C/50335/2021 11796 46/2020 Rs.22,99,891/- 3 BE
R C Jewellers dated dated Vs. 2524137
Pvt Ltd. 17.07.2019 17.09.2020 Rs.2,16,78,676/- 2610775
2725472
2. The facts relevant for the adjudication of these appeals are that the appellant had imported gold coins (other than legal tenders) from South Korea. Three Bills of entry were filed by the appellants for the clearance of import of said gold coins classifying them under Customs Tariff Heading (CTH) 7114 1910. Benefit of 'NIL' rate of Basic Customs Duty (BCD) was also claimed in terms of Entry At S. No. 526 of Notification No. 152/2009-
Customs dated 31.12.2009 as amended by Notification No. 66/2016 Cus dated 31.12.2016. Three of said Bills of Entry were assessed by the Customs department provisionally, on execution of PD Bonds. The department formed the opinion that gold coins, as imported, are being covered under CTH 7118 as the said heading applies to coins of any material including the precious metals. The department requested Director General, Foreign Trade (DGFT) vide letters dated 08.08.2017 and 24.08.2017 seeking clarification regarding import of gold coins. Pursuant thereto the CBEC vide letter dated 16.02.2018 conveyed that gold coins are classifiable under CTH 7118 9000 and are freely importable subject to RBI 2 C/50174/2021 guidelines as were mentioned in the said Circular and are reproduced in para 4 of the impugned Show cause notice.
3. From these guidelines, department observed that certain agencies have been notified by the DGFT under Foreign Trade Policy which are allowed to import gold in bullion form and in the form of gold coins. Accordingly the payment for only such import of gold is permitted under RBI guidelines. These agencies are :-
(i) agencies nominated by DGTF;
(ii) Banks authorized by RBI and
(iii) Star and Premier Trading Houses.
The other agencies were not permitted to import gold coins. Accordingly the department formed an opinion that the appellant/ importer not entitled to import the impugned goods (gold coins) from South Korea not being any of the above mentioned agencies. As such, irrespective of classification of gold coins under any entry of chapter 71, the department alleged that the gold coins have been imported in violation of applicable RBI guidelines and that duty exemption availed by the appellant under S.No. 526 of Notification No. 152/2009 dated 31.12.2009 were not applicable to such imports. The impugned gold coins were thus alleged to be restricted good and accordingly respective Show Cause Notices as mentioned in the table above were served upon the appellant proposing confiscation of the goods (gold coins) imported vide respective Bills of Entry having respective declared assessable value. Customs duty as mentioned in table above alleging it to be short paid duty, was proposed to be recovered along with the proportionate interest and appropriate penalty. The said proposal has been confirmed vide the respective Order-in-Original as mentioned in the table above.
4. Being aggrieved the present appeals have been filed.
3C/50174/2021
5. We have heard S/Shri Kishore Kunal, Manish Rastogi and Ms Kanak Grover, learned Counsels appearing for the appellant and Shri Nagender Yadav, learned Authorised Representative for the Department.
6. Learned Counsel for appellant submits that the order under challenge has been passed in violation of principles of natural justice and is also beyond the scope of impugned show cause notice. The order is also alleged to be in sheer violation of decision of this Tribunal in the case of Sri Exports vs Commissioner of Customs, Bangalore reported as [2019 (368) ELT 985 (Tri-Bangalore)]. It is further submitted that goods imported herein are gold coins and this Tribunal recently in the case of M/s. Abans Jewels Pvt Ltd. vs Principal Commissioner of Customs, ACC (Imports) New Customs House IGI Airport, New Delhi in Customs Appeal No. 50192 of 2021 decided on 28.03.2022 has again held that classification of gold coins (other than legal tenders) cannot be made under CTH 7118 9000, and the correct classification is under CTH 7114 1910. The decision also has settled that gold coins are freely importable under Foreign Trade Policy. The decision has also fully relied upon Sri Exports (supra) decision. It is further submitted that the Adjudicating Authority has laid emphasis upon decision in the case of High Court of Delhi in the case of Khandwala Enterprises Pvt Ltd. vs. Union of India reported as [2020 (371) ELT 50] and that the said decision has been discussed and distinguished by this Tribunal in the case of M/s. Abans Jewels (supra) case. The decision has also held that there is no regulation or restriction imposed by RBI with respect to import of gold coins. Learned Counsel has submitted that said decision has settled all the issues involved in the present case in favour of the importer. In the light of said decision, the order of Commissioner (Appeals) is prayed to be set aside. The order under challenge is otherwise alleged to be a result of pre-meditated and of lack of 4 C/50174/2021 application of mind. Accordingly, is prayed to be set aside and appeal to be allowed.
7. To rebut the submissions learned Departmental representative has mentioned that the findings of the Adjudicating Authority below have been arrived at after appreciating the explanatory notes for Chapter No. 118 and 7114. The order, with ample clarity has held that gold coins imported in the present case are covered under CTH 7118. The gold coins are rightly held to be restricted goods in terms of RBI guidelines and DGFT office memorandum dated 6.9.2017. Apparently and Admittedly the appellant is neither of the agencies as have been allowed by RBI to import gold coin. It is submitted that there is no infirmity in the findings arrived at by the Adjudicating Authority. The decision in Khandwala (supra) case, squarely covers the issue involved herein. The appeal is prayed to be dismissed.
8. After hearing the rival contentions of the parties and perusing the entire records, we observe and hold as follows:
The moot question to be adjudicated herein are observed as follows:
(1) Whether the gold coins imported by the appellants fall under CTH 7114 1910 as claimed by the appellant or under CTH 7118 9000 as claimed by the department.
(2) Whether the exemption from payment of Customs duty is available to the appellant with respect to imported gold coins in terms of Notification No. 152/2009-Customs dated 31.12.2009 as amended by Notification No. 66/2016 Cus dated 31.12.2016.
(3) Whether the imported gold coins can be called as the goods in restricted category merely on the basis of letter issued by Reserve Bank of India.
9. The findings of the above respective issues are as follows:
5C/50174/2021 Issue No. 1 For the purpose it is foremost to look into the Customs Tariff Harmonized System of Nomenclature (CTH) for both the entries in question. Tariff Items for CTH 7114 are :
Tariff Item Description of goods Unit Rate of duty 7114 ARTICLES OF GOLDSMITHS' OR SILVERSMITHS' WARES AND PARTS THEREOF, OF PRECIOUS METAL OR OF METAL CLAD WITH PRECIOUS METAL
- Of precious metal, whether or not plated or clad with precious metal :
7114 11 -- Of silver, whether or not plated or clad with precious metal :
Kg 15%
7114 11 10 --- Articles
7114 11 20 Kg 15%
--- Parts
7114 19 -- Of other precious metal, whether or not
plated or clad with precious metal :
7114 19 10 --- Articles of gold Kg 15%
And tariff items for 7118 reads as follows:
Tariff Item Description of goods Unit Rate of
duty
7118 COIN
7118 1000 - Coin (other than gold coin), not Kg. 15%
being legal tender
- Other
7118 9000 Kg. 15%
10. The perusal clarifies that under CTH 7114 all articles of gold including articles of goldsmith or silversmiths' wares and parts thereof, of precious metal or of metal clad with precious metal are covered. Tariff entry under CTH 7118 is specifically in respect of coins, including coins of not being legal tender and also the coins which are legal tender. The material /metal used for making coins is not that relevant for this entry.6
C/50174/2021
11. Two notes of Chapter 71 which covers both the tariff entries are relevant-
(1) Note 1B which reads: All articles wholly or partly of precious metals or metal clad with precious metal are to be classified in this Chapter.
(2) Note 10 which reads: For the purpose of heading 7114, the expression under "articles of goldsmiths and silversmiths ware includes such articles as ornaments, tableware, smokers requisites and other articles of household , office or religious uses. Precious metal as per Note 4 (A) means silver, gold and platinum.
12. The goods in question apparently and admittedly are gold coins. As the terms suggest these are an article crafted out of precious metal hence appears to be subject matter of CTH 7114. Simultaneously these articles specifically are coins and coins are precisely mentioned under CTH 7118. Thus it becomes the point of interpretation as to which CTH entry suits the impugned goods more. Hon'ble Apex Court in the case of Commissioner of Central Excise, Shillong vs Wood Craft Products Ltd. reported as [1995 (77) ELT 23 (SC)] and also in a later decision in the case of L.M.L Ltd. vs Commissioner of Customs reported as [2010 (258) ELT 321 (SC)] has held that for resolving any dispute relating to tariff classification, a safe guide is the internationally accepted nomenclature emerging from HSN. The explanatory notes to HSN 7118 are as follows :
"71.18 - Coin (+) 7118.10 - Coin (other than gold coin), not being legal tender 7118.90 - Other This heading applies to coins of any metal (including precious metals) of officially prescribed weight and design, issued under government control for use as legal tender. Consignments of individual coins or of sets of coins which are legal tender in the country of issue are classified in this 7 C/50174/2021 heading even if they are put up for general sale in presentation cases. The heading includes coin which are no longer legal tender but it excludes collectors' pieces (see Explanatory Note to heading 97.05) Coins are made by stamping out blanks from sheet metal; there are then "struck"
with the appropriate dies to produce simultaneously the designs on the two faces.
The heading does not cover:
(a) Medals even if "struck" in the same way as coins, these usually fall in heading 71.13, 71.14 or 71.17 or heading 83.06 (see corresponding Explanatory Notes)
(b) Coins mounted in brooches, tie-pins or other objects of personal adornment (heading 71.13 or 71.17)
(c) Broken, cut or battered coins of a kind usable only as scrap or waste metal"
When this note is read with description of goods under CTH 7118, it becomes clear that though tariff item 7118 specifically is with respect to coins but following coins are covered under the said entry:
(1) Coins which are legal tenders in the country of issue under entry No. 7118.90.
(2) Coins which are no longer legal tender or intended to legal tender (Gold coins are excluded) under entry No. 7118.10.
Thus coins of any metal including precious metal if are legal tender in the country of issue, those are classifiable under CTH 7118. Also all coins of non legal tender but not of gold are covered under CTH 7118. Had the impugned goods, the gold coins, would be the legal tender in the country the gold coins could be classified under CTH 7118. OR, had these coins though of non legal tender, but would not have been made of gold, these could have been classified under CTH 7118.
13. The phrase legal tender is not defined in any tariff heading or in any explanatory notes. Hence the dictionary meaning has to be taken into consideration. Oxford legal Dictionary defined legal tender as coins or any other money which the creditor is bound by 8 C/50174/2021 law to accept when tendered in payment of debt. According to Webster Dictionary, legal tender is money that may be legally offered in payment of an obligation and that a creditor must accept. According to a new Collins dictionary, legal tender is money in the form of coin or banknote which is officially part of a country's currency at a particular time. Thus it is clear that for the coins to be legal tender, they should have the face value and should be allowed to be spent in the country of issue. Applying this definition to the coins in question, it is clear that these are not the legal tender. But admittedly these non legal tender coins are made of gold. These observations are sufficient to hold that the impugned goods (gold coins) do not fall under CTH 7118.90, being gold of non legal tender. These goods do not even fall under CTH 7118.10 these being made of gold.
14. Entry at CTH 7114 covers all articles of Gold. The word article has also not been defined under any of the Notes to Chapter 71. Again the dictionary meaning has to be relied upon. As per Oxford Dictionary article is a particular item or object and include household articles. Cambridge Dictionary also define article to mean as an object, a particular thing specially one i.e. one of several things of a similar type or a thing similarly placed. As per Merriam Webster dictionary article is a thing or a person of a particular and distinctive kind of class. In the light of above discussion, it becomes clear that goods in question, (gold coins) being an object a thing of particular kind, hence are nothing but the articles.
15. In addition to explanatory notes to the Chapter of CTH, there are General Rules of Interpretation which require that classification to be determined first according to the terms of the heading of the tariff schedule and no relevant section or chapter notes are, unless otherwise required, according to the remaining GRIs, taken in their appropriate order, the Rules require that the classification of goods in the sub heading of headings shall be 9 C/50174/2021 determined according to the terms of those sub headings, not related to sub heading notes. Similarly, the explanatory notes of Chapter although a dispositive or legally binding but provide a commentary on the scope of each heading and are generally indicative of the proper interpretation of heading of chapters or entries. As already discussed above CTH 7114 covers all goldsmiths silversmiths wares of precious metal and all such things as are mentioned under note 10, as discussed above, whereas CTH 7118 applies to the coins of any metal including precious metals but the coin should be such as shall be issued under Government control for use as legal tender. Though coins of non legal tender are also covered in CTH 7118 but these coins should not be of gold. Keeping in view the entire above discussion about Chapter Notes, explanatory notes, the General Rules of Interpretation and the description of respective entries under CTH 7114 and 7118, it becomes clear that gold coins are such articles of gold which are in the form of coin, but being the coins of non legal tender, these cannot be covered under CTH 7018. These being articles of precious metals are therefore held to be covered under CTH 7114. This issue is otherwise no more res integra as has been decided by this Tribunal's Principle Bench in the case of Abans Jewels (supra) case and also by the Regional Bench of Hyderabad as well as of Bangalore in the case of Sri Exports (supra). Accordingly, the above formulated issue No. 1 stands decided in favour of the importer and against the Department.
Issue No. 2 & 316. Coming to the issue No. 2, we observe that the gold coins in question have been imported from Korea. It has been brought to notice by learned Counsel for the appellant and acknowledged by the Department that Republic of India entered into a 'Comprehensive Economic Partnership Agreement' with the Republic of Korea (Indo Korean CEPA), affirming their 10 C/50174/2021 respective commitments to develop an open market economy in Asia. This agreement obliges both the parties not to maintain any non-tariff barriers and to follow the Harmonized System of Nomenclature as the basis for classification. The Reserve Bank of India on 18.02.2015 issued a circular No. 79 dated 18.2.2015 specifically removing the prohibition from import of gold coins and medallions which were prohibited prior to February 2015. Pursuant thereto, the Foreign Trade Policy 2015-20 was notified vide Notification No. 01/2015 to remain in force from 01.04.2015 to 31.03.2020. In terms of Para 2.01 of the FTP, the imports of goods in India shall be free except regulated by way of 'prohibition', 'restriction' etc. as laid down in the Indian Trade Classification ("ITC (HS)") of exports and imports. As far as goods imported and classified under CTH 7114 1910 are concerned, in terms of the Schedule I of the ITC (HS), the same were freely importable without any restrictions prior to the issuance of the Notification No. 25/2017 dated 25.08.2017. Vide the said Import Policy, the Articles of gold were allowed to be imported free whereas coins of any metal other than gold, though were freely importable but were subject to RBI regulations, thus Import Policy of 2017 clarifies that since the goods in question were though coins but of gold, no prohibition is at all applicable upon these coins which were merely articles of gold.
17. The department also in its letter dated 14.9.2017 issued by the Commissioner of Customs and addressed to CBEC while referring to in the judgment of M/s. Abans Jewels Pvt. Ltd. (supra) has mentioned that gold coins (other than legal tender) are excluded from CTH 7118 as per the Explanation to HSN Notes and are covered under CTH 7114 and no restrictions / prohibitions exists on Imports of such gold coins till 24.08.2017. Relevant portion of the letter read as "4. In this context, it is stated that gold coins other than legal tenders are excluded from CTH 7118 as per explanation provided in HSN Explanatory Notes and therefore, the same are covered under CTH 11 C/50174/2021 7114. As per import policy given in ITC (HS) Schedule 1 for CTH 7114, policy for imports of the goods covered under the said heading is 'Free' without any policy conditions. Further, reference is also made to RBI Master Circular No. 17/2016-17 dated 01.01.2016 updated as on 12.01.2017 (as available on RBI website). As per para C.11.1.iv of the said Master Circular, "The import of gold coins and medallions is permitted.
5. In view of the above, this office is of the view that gold coins other than legal tender are covered under CTH 7114, that is an article of gold struck in the form of coin and there was no bar till 24.08.2017 on import of such gold coins. However, the matter is being brought to your kind notice for necessary clarification."
18. The DGFT has also issued Notification No. 25/ 2017 dated 25.08.2017 in connection with the amendment in import policy of gold and silver under Chapter 71 of the Tariff Act. The same is reproduced below:
"Directorate General of Foreign Trade Notification No. 25/2015-2020 New Delhi, Dated: 25th August, 2017 Subject: Amendment in import policy of gold and silver under Chapter 71 of the ITC (HS) 2017, Schedule-1 (Import Policy).
S.O. (E): In exercise of powers conferred by Section 3 (2) of the FT(D&R) Act, 1992 as amended from time to time, read-with paragraph 1.02 and 2.01 of the Foreign Trade Policy, 2015-2020, the Central Government hereby inserts Policy Condition No. 4 under Chapter 71 of the ITC(HS) 2017, Schedule-I (Import Policy) to read as under:
"Imports from South Korea of articles of jewellery and parts thereof, of precious metal or of metal clad with precious metal under Exim code 7113; articles of goldsmiths' or silversmiths' wares and parts thereof, of precious metal or of metal clad with precious metal under Exim code 7114; other articles of precious metal or of metal clad with precious metal under Exim code 7115; and coins under Exim code 7118 are Restricted."
19. Both these documents are sufficient to hold that gold coins in question were not restricted. Only such coins as are classified 12 C/50174/2021 under CTH 7118 that were restricted. As already held above that impugned gold coins are classified under CTH 7114. The RBI can issue regulations under section 58 of the Reserve Bank of India Act, 1934 or section 47 of the foreign Exchange Management Act, 1999. Section 58 of RBI Act requires such Regulations to be issued only by way of Notification. Section 48 of FEMA requires Regulations issued under section 47 FEMA to prior be presented before the parliament. Non of such regulations have been placed by the Department except a reference has been made to a letter issued by the RBI dated 13.09.2017 or the DGFT Memorandum. None of these documents can be called as Regulations issued by RBI under any of the discussed provisions. Otherwise also bar of RBI to issue directions under section 11 of Foreign Exchange Management Act extends only to authorized person with regard to making payment for foreign exchange or foreign security and RBI cannot regulate imports which are in the exclusive domain of DGFT.
20. The issue of prohibition has also been dealt with by this Tribunal in M/s. Abans Jewels (supra) case. We do not find any reason to differ from those findings which have been already followed in the case of M/s. Credence Cmmodities Exports vs Principal Commissioner of Customs, ACC (Imports) in Customs Appeal No. 50467 of 2021. Thus the issue number 2 & 3 as formulated above also stand decided in favour of the importer holding that the gold coins herein were not restricted / prohibited goods. Accordingly, the exemption as availed by the appellant under Notification No. 152/2009-Customs dated 31.12.2009 as amended by Notification No. 66/2016 Cus dated 31.12.2016, is held to be very much available to the appellant. We are of the opinion that Commissioner (Appeals) has wrongly relied upon the decision of Hon'ble High Court of Delhi in the case of Khandwala Enterprises Pvt Ltd. vs. Union of India (supra) case. We find that Hon'ble High Court of Delhi while appreciating 13 C/50174/2021 the above office memorandum dated 6.9.2017 as issued by Principal Commissioner has merely held that there was no reason to interfere with office memorandum. But, at the same time, the Hon'ble Delhi High Court also observed that importer can always establish before the Adjudicating Authority the cogent and convenient evidence to the effect that goods imported by it are entitled to the benefit of exemption. It was also observed by the Hon'ble Delhi High Court that manner in which the import item is described in the Bill of Entry is not necessarily conclusive as regards to its classifiability and importer can always establish that the item is not exclusively confined to the description contained in the Bill of Entry. Accordingly we hold that Adjudicating Authority below has wrongly interpreted the said decision. Infact has wrongly applied the same to the facts of the present case despite that the facts are not identical.
21. In the light of entire above discussion, we are not in agreement with the findings of Adjudicating Authority below. He is rather observed to have committed a judicial indiscipline by not following the earlier decisions which have been passed in the identical set of facts and circumstances. Resultantly, we hereby set aside the impugned order under challenge. Consequent thereto both the appeals in hand stand allowed.
(P V SUBBA RAO) MEMBER (TECHNICAL) ( DR. RACHNA GUPTA ) MEMBER (JUDICIAL) ss 14