Custom, Excise & Service Tax Tribunal
) M/S. Icici Bank Ltd vs Commissioner Of Customs ... on 4 November, 2013
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
C/397/2010, C/402 to 404/2010
C/MISC/513/2011, C/MISC/40576/2013 and C/409/2010
[Arising out of Order-in-Original No.441/2010 (ACC), dated 20.08.2010 passed by the Commissioner of Customs, Chennai]
FOR APPROVAL AND SIGNATURE:
Honble Shri Pradip Kumar Das, Judicial Member :
Honbe Shri Mathew John, Technical Member :
1. Whether Press Reporters may be allowed to see the Order
for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982? :
2. Whether it should be released under Rule 27 of the
CESTAT (Procedure) Rules, 1982 for publication in
any authoritative report or not? :
3. Whether the Members wish to see the fair copy of
the Order? :
4. Whether Order is to be circulated to the Departmental
Authorities? :
1) M/s. ICICI Bank Ltd.
2) Gold Quest International Pvt. Ltd.
3) Pushpan Appalanaidu
4) Joseph Augustineee
5) Jamnadas & Co.
Appellants
Versus
Commissioner of Customs (Airport-Cargo)
Chennai
Respondent
Appearance:
Shri V Balasubramanian
Shri Prabhat Kumar
Shr. Hari Radhakrishnan
Shri K.S.V.V. Prasad, SDR
For the Appellants 1
For Appellants 2 to 4
For Appellant 5
For the Respondent
CORAM:
Honble Shri Pradip Kumar Das, Judicial Member
Honbe Shri Mathew John, Technical Member
Date of hearing : 03-09-2013
Date of pronouncement 04-11-2013
FINAL ORDER NO.40506-40510/2013
Per Mathew John:
There are five appeals filed by five different appellants being considered in this proceeding. All the appeals arise from the same impugned order.
2.1. The first appellant, namely, ICICI Bank Ltd., (ICICIBL, in short), a commercial bank, imported 98 consignments of gold or silver medals during the period 01/04/2003 to 30/07/2007 and filed Bills of Entries for clearing the consignments. M/s Gold Quest International Pvt. Ltd. (GQIPL for short) paid the import value for these goods to ICICBL and additional 2% commission to ICICIBL and took possession of these goods. There is a dispute whether it was a transaction of sale between ICICBL and GQIPL or whether ICICIBL was acting as an agent for GQIPL. But this matter is not important in deciding the main dispute. The main dispute in the appeal filed by these two main appellants is the classification of the gold and silver medals imported. The appellants are contesting that the classification of the goods is under Chapter 71. The first appellant claimed classification 71081200 for gold medals and 71069290 for silver medals. The appellants claimed benefit of Notification No.80/97-Cus. and Notification No.62/04-Cus. for different periods. These exemption Notifications were applicable only to goods classifiable under Chapter 71. Revenue is contesting that the medals were classifiable under Heading 9705 00 90. There is also an issue contested by Revenue that local agency commission of 2% received by the first appellant from the second appellant, namely, GQIPL is to be added to the assessable value for determining customs duty. The impugned order denied the benefit of the exemption notifications claimed and confirmed a duty demand of Rs.25,27,89,159/- from ICICIBL along with interest. Further the goods valued at Rs.164,79,30,708/ were ordered to be confiscated under section 111(d), 111(m) and 111(o) of the Customs Act,1962. An option was given to redeem the goods on payment of a fine of Rs.8,23,00,000/-. (The goods were already cleared and were not available for confiscation or redemption). Further, a penalty of Rs.2.50 crores under Section 112(a) and 114A of the Customs Act, 1962 is imposed.
2.2. The second appellant, namely, GQIPL after taking possession of the goods from ICICB, sold such medals to M/s. Quest Net Enterprises India Pvt. Ltd. (QEIPL, in short). Apart from procuring medals imported through ICICIBL, the second appellant, GQIPL, directly imported 42 consignments of such goods by filing bills of entry in their own name during the period 01/01/2003 to 31/07/2007. In the case of gold medals imported, this second appellant had claimed classification under heading 71131190 in some cases and heading 71142020 in some other cases. In the case of silver medals, 71069290 in some cases and heading 71181000 in some other cases as seen from Annexure-II to SCN. The benefit of the exemption Notification No.80/97-Cus and Notification No.62/04-Cus was claimed and allowed. The impugned order denied benefit of these exemption notifications and confirmed a demand of Rs.1,30,44,357/- from this appellant along with interest. Further, the goods valued at Rs. 8,18,33,871/- was confiscated under section 111(d), 111(m) and 111(o) of Customs Act, 1962 and option given to redeem the goods on payment of fine of Rs. 41,00,000/-. (The goods were already cleared and were not available for confiscation or redemption). Further penalty of Rs. 13 lakhs under section 112 (a) and 114A of Customs Act, 1962 is imposed on this appellant.
2.3 The third appellant Shri. Pushpan Appalanaidu is Managing Director of the second appellant, which is a company. On this appellant there is a penalty of Rs.25 lakhs imposed under section 112(a)/114AA.
2.4 The fourth appellant, namely, Shri Joesph Augustine, is Associate Director of QEIPL and also the Senior Manager of GQIPL. There is a penalty of Rs.2 lakhs imposed under Section 112(a)/114AA on this appellant.
2.5 The fifth appellant, namely, M/s. Jamnadas & Co., is a Customs House Agent, through whom bills of entries were filed. There is a penalty of Rs.1,00,000/- imposed under Section 112 (a)/114AA of the Customs Act, 1962 on this appellant.
3. The medals imported by the first appellant, ICICIBL and second appellant, GQIPL had images of god, goddess, saints, temples, historical sites, well known historical persons like Shri Narayana Guru, Mother Teresa etc., embossed on each of the medals. The key question to be decided in these appeals is whether such medals were rare and collectors pieces having numismatic interest as held in the impugned order and consequently whether the correct classification of the goods was under heading 97.05 of Customs Tariff as decided in the impugned order as against classification under Chapter 71 claimed by the appellants. Actually, the issue is more precisely whether the imported items were eligible for exemption under Notification No.80/97-Cus. and Notification No.62/04-Cus. for different periods, which notifications were available to goods falling under Chapter 71 and not available to goods falling under Chapter 97. There is an issue of valuation adjudicated, in para 53 of the impugned order, ordering that the 2% margin charged by ICICIBL to GQIPL should form part of the assessable value for payment of duty. This issue becomes relevant if the goods are classifiable under Chapter 97 and consequently duty is to be paid based on value. If the goods are held to be classifiable under Chapter 71 the importers would be eligible to pay duty at specific rates under Notification No.80/97-Cus. and Notification No.62/04-Cus. for different periods.
4. There is contravention of RBI guidelines discussed para 25.9 but the question as to whether this issue will survive even if the goods are classifiable under Chapter 71 and how the goods would have been liable to confiscation under Section 111 (d) and 111 (o), irrespective of the classification, is not brought out clearly in the impugned order.
5. The investigation in the matter started first in the case of Bill of Entry No. 405093, dated 03.07.2007 filed by ICICIBL for clearance of 24 packages containing 4199 nos. of gold medals of purity 999.9 weighing 22,595.89 gms. valued at Rs.3,02,50,670/- and 5497 nos. of silver medals of purity 999.9 weighing 152.36 kgs. valued at Rs.53,03,397/-. The goods were first examined for assessment. Benefit of Customs Notification No.62/2004-Cus. dated 12.05.2004 was claimed by the importer. But, it was noticed that though the description in the invoice tallied with the description given in the Bill of Entry, the corresponding Air Way Bill No.020 66 99 6952, dated 25.06.2007 showed the description of the goods as Gold and Silver Coins Numismatics 24 pieces. The assessing officer made further queries to find out whether these coins were of numismatic interest because coins of numismatic interest were classifiable under Heading No.9705 of Customs Tariff and such goods were not eligible for exemption under Notification No.62/2004-Cus. dated 12.05.2004 as claimed. Two more similar consignments covered by Air Way Bill Nos.020 66997114 and 098 8644 3766 for which Bill of Entry No. 406929, dated 05.07.2007 and Bill of Entry No. 407786, dated 07-07-2007 were filed by ICICIBL declaring classification under Customs Tariff Heading 71081200 were found and the goods imported under the three bills of entries were provisionally assessed. The present impugned order does not deal with the three bills of entries assessed provisionally.
6. On 01.08.2007, the office premises of GQIPL, QEIPL was searched in the presence of Shri Joseph Augustinee and certain folders relating to import of gold and silver medallions, Xerox copies of extracts of stock register, physical stock verification report as on 31.07.2007 etc. were seized. Enquiries were conducted with Shri Joseph Augustinee, Associate Director of QEIPL and also the Senior Manager of GQIPL and his statement was recorded on 02.08.2007. It came out that QEIPL is a direct marketing company dealing in gold and silver medallions and GQIPL is the supplier of gold and silver coins to QEIPL. In his statement, Shri Joesph Augustinee stated that medals imported were specially minted medals, the cost of which would be higher than that for normal medals or coins, due to the craftsmanship, highest quality minting, rarity and finesse etc. Further, he agreed that the website of GQIPL is in Hong Kong which web-site is also for various other companies including QEIPL. This website markets their products using expressions like advantage collections, numismatics etc. These companies were also advertising scope of its service as procurement and sale of numismatic gold and silver medallions and the ISO 9001:2000 Certificate of compliance issued to QEIPL by the International Certification Services certified the scope of the certificate using expression Scope: Procurement and Sale of Numismatic Gold and Silver Medallions. He added that numismatic company is a tag line of the company and hence, these words form the part of their branding.
7. Revenue had recorded the statements of Shri N. Nagappan, Deputy Manager, M/s. Brinks Arya India Pvt. Ltd. (BAIPL, in short), which is an associate company of M/s. Brinks, Germany and engaged in the business of importing high value cargo by airlines and delivering it to customers. He stated that the expression coins-numismatics on the air way bills were included in the documents prepared by M/s. Brinks, Germany, based on the suppliers instructions.
8. Revenue also relies on comparison of value of normal gold/silver coins imported by ICICIBL, as compared to the value of impugned gold/silver medals. They further conducted enquiry about retail sale price of these items and the results are recorded in para 25.15 of the adjudication order. It was found that the impugned goods were sold in retail by QEIPL at about two times the value of normal gold coins on a per gram basis. According to Revenue this high price fetched in retail sale is only on account of rarity of the pieces and its numismatic interest. The facts relevant for deciding the classification of the goods are as recorded above, though the adjudication order records many other facts which in our view are not relevant for deciding the classification of the goods and the claim for exemption notification and hence those facts are not being stated in detail in this order.
9. Since the goods were described in the bill of entry as numismatics and its value was much higher as compared to ordinary gold coins, both at the time of import and in retail sale and since these goods were being marketed as collectors pieces and numismatic coins, Revenue was of the view that the goods were mis-declared by the importers in the bill of entry to avoid Customs duty.
10. Revenue located about 98 other consignments imported by ICICIBL and 42 consignments imported by GQIPL in the past classifying it under Chapter 71 of the Customs Tariff and proposed to re-classify the goods under Customs Tariff Heading 9705 and to deny the exemption and demand duty and to impose penalty for mis-declaration of the goods in the bill of entry with intention to evade payment of duty and the other three appellants were made parties to the Show cause Notice for having abetted evasion of Customs duty. The impugned order is in respect of these 98 consignments imported by ICICIB and 42 consignments imported by GQIPL and already cleared before issue of SCN.
11. As already stated, the core issue to be decided is the classification of goods. The learned Counsel for the appellants draw our attention to the Chapter notes under Chapter 9705 of the Customs Tariff Act which reads as under:-
97.05 - COLLECTIONS AND COLLECTORS PIECES OF ZOOLOGICAL, BOTANICAL, MINERALOGICAL, ANATOMICAL, HISTORICAL, ARCHEAOLOGICAL, PALAEONTOLOGICAL, ETHINOGRAPHIC OR NUMISMATIC INTEREST.
These articles are very often of little intrinsic value but derive their interest from their rarity, their grouping or their presentation. The heading includes:
(A) Collections and collectors pieces of zoological, botanical, mineralogical or anatomical interest, such as:
(1) Dead animals of any species, preserved dry or in liquid, stuffed animals for collections.
(2) Blown or sucked eggs, insects in boxes, frames, etc. (other than mounted articles constituting imitation jewellery or trinkets), empty shells, other than those of a kind suitable for industrial use.
(3) Seeds or plants, dried or preserved in liquid, herbariums
(4) Specimens of minerals (not being precious or semi-precious stones falling in Chapter 71); specimens of petrification.
(5) Osteological specimens (skeletons, skulls, bones)
(6) Anatomical and pathological specimens
(B) Collections and collectors pieces of historical, ethnographic, palaemotological or archaeological interest, for example:
(1) Articles being the material remains of human activity suitable for the study of the activities of earlier generations, such as: mummies, sarcophagi, weapons, objects of worship, articles of apparel, articles which have belonged to famous persons
(2) Articles having a bearing on the study of the activities, manners, customs and characteristics of contemporary primitive peoples, for example, tools, weapons or objects of worship
(3) Geological specimens for the study of fossils (extinct organisms which have left their remains or imprints in geological strata), whether animal or vegetable.
(C) Collections and collectors pieces of numismatic interest
These are coins and medals presented as collections or as separate pieces; in the latter case, each consignment usually contains only a few examples of any one coin or medal, and these are classified here only if clearly intended for a collection.
The heading excludes coins and medals not regards as collectors pieces nor forming it collection of numismatic interest (e.g. large consignments of any one coin or medal), these generally fall in Chapter 71 but any such coins and medals so battered or bent that they are fit only for remelting etc. Are prima facie classifiable in the headings for scrap and waste metal.
Coins which are legal tender in the country of issue fall in heading 71.18 even if they are put up for general sale in presentation cases.
Coins or medals mounted as jewellery are excluded (Chapter 71 or heading 97.06)
*
* * Goods produced as a commercial undertaking to commemorate, celebrate, illustrate or depict an event or any other matter, whether or not production is limited in quantity or circulation, do not fall in this heading as collections or collectors pieces of historical or numismatic interest unless the goods themselves have subsequently attained that interest by reason of their age or rarity.
12. The Ld. Advocate for ICICIBL submitted the following arguments.
12.01 The onus of proving the classification is on the Department and such onus has not been discharged.
12.02 The officers, who issued the SCN did not see the goods which were already cleared and the goods were not shown to any expert in the field and their advice taken.
12.03 He relies on Note (C) of Chapter 97 in HSN reproduced in para 11 and highlighted.
12.04 As per the note extracted above, imported goods do not fall under Chapter 97 and Note also suggest that it will fall under Chapter 71.
12.05 He also relies on the last Note in HSN under heading 97.05 which is reproduced in para 11 and highlighted. He argues that the medals imported were freshly minted ones and had not acquired age or rarity" to get classified under chapter 97.05.
12.06 Further, he relies on para 33 of adjudication order bringing out the details of statement given by Shri Joseph Augustineee as follows:-
"He further admitted that these products are designed, minted and imported based on customers demand and on consignment basis....", 12.07 He argues that since these medallions are 'designed, minted and imported' based on the orders placed, which medallions have no 'rarity or age', which is sine qua non as per the last HSN Note extracted above, irrespective of the quantity involved. However, the Advocate submitted a statement showing quantity of coins imported under 97 B/E showing that most of the pieces were imported in hundreds or a few thousands.
12.08 Neither the importer nor the exporter has declared the goods as 'numismatics' in the Airway Bill. Both of them were not parties to the Airway Bills. In any case, the description in the Airway Bill (prepared by a third person) cannot be the basis to decide the classification under CTH 9705. He pointed out that one of the airway bills described the goods as FRESHLY MINTED GOLD & SILVER MEDALLIONS.
12.09 He also points out the classification of the product was earlier taken up for adjudication by Show Cause Notice dated 21/09/2005, and on adjudication Classification under CTH 71 was confirmed with benefit of exemption Notification under a notification of the same nature in force for that period. This has reached finality without any further appeal and hence, it is not open to the Revenue to rake up the issue of Classification repeatedly.
Inapplicability of extended period of time limit and penalty 12.10 Appellant has been importing since 2002, besides other importers like STC, MMTC etc., classifying the goods under Chapter 71 and thus there was a legitimate expectation of classification under Chapter 71.
12.11 Cargo cleared after test and examination by jewellery group. Adjudication of the very same goods on classification and exemption was done earlier by issue of Show Cause Notice dated 21/09/2005.
12.12 Two Senior Executives viz., Mr. Kota Venkatesh and Mr. Manish Padhya of the Appellant, have been exonerated without any penalty. When the executives through whom the Appellant carried on the operations, have been exonerated, the Appellant Company cannot be accused of any mala fides warranting imposition of penalty.
12.13 The very fact that no penalty (equivalent to duty) has been imposed under Sec.114A, clearly demonstrates that there was no mens rea against Appellant in this case and the extended period is inapplicable and consequently Appellant would be entitled for refund of duty paid under protest.
12.14. M/s ICICIBL also contest the addition to the value as ordered in the impugned order. According to them, the transaction value will only depend upon the value declared in the invoice and the value actually paid to overseas supplier. The 2% margin which they have realized on sales to QEIPL cannot form part of the assessable value of the goods and is not covered by any of the provisions of Customs Valuation Rules, 1988.
13. The Learened Advocate Shri Prabhat Kumar in addition adopting the above arguments submitted the following arguments:
13.01. He invited our attention to Chapter Note No.7114 reading as under:
(E) Other articles for domestic or similar use, for example, busts, statuettes and other figures for interior decoration; jewel cases; table centre-pieces; vases, jardinihres, picture frames; lamps, candelabra, candle-sticks, chandeliers, mantelpiece ornaments, decorative dishes and plates, medals and medallions (other than those for personal adornment) sporting trophies; perfume burners, etc. So, he argues that classification claimed under Chapter 71 is justified.
13.02. He further pointed out that classification of goods cannot be determined on the basis of advertising gimmicks or marketing techniques or labels on packing materials. He relied on the following decisions of in this matter:-
(i) Vicco Laborataries Vs. CCE- 2007 (218) ELt 129 (Tri-Mum) affirmed by the Apex Court as reported at 2010 (255)ELT A 83
(ii) Teracom Privat Ltd Vs. CCE-2008 (222) ELT 58 (Tri-Mum)
(iii) Herbal Products Vs. CCE 2002(146) ELT 126(Tri-Bang) as affirmed by SC reported at 2004 (164) ELT A127(SC) 13.03. The Advocate points out that HSN notes are a safe guide for interpreting entries in Indian Customs Tariff as decided in the following decisions:
(i) LML Ltd Vs. CC-2010 (258) ELT 321(SC)
(ii) Hindalco Industries Ltd VsCCE-2009(237) ELT 588 (Tri-Ahmd.) affirmed by the Hon. Apex Court as reported at 2011(271) ELT A 70 (SC).
13.04. It is also their argument that all these goods were examined and thereafter, the customs officers classified the goods and finalized the assessment. The goods were seen by the Customs officers along with description given in import documents at the time of examination they did not consider the goods to be of numismatic interest. The advocate points out that another set of officers later issued the SCN without seeing the goods and such action cannot have much credence.
14. Opposing the submissions of the advocates the Ld. A.R. for Revenue makes the following submissions Documentary and other evidences on record:
14.01 In Airway Bills issued by the Airline Agents at the loading Port, the description of the cargo was mentioned as "Gold + Silver coin-numismatic". These documents were prepared by M/s. Brinks, Germany based on instructions given by the supplier, M/s. BH Mayer's Kunsprageanstalt Gmbh, Germany.
14.02 M/s. B. H. Mayer Mint, Germany founded in 1871 minted the coins in question as is evident from import documents and information on website.
14.03 Certificate of compliance issued by M/s. International Certification Services (Asia) Pvt. Ltd to M/s. Quest Net Enterprises India Pvt., Ltd., the scope of the company is mentioned as Procurement and Sale of Numismatic Gold and Silver Medallions.
14.04 In the website www.quest.net, the coins/medals under import were described as numismatic.
14.05 As per the website, these coins/medals are meant to satisfy one's passion for history, artistry and perfection in art and to immerse oneself in stunning treasures.
14.06 The website also specifies following advice on handling of these goods to keep the coins in the provided presentation box; to install a dehumidifier; to keep them in dry environment with minimal average temperature; during examination of the coins, hold the coins by its fingertips; oil or acid from once hands can blemish the original shine of the coins; wear cotton clothes to handle the coins; do not drop coins to avoid denting and damage; not to slide coins over a hard surface; dry not to clean coins at all etc. All these instructions indicate that these are not normal gold coins/medallions but are rare collections to be safeguarded with due care.
14.07 Shri Joseph Augustineee, Associate Director of M/s. Quest Net Enterprises India Pvt. Ltd and Senior Manager in M/s. Gold Quest International Pvt. Ltd, vide his statement dated 2.8.2007 has stated inter alia, that the imported Gold/ Silver Coins were 'limited edition' exclusive and special products.
14.08 In view of the above, it is clear that the imported goods were presented as collection of numismatic interest by the supplier, imported as collection by the appellants and these were marketed as collection to the public and are known as collections to the potential collectors and in common trade parlance. Hence, they are rightly classified under CTH 9705 as they are "Collections or Collectors Pieces of Numismatic Interest.
Arguments based on Dictionary Meaning of Numismatic 14.09 Numismatic is not defined under Tariff Schedule nor under HSN Notes.
As per Chambers Dictionary:
adj. relating to money, coins or medals n. the study or collection of coins and medals.
14.10. The meaning available for "Medal" as per Chambers Dictionary is as below:
n. a piece of metal used in the form of a coin bearing some design or inscription, struck or cast in commemoration of an event or as a reward of merit.
14.11. Goods in question being 'Gold and Silver coins' with various motifs, it would be correct to treat them as 'Coins and Medals'.
Arguments against classification under Ch.71. i.e 7108 or 7114 or 7118.
14.12. Appellants have claimed the classification under CTH 7108. The said CTH refers to gold in unwrought or in semi-manufactured form whereas in the present case goods are in completely finished form with special craftsmanship with attendant instructions for their upkeep and maintenance, thus, cannot be classified under CTH 7108. Moreover, the assessable value of gold/silver coins imported by M/s. ICICIBL, on behalf of the appellant-Company is much higher (more than double) than the assessable value of ordinary gold medallions imported by M/s. ICICIBL, on their own behalf for sale to general public. Thus it is not the intrinsic value of the metal (gold/silver) is valued here and thus imported goods do not merit classification under CTH 7108.
14.13. Even though, they have not sought the classification under 7114 before the original authority or in the appeal papers, appellant's advocate has cited that Tariff heading during the submissions before the Hon'ble Bench. Perusal of the CTH 7114 shows that it deals with goldsmith or silversmith ware which inter alia includes items used in domestic or for decoration purposes. Imported goods are certainly not meant for the same. Following the principles of ejusdem gemeric or Noscitur a sociis, the imported items do not fall under the said CTH 7114.
14.14. CTH 7118 refers to legal tenders of present and past (which are no more in currency). Coins/medals imported in this case have never been legal tenders (presently or in the past). Further, HSN of 7118 excludes collectors' pieces (as finds mention under 9705). Thus, classification under 0TH 7118 is also ruled out. In view of the above submissions, it is evident that the imported goods are not classifiable under chapter 71 and thus not entitled for the exemption claimed by them.
Arguments based on HSN notes under CTH 9705:
14.15. Goods, which are in the nature of numismatic interest are classifiable under heading Other 9705. As per HSN of 9705, coins/medals presented as collection are classifiable under Other 9705. The subject goods satisfy both the criteria as being of numismatic interest and also are presented as collections.
Argument based on High Value of the goods as compared to ordinary gold coins 14.16. These goods are presented as collections to the potential collectors as is evident from the literature and documentary evidences in this case. This is supported by the fact that, during relevant period, the assessable value of gold/silver coins imported by M/s. ICICIBL, on behalf of the appellant-Company is higher than the assessable value of ordinary gold medallions imported by M/s. ICICIBL, on their own behalf for sale to general public. Moreover, during the relevant period, one number of imported 6 gram gold medallion was sold by M/s Quest Net Enterprises India Pvt. Ltd., to general public for a sum of Rs.32,200/-.
14.17. With regard to the volume of pieces in question for considering the same as 'collections and pieces of rarity', the volume needs to be examined with reference to the potential number of collectors in a population of 120 crores. In this case, even as per appellants submissions, some medallions are imported as limited as 2 or 3 or 4 or 6 and also some at a range of 50 to 100, some at 1000-4000. Even the described under single description like Lakshmi and numbered as 3798, there are so many varieties in it like 8 varieties of asthalakshmis itself. Thus, numbers of a specific variety come down drastically. Even in the later case, they were presented as limited edition of rare collections only and thus rightly under CTH 9705.
14.18 The gold coins/medals with motifs of Humayun Tomb, Tajmahal, Bahubali, Brahadeeswara Temple, Lakshmi, Ganapathi, Jesus, Ajmer Sherief, etc., are considered as items of collection. These goods, from the view point of potential `Purchaser Collector', are collectors items, presented so, and viewed so by the public. In view of limited editions of these coins/medals, they have to be treated as collections classifiable under CTH 9705.
14.19 These gold and silver medallions were imported and sold to the public at a price which were much higher than the than prevailing market price of gold and silver coins/jewellery because of their specific mintage, limited editions and rarity of collections and collectors interest having numismatics value.
General Rules of Interpretation (GIR) of Customs Tariff.
14.20 In terms of Rule 3(a) of GIR, CTH 9705 is a specific heading to include goods shipped as of numismatic interest and presented as collector's pieces.
14.21 Even in case of contention with any heading of Chapter 71, in terms of GIR 3 (c), 9705 is the appropriate heading as it occurs last in numerical order.
14.22 Without prejudice to the above, perusal of Rule 4 of GIR will also indicate that goods in question are akin to those that merit classification under CTH 9705.
14.23. He further submits that the Customs officers, who examined the goods were not aware of the business transaction of the seller abroad to the importer and also the manner in which these medals were sold in retail. In the absence of which, the Customs officers have gone by prima facie appearance of the goods. When documents revealed a different position, it is only proper that the demand notice was issued invoking the extended period of time since the appellant had suppressed information in their possession by not disclosing it to the Customs officers.
15. We have considered submissions on both sides.
16. As far as facts are concerned it is fairly clear that these goods were marketed to the public as coins/medals of numismatic interest and higher prices per gram of gold/silver were charged from the buyers as compared to such prices for coins of same purity. It is also clear that these goods were freshly minted medals minted to order. Thus the goods were not collections at the end of the supplier but were marketed as collectors pieces.
17. As regards classification based on facts as stated above, on the one hand it is a settled principle hat HSN notes are a safe guide for interpreting the scope of entries in the schedule to Indian Customs Tariff Act and it is also settled through judicial decisions that marketing gimmicks adopted for marketing a product cannot be relied upon for deciding classification. The decisions of the Apex Court on the above two principles are already discussed in para 13.02 and 13.03 above. The Tariff is aligned to HSN codes and descriptions so that India gets integrated into the world trading community adopting the same classification of goods. If the Explanatory Notes in HSN given in Heading 9705 is considered, the impugned goods cannot be considered as items of numismatic interest because these goods were freshly minted against orders and 100s of such pieces are minted and if there was demand from more gullible people flush with money to buy such items, many more could be minted and sold at such high prices. Since the HSN notes 9705 (as recorded in paras 11, 12.03, 12.04 above) are very explicit in the matter, it is not proper to adopt a different classification for the reason that the exporting company was established in the year 1871 or because the marketing agency adopted a gimmick of presenting the goods as items of numismatic interest to sell the goods to retail investors at high prices. This Tribunal cannot address the issue of cheating, if any, of customers in this matter.
18. We further take note of the contents of Notification 62/04-Cus. dated 12-05-04, which is the real bone of contention. The notification is re-produced below:
In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 80/1997-Customs, dated the 21st October, 1997, published in the Gazette of India, Extraordinary vide, G.S.R. No. 610(E), dated the 21st October, 1997, hereby exempts goods of the description specified in column (2) of the Table hereto annexed and falling within Chapter 71 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), when imported into India, other than through post, courier or baggage, from so much of the duty of customs leviable thereon which is specified in the said First Schedule as is in excess of the amount calculated at the rate specified in the corresponding entry in column (3) of the said Table and from the whole of the additional duty of customs leviable thereon under section 3 of the said Customs Tariff Act.
TABLE S. No. Description of goods Rate (1) (2) (3)
1.
Gold bars, other than tola bars, bearing Manufacturers or refiners engraved serial number and weight expressed in metric units, and old coins Rs. 100 per 10 gms.
2. Gold in any form (other than those specified, against S. No. 1, in this column), including liquid gold and tola bars Rs. 250 per 10 gms.
3. Silver in any form Rs. 500 per kg.
Explanation. - For the purposes of this notification, the expression Gold in any form or Silver in any form shall include medallions and coins, but shall not include jewellery made of gold or silver, as the case may be, and foreign currency coins.
(highlighting supplied)
19. It is clear from the explanation to the Notification that the exemption was intended for coins and medals of gold and silver and the notification is issued with an understanding that these will fall under Chapter 71. However there is lack of clarity as to the heading of Chapter 71 under which these goods will get classified. On going through the Customs Tariff and HSN explanatory Notes this issue does not get resolved very easily because each of the headings 7108, 7113 and 7114 and 7118 may not be exactly suitable for coins and medals for the following reasons
(i) Heading 7108 covers only unwrought gold. What was imported was gold of 999.99 purity which could not be considered as unwrought
(ii) Heading 7113 covers articles of Jewellery. Coin or medal cannot be considered as an article of jewellery
(iii) Heading 7114 covers Articles of goldsmiths or silversmiths wares and gold/silver coin or medal cannot be considered as goldsmiths ware or silversmiths ware. However Note (E) in HSN for this heading specifically mentions that medals and medallions are covered by this heading.
(iv) Heading 7118 would appear to cover coins. But HSN notes explains that this heading applies to coins of any metals (including precious metals) of officially prescribed weight and design, issued under government control for use as legal tender. However the note is to the effect that coins being legal tender of any metal will be covered by this heading falling under chapter 71 for Precious Metals. The note does not say that gold coins which are not legal tender will not fall under this heading.
20. Of course, the above discussions are also to be seen along with note 1 of Chapter 71, which is reproduced below:
1. Subject to note 1 (a) to section VI and except as provided below, all articles consisting wholly or partly:
(a) of natural or synthetic pearls or of precious or semi-precious stones (natural, synthetic or reconstructed) or
(b) of precious metal or of metal clad with precious metal, are to be classified in this chapter
21. Since Note 1(a) of Section VI is not relevant to the context the only note to be considered is Note 3 (p) of Chapter 95. That is to say if goods are not classifiable under heading 97.05 or 97.06 the goods are classifiable under Chapter 71. For the reason as explained above the goods cannot be classified under heading 97.05.
22. Once the classification under Heading 9705 is overruled classification under Chapter 71 follows as a corollary of the HSN notes under heading 97.05 which itself suggests classification under Chapter 71 without specifying the heading. There is no reason for altering such classification though the exact classification under Chapter 71 needs further examination. Since this issue is not examined by lower authorities we do not want to give a final decision on this issue. At this stage, decision on this issue is not relevant for passing a final order because the exemption under the relevant notifications Notification No.80/97-Cus. and Notification No.62/04-Cus. were available so long as the goods were classifiable under Chapter 71 irrespective of the heading under which it was getting classified under Chapter 71. Since the classification under Chapter 71 done at the time of import is found to be in order no proceedings initiated against any of the appellants including the Customs House Agent can survive and so the detailed submission given by Appellant No.5 are not being recorded.
23. We are not dealing with the issue of alleged violation of RBI guidelines that banks nominated for importing gold should not have entered into tie up arrangement with non-nominated banks/non-banking financial companies/ co-operative banks for retailing of imported gold/gold coins. This issue is discussed in para 25.9 of the impugned order. The consequence of this as seen from in the impugned order to be confiscation under 111(d) and 111(o) of Customs Act. It is seen that the defense arguments submitted by the ICICIBL is not examined with reference to the factual position that goods were sold by ICICIBL to on payment of RST 1% as stated in para 25.15 of the impugned order and no is finding given with reference the argument that ICICIBL was not acting as agent for GQIPL but selling the goods to GQIPL. Further, we note that the goods were not available for confiscation. So, confiscation is not maintainable and consequently, penalties under section 112 (a) also are not maintainable.
24. There is an issue of valuation as raised in para 26(c) of the impugned order and adjudicated in para 53 of the order. We are not passing any order on this issue because the exact rule of the Customs Valuation (Determination of Price of Imported goods) Rules, 1988 relied upon is not discussed in the order. Nor was it argued by either side in detail. Further, once classification under Chapter 71 is upheld the appellants were eligible to pay duty at specific rates under notifications Notification No.80/97-Cus. and Notification No.62/04-Cus. and valuation was of no consequence for payment of duty.
25. For reasons recorded above the impugned order is set aside and the appeals filed by all the appellants are allowed.
(Pronounced in open court on 04-11-2013)
(MATHEW JOHN) (PRADIP KUMAR DAS)
TECHNICAL MEMBER JUDICIAL MEMBER
ksr
DRAFT
Remarks
I
II
III
Date of dictation
11-09-2-13
Draft Order - Date of typing
11-09-2013
25.10.2013
Fair Order Typing
31.10.2013
Date of number and date of dispatch
34
C/397/2010