2006 (9) TMI 35 - AT - Central Excise

Article - Stated that the watch with its case and bracelet made wholly of precious metal and studded with precious stone is classifeid as an article of jewellery not as a watch.

Summary

Issues: Classification of watches with precious metals and stones under CETA 1985

Issue 1: Classification of watches under CETA 1985
The case involved the classification of watches manufactured by a company under CETA 1985. The company had initially classified the watches under CSH 9101.00 but later wanted to classify them under CSH 7101.40. The Assistant Commissioner approved the classification under CSH 9101.00 based on the terms of the heading and relevant Chapter notes. He noted that watches with cases wholly of precious metal fell under heading 9101 according to Note 2 to Chapter 91.

Issue 2: Appeal against classification
The company appealed the decision, arguing that the watches were primarily jewelry and their time-keeping function was secondary. They contended that consumers bought the watches for their ornamental value rather than as timepieces. The Commissioner considered Chapter sub-headings 91.01, 91.02, and 7101.40 to decide the issue. He upheld the classification under CSH 9101.00 based on the HSN explanatory notes, which stated that watches of Chapter 91 could be made of any material, including precious metals and stones.

Issue 3: Grounds for appeal
In the subsequent appeal, the company claimed that the watches were purchased for their ornamental value, not as timepieces. They argued that the watches should be classified as jewelry under Rule 3(b) of the interpretative rules. The company emphasized the ornamental value of the watches and asserted that the Department had not proven that the items were watches and not jewelry.

Analysis and Conclusion
The Tribunal noted that the watches in question had cases and bracelets made of precious metal and were studded with precious stones. The dominant character of the watches as timepieces could not be disregarded, even if they were also ornamental. The Tribunal emphasized that the watches fell under CSH 9101.00, which covered watches with cases wholly of precious metal. The argument that the watches were purchased for their ornamental value did not alter their classification as watches under the relevant Chapter notes. The Tribunal upheld the classification under CSH 9101.00 based on the unambiguous text of the tariff entry and the explanatory notes in the HSN under Chapter 91. Consequently, the appeal was found to be without merit and was dismissed.