2013 (11) TMI 494 - AT - Customs

Classification of the gold and silver medals imported - classifiable under Chapter 71 or under Heading 9705 00 90 - Benefit of Notification No.80/97-Cus. and Notification No.62/04-Cus. - Confiscation under section 111(d), 111(m) and 111(o) - Violation of RBI guidelines - Held that - 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 - goods were not collections at the end of the supplier but were marketed as collectors pieces - 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 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. 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 - 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. The consequence of violation of RBI guidelines is the 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% 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. 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 - Decided in favour of assessee.

Issues Involved:
1. Classification of gold and silver medals.
2. Eligibility for exemption under Notification No.80/97-Cus. and Notification No.62/04-Cus.
3. Addition of 2% local agency commission to assessable value.
4. Alleged violation of RBI guidelines.
5. Valuation of imported goods.

Detailed Analysis:

1. Classification of Gold and Silver Medals:
The core issue was whether the imported medals were "rare and collectors' pieces having numismatic interest" under Heading 9705 or should be classified under Chapter 71 as claimed by the appellants. The appellants argued that the medals were freshly minted and lacked the "age or rarity" required for classification under Heading 9705. The Tribunal found that the medals were marketed as collectors' pieces but were freshly minted and could be produced in large quantities if demand existed. The Tribunal concluded that the medals did not meet the criteria for classification under Heading 9705, thus should be classified under Chapter 71.

2. Eligibility for Exemption under Notification No.80/97-Cus. and Notification No.62/04-Cus:
The appellants claimed exemptions under these notifications, which were available for goods classified under Chapter 71. Since the Tribunal upheld the classification under Chapter 71, the appellants were found eligible for the exemptions. The Tribunal noted that the notifications intended to exempt coins and medals of gold and silver, reinforcing the classification under Chapter 71.

3. Addition of 2% Local Agency Commission to Assessable Value:
The Revenue contested that the 2% commission received by ICICIBL from GQIPL should be added to the assessable value. The Tribunal did not pass a specific order on this issue, noting that once the classification under Chapter 71 was upheld, the appellants were eligible to pay duty at specific rates under the relevant notifications, making the valuation issue inconsequential for duty payment.

4. Alleged Violation of RBI Guidelines:
The impugned order discussed a contravention of RBI guidelines regarding the tie-up arrangement for retailing imported gold. The Tribunal noted that the defense arguments submitted by ICICIBL were not examined in detail, and no clear finding was given. Since the goods were not available for confiscation, the Tribunal found that confiscation and penalties under Section 112(a) were not maintainable.

5. Valuation of Imported Goods:
The issue of valuation was raised but not detailed in the impugned order. The Tribunal did not pass an order on this issue, as the classification under Chapter 71 rendered the valuation issue irrelevant for duty payment under the specific rates of the applicable notifications.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeals filed by all appellants. The medals were classified under Chapter 71, making the appellants eligible for the exemptions under Notification No.80/97-Cus. and Notification No.62/04-Cus. The issues of valuation and RBI guideline violations were not conclusively addressed due to the primary classification decision.

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