2016 (5) TMI 303 - SC - Customs

Import of spectacle lense - Department treated them as semi-finished spectacles lenses classifying under the CTH 9001.90.90 but appellant classified it under CTH 9001.40.90 & 9001.50.00 - Entitlement for benefit of Notification No.06/06 CE dated 1st March, 2006 - Held that - there is no change in the tariff rate or in the nomenclature of various entries in the earlier notifications which were of tariff heading of 8 digits. As a consequence, when the spectacle lenses imported by the appellant were given the benefit of exemption as per the exemption notification No.6/6 dated 1st March, 2006, the said position continued even thereafter and therefore the appellant was entitled to the benefit of this notification even for the period in question. The adjudicating authority as well as the CESTAT have been influenced by the fact that the goods in question were re-classified as semi-finished spectacle lenses and on that basis it is held that since these were semi-finished spectacle lenses and not finished one, the benefit of exemption notification which is available only in the case of spectacle lenses, i.e., that is finished spectacle lenses, would not be available to the appellant herein. This approach of the authorities below was clearly erroneous. It is the power lenses which were imported by the appellant herein. They were treated as semi-finished only because of the reason that while fitting these lenses for a particular customer, i.e., before customizing according to the prescription, they were to be finished lenses. Therefore, the goods could not be treated as semi-finished and it could be appropriately described as to be finished spectacle lenses and are entitled to exemption as per notification No.6/06 CE dated 1st March, 2006. - Decided in favour of assessee.

Summary

Issues:
Classification of imported spectacle lenses under Customs Tariff Heading, denial of exemption under Notification No.6/06CE, historical background affecting entitlement to exemption.

Analysis:
The appellant imported spectacle lenses classified under Customs Tariff Heading 9001.40.90 & 9001.50.00, seeking exemption under Notification No.6/06CE. However, the assessing authority classified the goods under Chapter Heading 9001.90.90, denying the exemption as the goods were considered semi-finished. The appeal and CESTAT appeal were dismissed, leading to the Supreme Court's intervention.

The determination of the appellant's entitlement to the exemption hinged on historical treatment of such goods until the Notification dated 1st March, 2006. The historical background revealed that spectacle lenses attracted nil duty until 2004, with subsequent exemptions granted. Despite changes in the tariff schedule, the Department clarified that the introduction of 8-digit headings did not alter the duty rates or exemptions. Therefore, the appellant was entitled to the exemption under Notification No.6/06CE even for the relevant period.

The authorities below erred in reclassifying the goods as semi-finished spectacle lenses, thus denying the exemption meant for finished spectacle lenses. The Supreme Court clarified that the lenses were power lenses imported by the appellant, treated as semi-finished due to customization before fitting them for customers. As these lenses were to be finished before use, they should be considered "to be finished spectacle lenses" and not semi-finished. The Court overturned the CESTAT judgment, ruling in favor of the appellant's entitlement to the exemption under Notification No.6/06CE.

In conclusion, the Supreme Court set aside the CESTAT judgment, holding that the imported goods were indeed entitled to exemption under Notification No.6/06CE. The appeals were allowed, granting the appellant consequential benefits.