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Issues: Classification of imported goods under Customs Tariff Act, 1975.
The judgment by the Appellate Tribunal CEGAT, New Delhi involved the classification of imported goods by M/s. Bhukhanawala Diamond Tools Pvt. Ltd. The goods were described as "Formset Dresser Diamond" in the invoice and "Synthetic Industrial Diamond" in the Bill of Entry. The appellants claimed classification under Heading No. 71.02(3) of the Customs Tariff Act, 1975 with the benefit of exemption Notification No. 131-Cus., dated 1.7.1977. However, the Assistant Collector classified the goods under Heading No. 68.01/16(1), directing assessment at 100% ad valorem plus additional duty equivalent to excise duty. This decision was upheld by the Collector of Customs (Appeals), leading to the present appeal. The main issue revolved around the correct classification of the goods. The Assistant Collector and the Collector of Customs (Appeals) classified the goods as agglomerated diamond abrasives under Heading 68.01/16(1). However, the Tribunal analyzed the characteristics of the goods, noting that they were not in dust or powder form, ruling out classification under Heading 71.04. The Tribunal emphasized that the goods were described as "Formset Dresser Diamond," consisting of polycrystalline diamond designed for specific industrial applications. The literature on the goods indicated that they were synthetic diamonds, not agglomerated diamond abrasives as contended by the lower authorities. The Tribunal also highlighted that the statutory Note 2(k) excluded abrasive goods containing dust or powder, which did not apply to the subject goods, further supporting their classification under Chapter 71. The Tribunal examined the relevant statutory notes to determine the appropriate classification. It noted that Note 1(a) to Chapter 71 specified that articles consisting of precious or semi-precious stones should be classified within Chapter 71. The choice for classification within Chapter 71 was between Headings 71.02(3) and 71.03. While the Collector (Appeals) ruled out Heading 71.03, the Tribunal disagreed, considering the goods as not cut to shape and size after formation. The Tribunal concluded that synthetic diamonds fell under Heading 71.03 due to its specificity regarding synthetic precious or semi-precious stones, leading to the correct classification of the goods. The Tribunal also addressed the applicability of Notification No. 131-Cus., dated 1.7.1977, which exempted synthetic industrial diamonds under Chapter 71 from excess customs duty. Given the classification of the goods under Chapter 71, the notification applied, granting the appellants relief from additional duties. Consequently, the appeal was allowed, and the goods were classified under Heading 71.03 of the Customs Tariff Schedule, providing the appellants with the benefits of the notification and consequential relief.
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