2009 (9) TMI 385 - AT - Customs

Exemption- Notification No. 11/Cus./78 dated 7-1-78- The brief facts of the case are that the respondent filed Bill of Entry for clearance of two types of goods viz., (a) Rough Tumbled Turqurenite (b) Rough Tumbled Tiger Eye. The respondent claimed the clearance of the goods under CTSH 7103.10 read with exemption Notification No. 11/Cus./78 dated 7-1-78. The short point involved in this matter is that the respondents are claiming classification under Heading 7103.10 read with Notification No. 11/78-Cus. which exempts rough semi-precious stones falling under Heading 71.03 of Customs Tariff. However, the department is of the view that the goods are classifiable under Heading 6810.99, which covers articles of other artificial stones and as such the exemption of Notification No. 11/78-Cus. is not available to the impugned goods. The commissioner (Appeal) allow the appeal of respondent. Held that- as rightly submitted by the Revenue, even the chemical composition of the stone deffers when compared with the certificate produced by the respondent and the report of the DYCC. The respondents have not chosen to explain the differences in chemical composition also.Under these circumstances, we allow the appeal filed by the Revenue and hold that the product in question is not a natural rough semi-precious stone and uphold the order of the Joint Commissioner.

Summary

Issues:
1. Continuous adjournment requests by the respondent during the proceedings.
2. Classification of goods under Heading 7103.10 read with Notification No. 11/78-Cus. for duty exemption versus classification under Heading 6810.99 as per the department's view.

Analysis:
1. The judgment revolves around the respondent's persistent requests for adjournments during the proceedings. The respondent repeatedly sought adjournments, delaying the case multiple times. Despite the respondent's latest request for an adjournment being denied, the Bench proceeded with the hearing and made a final decision on the merits of the case.

2. The core issue in this case pertains to the classification of goods. The respondent claimed duty exemption under Heading 7103.10 with reference to Notification No. 11/78-Cus., asserting that the goods were rough semi-precious stones. However, the department contended that the goods should be classified under Heading 6810.99, considering them as articles of other artificial stones, thus making them ineligible for the duty exemption provided under the said notification.

3. The physical examination of the impugned rough semi-precious stones revealed discrepancies. While one type of stone, Tiger Eye, was confirmed to be entitled to duty exemption, the other stone, initially declared as Turqurenite, was sent for further testing. The Gemmological Institute of India's report suggested that the stone might be reconstructed or treated Turquoise, not the rough Turqurenite as claimed by the respondent. Subsequent analysis by the Deputy Chief Chemist Laboratory revealed that the stone mainly consisted of calcium carbonate, synthetic resin binds, and organic coloring matter, leading to a classification under CTSH 6810.99 by the Joint Commissioner.

4. The respondent appealed to the Commissioner of Customs (Appeals), who favored the respondent based on the authenticity of the test report submitted and granted the benefit of the doubt. However, the revenue challenged this decision, leading to the current appeal. The department's argument relied on conflicting reports from the Gemmological Institute of India and the DYCC Laboratory, emphasizing that both reports concurred that the stone was not a natural rough semi-precious stone but rather reconstructed or treated, based on physical and chemical analyses.

5. After careful consideration of the submissions and evidence, the appellate tribunal sided with the revenue, rejecting the respondent's claim for duty exemption under Heading 7103.10. The tribunal upheld the Joint Commissioner's decision, concluding that the disputed product did not qualify as a natural rough semi-precious stone, based on the findings of the analytical reports and the lack of explanation for the inconsistencies in the chemical composition of the stone.

This detailed analysis encapsulates the key issues, arguments, and the tribunal's decision in the legal judgment.