1998 (2) TMI 333 - AT - Customs

Watch cases with bracelets - not eligible for benefit of exemption under Notification No. 44/85-Cus. and No. 65/87-Cus.

Issues Involved: Eligibility for concessional rate of customs duty under Notification No. 65/87-Cus., classification of imported goods, applicability of Notification No. 43/85-Cus., and imposition of penalties and fines.

Issue 1: Eligibility for Concessional Rate of Customs Duty under Notification No. 65/87-Cus.
The primary issue was whether the imported watch cases with attached bracelets qualified for a concessional rate of customs duty under Notification No. 65/87-Cus., dated 1-3-1987. The appellants argued that the watch cases with bracelets should be considered as complete watch cases, thereby qualifying for the concessional rate. However, the Tribunal held that the watch cases with bracelets were not complete watch cases as per the notification. The Tribunal emphasized that a watch case and a bracelet are distinct items, with the bracelet being an accessory and not a component of the watch case. Consequently, the imported goods did not qualify for the concessional rate under Notification No. 65/87-Cus.

Issue 2: Classification of Imported Goods
The Tribunal examined whether the imported goods, described as watch cases with bracelets, were correctly classified under the Customs Tariff. The Tribunal noted that watch cases and bracelets are classified under different headings: watch cases under Heading No. 91.11 and bracelets under Heading No. 91.13. The Tribunal concluded that the imported goods were more than just watch cases and could not be classified solely as watch cases for customs purposes. Therefore, the goods were not eligible for the concessional rate of duty as complete watch cases.

Issue 3: Applicability of Notification No. 43/85-Cus.
The appellants made an alternative plea for the applicability of Notification No. 43/85-Cus., which provided a concessional rate of duty for components of quartz analog wrist watches. The Tribunal examined this plea and determined that the bracelet, being an accessory and not a component of the watch, did not qualify for the concessional rate under Notification No. 43/85-Cus. The Tribunal emphasized that the bracelet did not contribute to the manufacture of the watch and was not a constituent part of the watch.

Issue 4: Imposition of Penalties and Fines
The Tribunal upheld the penalties and fines imposed by the adjudicating authority. The Collector of Customs, Bangalore, had imposed a penalty of Rs. 50,000/- and a redemption fine of Rs. 1 lakh in one order, and a penalty of Rs. 75,000/- along with a demand for duty amounting to Rs. 7,56,776.77 in another order. The Tribunal found no grounds to interfere with the adjudicating authority's decision, considering the facts and circumstances of the case.

Conclusion:
The Tribunal rejected both appeals, confirming that the imported watch cases with bracelets were not eligible for the concessional rate of customs duty under Notification No. 65/87-Cus. or Notification No. 43/85-Cus. The classification of the goods as distinct from complete watch cases was upheld, and the penalties and fines imposed by the adjudicating authority were deemed reasonable and justified.

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