1999 (8) TMI 441 - AT - Customs

Summary

Issues:
Classification of porcelain items under Customs Act, 1962 - Correct classification of Vase, Champion Cup, Peacock Champion Cup, Gourd Pot, Lamp Stand, and Basket - Confiscation of items - Redemption fine and penalty imposed - Mens rea absent for penalty invocation.

Analysis:
The appeal challenged the order of the Commissioner of Customs (Appeals) regarding the classification of six porcelain items imported by the appellants. The dispute centered around whether the items should be classified under Chapter Heading 69.13 as ornamental articles or under Chapter Heading 69.11 as tableware and kitchenware eligible for import under Special Import Licence (SIL).

The Additional Commissioner of Customs classified the items based on their utility and ornamental value. While Vases and Porcelain Basket were considered capable of being used as intended, items like Champion Cup, Peacock Champion Cup, and Gourd Pot were deemed ornamental with limited utility. The Lamp Stand was excluded from Chapter 69 classification. The Commissioner (Appeals) upheld the classification under Chapter Heading 69.13 for the disputed items but set aside the penalty due to the absence of mens rea and no mis-declaration or under-valuation issues.

The appellants argued that the items were merely decorated household articles with intact utility and should be classified under Chapter Heading 69.11. They contended that the decoration did not impair the usefulness of the items as containers and referred to HSN notes for classification guidance. The Revenue failed to prove that the items fell under Chapter Heading 69.13, according to the appellants.

Upon examination of the disputed items, the tribunal considered whether the items retained their character as tableware, kitchenware, or household articles despite ornamentation. The tribunal concluded that due to the highly decorative and ornamental nature of the goods, they did not fit the category of articles classified under 6911.10 (Tableware and Kitchenware) of the Customs Tariff Act, 1975. Therefore, the impugned order was upheld, and the appeal was dismissed.

In summary, the judgment addressed the correct classification of porcelain items under the Customs Act, focusing on utility versus ornamental value. The tribunal upheld the classification under Chapter Heading 69.13 for the disputed items based on their highly decorative nature, leading to their exclusion from the tableware and kitchenware category eligible for SIL import. The penalty was set aside due to the absence of mens rea, highlighting the importance of classification criteria and utility assessment in customs disputes.