2021 (9) TMI 91 - HC - Customs

Classification of imported goods - consignment of gold pendants weighing 5 kgs - to be classified under Custom Tariff Heading (CTH) 7108 or CTH 7113? - prohibited goods or not - concessional rate of duty in terms of Free Trade Agreement (FTA) - HELD THAT - The subject goods under import were subjected to refining and manufacturing process, resulting in getting an oval shape with flower symbol and purity being imprinted thereon. Thus, the subject goods were in fully worked and finished condition. Exim Code and CTH 7108 and with sub-heading and item description 7108-12-00 under which heading the respondents seek to classify the subject import deals with Gold - unwrought . The term unwrought as used in the heading means Gold that is not worked upon thereby meaning not subjected to process of refining and reaching finished condition . It is to be noted that from the date of filing of Bill entry by the petitioner on 10.05.2021 till 05.06.2021 i.e., the date of seizure, the respondents did not raise any doubt as to the mis-declaring / mis- classifying the goods as Articles of Jewellery . A reading of panchanama drawn on 05.06.2021 and also the subsequent two panchanamas would show that the correct description of the goods is not given, as it fails to mention that each of the pendant had a protrusion with a hole and a ring through which a chain can be passed through, so that the imported goods can be worn as a hanging in the neck - The term Gold Bar as known to people dealing in such goods, is of a rectangular form having specified length and width and also of a higher weight. That apart, when the Import of Gold was regulated in the Gold (Control) Act, 1968, the bringing in Gold into country in small quantity was in the form of Biscuit - weighing about 50 grams and above, followed by Gold-Bar and the last and bigger form being Gold-Brick. Since, the goods imported by the petitioner are classifiable under Exim code 711319, the amendment made to the policy condition from free to restricted would not be applicable. If the import of goods is not restricted and is permitted as free , the subject import cannot be considered as prohibited goods liable for confiscation. The seizure of import consignment is set aside - the respondents are directed to assess Bill of Entry classifying the goods as falling under CTH 7113 1910, within a period of five (5) days from the date of receipt of a copy of this order - the respondents shall bear the warehousing charges payable for keeping the imported consignment under safe custody till the date of release - Petition allowed - decided in favor of petitioner.

Summary

Issues Involved:
1. Legality of the seizure of imported gold pendants.
2. Classification of the imported goods under the Customs Tariff.
3. Applicability of the Import Policy and Foreign Trade Policy.
4. Compliance with procedural requirements for import clearance.
5. Validity of the respondents' actions regarding the import consignment.

Issue-wise Detailed Analysis:

1. Legality of the Seizure of Imported Gold Pendants:
The petitioner challenged the respondents' action of seizing the imported gold pendants weighing 5 kgs under Bill of Entry No. 3892849 dated 10.05.2021. The seizure was conducted under a Panchanama drawn on 05.06.2021. The petitioner contended that the seizure was illegal, mala fide, and motivated. The court took note of the sequence of events and the respondents' actions following the filing of the Writ Petition.

2. Classification of the Imported Goods under the Customs Tariff:
The petitioner classified the imported goods as "Articles of jewellery and parts thereof, of precious metal or of metal clad with precious metal" under Custom Tariff Trading No. 7113 19 10, claiming they were "freely importable." Conversely, the respondents argued that the goods should be classified under Chapter Heading 7108-12-00 as "Gold - Other unwrought forms - Non Monetary," which is restricted under the Import Policy. The court analyzed the nature of the goods, noting they were fully worked and finished, thus falling under the classification of "Articles of Jewellery, of gold, unstudded" (7113 19 10).

3. Applicability of the Import Policy and Foreign Trade Policy:
The court examined the relevant provisions of the Import Policy and Foreign Trade Policy, including the Main Notes and Supplementary Notes of Chapter 71. The court concluded that the amendment of the policy condition by Notification No. 36/2015-2020, dated 18.12.2019, applied only to specific goods under Exim Code 7108 and not to finished forms of gold like "Articles of Jewellery" falling under Exim Code 7113.

4. Compliance with Procedural Requirements for Import Clearance:
The petitioner complied with the procedural requirements by submitting the necessary documents and responding to the queries raised by the respondents. Despite this, the respondents issued piecemeal queries and delayed the clearance process. The court noted that the respondents did not dispute the classification of the goods until the petitioner filed the Writ Petition. The court found that the respondents' actions were contrary to the circular issued by the 2nd respondent, which directed officers to raise all queries in one go.

5. Validity of the Respondents' Actions Regarding the Import Consignment:
The respondents claimed that the imported goods were misclassified as "Articles of Jewellery" to avoid the restrictive policy condition applicable to gold in unwrought forms. The court disagreed, stating that the goods were in a finished condition and thus rightfully classified under 7113 19 10. The court also noted that similar imports had been cleared by the respondents at different ports. The court found the respondents' seizure of the goods to be unjustified and directed the assessment of the Bill of Entry as filed by the petitioner.

Conclusion:
The Writ Petition was allowed, and the seizure of the import consignment affected on 05.06.2021 was set aside. The respondents were directed to assess the Bill of Entry No. 3892849 dated 10.05.2021, classifying the goods under CTH 7113 1910, within five days. The respondents were also ordered to bear the warehousing charges for the imported consignment until its release. Consequently, I.A. No. 4 of 2021 was dismissed.