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TMI Blog2013 (11) TMI 494X X X X Extracts X X X X X X X X Extracts X X X X ..... was acting as an agent for GQIPL. But this matter is not important in deciding the main dispute. The main dispute in the appeal filed by these two main appellants is the classification of the gold and silver medals imported. The appellants are contesting that the classification of the goods is under Chapter 71. The first appellant claimed classification 71081200 for gold medals and 71069290 for silver medals. The appellants claimed benefit of Notification No.80/97-Cus. and Notification No.62/04-Cus. for different periods. These exemption Notifications were applicable only to goods classifiable under Chapter 71. Revenue is contesting that the medals were classifiable under Heading 9705 00 90. There is also an issue contested by Revenue that 'local agency commission' of 2% received by the first appellant from the second appellant, namely, GQIPL is to be added to the assessable value for determining customs duty. The impugned order denied the benefit of the exemption notifications claimed and confirmed a duty demand of Rs.25,27,89,159/- from ICICIBL along with interest. Further the goods valued at Rs.164,79,30,708/ were ordered to be confiscated under section 111(d), 111(m) and 111(o) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f god, goddess, saints, temples, historical sites, well known historical persons like Shri Narayana Guru, Mother Teresa etc., embossed on each of the medals. The key question to be decided in these appeals is whether such medals were rare and collectors pieces having numismatic interest as held in the impugned order and consequently whether the correct classification of the goods was under heading 97.05 of Customs Tariff as decided in the impugned order as against classification under Chapter 71 claimed by the appellants. Actually, the issue is more precisely whether the imported items were eligible for exemption under Notification No.80/97-Cus. and Notification No.62/04-Cus. for different periods, which notifications were available to goods falling under Chapter 71 and not available to goods falling under Chapter 97. There is an issue of valuation adjudicated, in para 53 of the impugned order, ordering that the 2% margin charged by ICICIBL to GQIPL should form part of the assessable value for payment of duty. This issue becomes relevant if the goods are classifiable under Chapter 97 and consequently duty is to be paid based on value. If the goods are held to be classifiable und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Associate Director of QEIPL and also the Senior Manager of GQIPL and his statement was recorded on 02.08.2007. It came out that QEIPL is a direct marketing company dealing in gold and silver medallions and GQIPL is the supplier of gold and silver coins to QEIPL. In his statement, Shri Joesph Augustinee stated that medals imported were specially minted medals, the cost of which would be higher than that for normal medals or coins, due to the craftsmanship, highest quality minting, rarity and finesse etc. Further, he agreed that the website of GQIPL is in Hong Kong which web-site is also for various other companies including QEIPL. This website markets their products using expressions like 'advantage collections', 'numismatics' etc. These companies were also advertising scope of its service as procurement and sale of numismatic gold and silver medallions and the ISO 9001:2000 Certificate of compliance issued to QEIPL by the International Certification Services certified the scope of the certificate using expression 'Scope: Procurement and Sale of Numismatic Gold and Silver Medallions'. He added that 'numismatic company' is a 'tag line of the company' and hence, these words form the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L and already cleared before issue of SCN. 11. As already stated, the core issue to be decided is the classification of goods. The learned Counsel for the appellants draw our attention to the Chapter notes under Chapter 9705 of the Customs Tariff Act which reads as under:- 97.05 - COLLECTIONS AND COLLECTORS PIECES OF ZOOLOGICAL, BOTANICAL, MINERALOGICAL, ANATOMICAL, HISTORICAL, ARCHEAOLOGICAL, PALAEONTOLOGICAL, ETHINOGRAPHIC OR NUMISMATIC INTEREST. These articles are very often of little intrinsic value but derive their interest from their rarity, their grouping or their presentation. The heading includes: (A) Collections and collectors pieces of zoological, botanical, mineralogical or anatomical interest, such as: (1) Dead animals of any species, preserved dry or in liquid, stuffed animals for collections. (2) Blown or sucked eggs, insects in boxes, frames, etc. (other than mounted articles constituting imitation jewellery or trinkets), empty shells, other than those of a kind suitable for industrial use. (3) Seeds or plants, dried or preserved in liquid, herbariums (4) Specimens of minerals (not being precious or semi-precious stones falling in Chapter 71); specimens of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red and the goods were not shown to any expert in the field and their advice taken. 12.03 He relies on Note (C) of Chapter 97 in HSN reproduced in para 11 and highlighted. 12.04 As per the note extracted above, imported goods do not fall under Chapter 97 and Note also suggest that it will fall under Chapter 71. 12.05 He also relies on the last Note in HSN under heading 97.05 which is reproduced in para 11 and highlighted. He argues that the medals imported were freshly minted ones and had not acquired age or rarity" to get classified under chapter 97.05. 12.06 Further, he relies on para 33 of adjudication order bringing out the details of statement given by Shri Joseph Augustineee as follows:- "He further admitted that these products are designed, minted and imported based on customers demand and on consignment basis....", 12.07 He argues that since these medallions are 'designed, minted and imported' based on the orders placed, which medallions have no 'rarity or age', which is sine qua non as per the last HSN Note extracted above, irrespective of the quantity involved. However, the Advocate submitted a statement showing quan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the goods and is not covered by any of the provisions of Customs Valuation Rules, 1988. 13. The Learened Advocate Shri Prabhat Kumar in addition adopting the above arguments submitted the following arguments: 13.01. He invited our attention to Chapter Note No.7114 reading as under: (E) Other articles for domestic or similar use, for example, busts, statuettes and other figures for interior decoration; jewel cases; table centre-pieces; vases, jardinihres, picture frames; lamps, candelabra, candle-sticks, chandeliers, mantelpiece ornaments, decorative dishes and plates, medals and medallions (other than those for personal adornment) sporting trophies; perfume burners, etc. So, he argues that classification claimed under Chapter 71 is justified. 13.02. He further pointed out that classification of goods cannot be determined on the basis of advertising gimmicks or marketing techniques or labels on packing materials. He relied on the following decisions of in this matter:- (i) Vicco Laborataries Vs. CCE- 2007 (218) ELT 129 (Tri-Mum) affirmed by the Apex Court as reported at 2010 (255)ELT A 83 (ii) Teracom Privat Ltd Vs. CCE-2008 (222) ELT 58 (Tri-Mum) (iii) Herbal Products ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thes to handle the coins; do not drop coins to avoid denting and damage; not to slide coins over a hard surface; dry not to clean coins at all etc. All these instructions indicate that these are not normal gold coins/medallions but are rare collections to be safeguarded with due care. 14.07 Shri Joseph Augustineee, Associate Director of M/s. Quest Net Enterprises India Pvt. Ltd and Senior Manager in M/s. Gold Quest International Pvt. Ltd, vide his statement dated 2.8.2007 has stated inter alia, that the imported Gold/ Silver Coins were 'limited edition' exclusive and special products. 14.08 In view of the above, it is clear that the imported goods were presented as collection of numismatic interest by the supplier, imported as collection by the appellants and these were marketed as collection to the public and are known as collections to the potential collectors and in common trade parlance. Hence, they are rightly classified under CTH 9705 as they are "Collections or Collectors Pieces of Numismatic Interest. Arguments based on Dictionary Meaning of 'Numismatic' 14.09 'Numismatic' is not defined under Tariff Schedule nor under HSN Notes. As per Chambers Dictionary: adj. rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the nature of numismatic interest are classifiable under heading 'Other 9705'. As per HSN of 9705, coins/medals presented as collection are classifiable under 'Other 9705'. The subject goods satisfy both the criteria as being of numismatic interest and also are presented as collections. Argument based on High Value of the goods as compared to ordinary gold coins 14.16. These goods are presented as collections to the potential collectors as is evident from the literature and documentary evidences in this case. This is supported by the fact that, during relevant period, the assessable value of gold/silver coins imported by M/s. ICICIBL, on behalf of the appellant-Company is higher than the assessable value of ordinary gold medallions imported by M/s. ICICIBL, on their own behalf for sale to general public. Moreover, during the relevant period, one number of imported 6 gram gold medallion was sold by M/s Quest Net Enterprises India Pvt. Ltd., to general public for a sum of Rs.32,200/-. 14.17. With regard to the volume of pieces in question for considering the same as 'collections and pieces of rarity', the volume needs to be examined with reference to the potential number of colle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15. We have considered submissions on both sides. 16. As far as facts are concerned it is fairly clear that these goods were marketed to the public as coins/medals of numismatic interest and higher prices per gram of gold/silver were charged from the buyers as compared to such prices for coins of same purity. It is also clear that these goods were freshly minted medals minted to order. Thus the goods were not collections at the end of the supplier but were marketed as collectors pieces. 17. As regards classification based on facts as stated above, on the one hand it is a settled principle hat HSN notes are a safe guide for interpreting the scope of entries in the schedule to Indian Customs Tariff Act and it is also settled through judicial decisions that marketing gimmicks adopted for marketing a product cannot be relied upon for deciding classification. The decisions of the Apex Court on the above two principles are already discussed in para 13.02 and 13.03 above. The Tariff is aligned to HSN codes and descriptions so that India gets integrated into the world trading community adopting the same classification of goods. If the Explanatory Notes in HSN given in Heading 9705 is con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bars Rs. 250 per 10 gms. 3. Silver in any form Rs. 500 per kg. Explanation. - For the purposes of this notification, the expression 'Gold in any form' or 'Silver in any form' shall include medallions and coins, but shall not include jewellery made of gold or silver, as the case may be, and foreign currency coins. (highlighting supplied) 19. It is clear from the explanation to the Notification that the exemption was intended for coins and medals of gold and silver and the notification is issued with an understanding that these will fall under Chapter 71. However there is lack of clarity as to the heading of Chapter 71 under which these goods will get classified. Ongoing through the Customs Tariff and HSN explanatory Notes this issue does not get resolved very easily because each of the headings 7108, 7113 and 7114 and 7118 may not be exactly suitable for coins and medals for the following reasons (i) Heading 7108 covers only unwrought gold. What was imported was gold of 999.99 purity which could not be considered as unwrought (ii) Heading 7113 covers articles of Jewellery. Coin or medal cannot be considered as an article of jewellery (iii) Heading 7114 covers Arti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... done at the time of import is found to be in order no proceedings initiated against any of the appellants including the Customs House Agent can survive and so the detailed submission given by Appellant No.5 are not being recorded. 23. We are not dealing with the issue of alleged violation of RBI guidelines that banks nominated for importing gold should not have entered into tie up arrangement with non-nominated banks/non-banking financial companies/ co-operative banks for retailing of imported gold/gold coins. This issue is discussed in para 25.9 of the impugned order. The consequence of this as seen from in the impugned order to be confiscation under 111(d) and 111(o) of Customs Act. It is seen that the defense arguments submitted by the ICICIBL is not examined with reference to the factual position that goods were sold by ICICIBL to on payment of RST 1% as stated in para 25.15 of the impugned order and no is finding given with reference the argument that ICICIBL was not acting as agent for GQIPL but selling the goods to GQIPL. Further, we note that the goods were not available for confiscation. So, confiscation is not maintainable and consequently, penalties under section 112 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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