2009 (6) TMI 317 - AT - Customs

Appellant submits that the goods imported - gold mountings for making studded jewellery , are fully covered by Circular No. 13/2006-Cus., dated 29-3-06 clarifying that findings and mountings of gold/silver are covered by S. Nos. 2 & 3 of the exemption Notification No. 62/04-Cus., dated 12-5-04. He mentioned that though the Board, earlier also vide Circular No. 40/2004-Cus., dated 4-6-04 had clarified that the words gold in any form or silver in any form in Notification No. 62/04-Cus. will cover all items of gold and silver in Chapter 71, except gold/silver jewellery or foreign currency of coins of gold/silver, and that it would cover findings and mountings of gold/silver, Circular No. 528/18/04-CUS-TU, dated 2-8-05 had been issued, as clarified in subsequent Circular dated 29-3-06, only to alert the field formations to prevent misuse of Notification No. 62/04-Cus. by claiming concessional import duty on import of complete gold/silver jewellery in the guise of mountings and findings and that to remove confusion and difficulties, the Board in this Circular, has clarified that the findings and mountings of gold/silver are covered by the exemption Notification No. 62/04-Cus Board s letter dated 2-8-05 rightly clarified that provisions of an exemption notification cannot expand the scope of notification so as to cover gold jewellery - We fully agree with the view expressed in the Board s circular dated 2-8-05 that a circular issued by the Board for clarifying the provisions of an exemption notification, cannot expand the scope of the notification and when the Notification No. 62/04-Cus., dated 12-5-04 specifically excludes jewellery of gold , a circular cannot extend the scope of the exemption notification as to cover the gold jewellery. - Circulars of the Board are binding only when the same are in accordance with the law. Therefore, the items of gold which have acquired the character of jewellery would not be covered by the exemption - only the mountings which do not have the character of jewellery would be eligible for exemption. But this aspect has to be decided by the lower Appellate Authority. Matter remanded

Summary

The Appellate Tribunal CESTAT, New Delhi, consisting of Shri D.N. Panda and Rakesh Kumar, heard an appeal regarding the eligibility of "18 caret gold mountings" for concessional rate of duty under exemption Notification No. 62/04-Cus. The appellant argued that the mountings should be covered by the notification as per various circulars issued by the Board. The Department contended that the mountings were excluded under the Explanation of the notification. The Tribunal noted the conflicting interpretations of the circulars but agreed with the Board's Circular No. 528/18/04-Cus. (TU) that mountings should not be eligible for exemption as they are considered as complete jewellery items. Citing a Supreme Court judgment, the Tribunal found that circulars are binding only when in accordance with the law and remanded the matter to the lower Appellate Authority for a fresh decision, considering the Board's circular and the Tribunal's observations. The case highlights the importance of interpreting exemption notifications in line with relevant circulars and legal principles.