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TMI Blog2013 (5) TMI 792X X X X Extracts X X X X X X X X Extracts X X X X ..... . 7321 of the Drawback Schedule. Against the said Order-in- Original, the respondents preferred an appeal before the Commissioner (Appeals). The appeal of the respondents, against the aforesaid Order-in-Original dated 25-4-2009, was rejected by the Commissioner (Appeals) vide the Order-in- Appeal No. 31-CE/Appeal/Noida, dated 29-1-2010. Against the said Order-in- Appeal, the respondents filed Revision Application before this authority under Section 129DD of the Customs Act, 1962 which was decided vide GOI Revision Order No. 37/11-Cus., dated 22-2-2011, by way of remand order. The adjudicating authority, vide the Order-in-Original No. 01/DBK/2012, dated 30-1-2012, again decided the classification of the impugned goods under Heading 7321 of the Drawback Schedule. 3. Being aggrieved by the said order-in-original applicant filed appeal before Commissioner (Appeals), who set aside the impugned Order-in-Original, dated 30-1-2012 and allowed the appeal classifying the impugned goods i.e. the Fire Pit of Iron as item of Handicraft under Heading No. 7326 of the Drawback schedule. 4. Being aggrieved by the impugned Order-in-Appeal, the applicant department has filed this revision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of heading 7323. This is more so in view the fact that the 'fire pit' is a non-electric warmer and cannot function without the use of solid fuel of either wood or coal and thus is more akin to Heading No. 7321 rather than Heading No. 7323." 4.2 The Commissioner (Appeals) has relied upon the Board's Circular No. 7/2011-Cus., dated 18-1-2011 wherein it has been said that the certificate from EPCH/Development Commissioner (Handicraft) should not be asked on a routine basis. She also relied upon the Board's Circular No. 3/2010-Cus., dated 12-2-2010 that the said certificate issued by EPCH/Development Commissioner (Handicraft) should normally be accepted and in case of not acceptance of the same, the approval of Commissioner is required. In this regard the relevant portion of Circular No. 56/99-Cus., dated 26-8-1999 is reproduced below : "In response to various representations received from Trade bodies, the issue has been examined by the Boards in consultation with the Development Commissioner, Handicrafts and the Ministry of Textiles, it has been decided to accept the Certificates issued by Export Promotion Council for Handicrafts by way of endorsement on the body of the Ship ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sses which are apparently carried out manually. Other process cannot be carried out without the aid of machines. Therefore, it appears that major portion is carried out by the machines. Hence, the Commissioner (Appeals) has wrongly taken the support of Board's Circular and the criteria laid down by the Apex Court in the case of Collector of Central Excise, New Delhi v. Louis Shoppe as reported at 1996 (83) E.L.T. 13 (S.C.). The Hon'ble Court has laid down the criteria for handicraft goods as under : "(1) It must be predominantly made by hand. It does not matter if some machinery is also used in the process. (2) It must be graced with visual appeal in the nature of ornamentation or in-lay work or some similar work lending it an element of artistic improvement. Such ornamentation must be of a substantial nature and not a mere pretence." The Apex Court has clearly laid down that it merit be pre-dominantly made by hand. Whereas, in the instant case it is done predominantly by machine. 4.5 It is pertinent to mention here that while remanding back the instant case vide Order No. 37/11-Cus., dated 22-2-2011 of the Govt. of India passed by the Joint Secretary to the Govt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es,' which was found unacceptable by the department. It is also important to note in this regard that in four out of the five impugned consignments, the drawback claimed exceeded Rs. 1 lakh. In the above facts and circumstances of the case, there was apparently no justification on the part of the department for not drawing sample. The respondent's subsequent claim for alternate classification of the impugned goods as 'Handicraft' surely did not stand on the way of drawal of sample prior to export, as mandated by the Board, particularly when original classification itself was subsequently disputed by the department after having accepted the same at the time of export. It is evident that the department has tried to pass off the blame for their above lapse to the respondent, which is clearly not justified, nor acceptable. 5.1.3 Be that as it may, the remand order of the Hon'ble Revision Authority limited the scope of the de novo proceeding to the question whether the certificates of the MHSC and the EPCH were acceptable with a rider that the above certificates can be rejected only with approval of the Commissioner and in consultation with the certificate issuing authorities, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment that acceptance or rejection of the said certificates after the export is not relevant flies in the face of the Board's instruction and the Hon'ble Revision Authority's directive, amounting to defiance. 5.2.3 The Commissioner (Appeals) has correctly observed that the invoices were duty endorsed with certificate of EPCH in accordance with the requirement as per Board's clarificatory Circular No. 7/11 (para 4 of the Circular refers). Despite that, the department's insistence on the requirement of such endorsement on the body of each shipping bill in terms of the Board's earlier Circular No. 56/99 is inexplicable, unjustified and totally unacceptable. It is pertinent to note in this regard that apart from such endorsements on the invoices, the respondent has produced a copy of the detailed letter of EPCH, dated 30-3-2012, addressed to the Joint Secretary (Drawback), the Development Commissioner (Handicrafts), the Director General of Export Promotion and the Director General of Foreign Trade, wherein the impugned goods have been certified as 'Handicraft'. This letter has been referred to as one of the grounds in para 4.5 of the order of the Commissioner (Appeals), dated 27- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration of the drawback claim of the respondent under Heading 7326, based on the certificates of the Development Commissioner (Handicrafts)/ EPCH, even though drawback claim was made on the shipping bills under a different head, viz. 7323. Besides, it is the case of the respondent that in view of specific mandate of the Board, sample ought to have been drawn by the department in the subject case inasmuch as in 4 out of the 5 consignments, the drawback claim exceeded an amount of Rs. 1 lakh, and the department prima facie was not in a position to determine classification based on visual inspection of the goods. It is certainly not fair on the part of the department to pass on the blame for their failure to draw sample to the respondent, more so when the department in any case did not accept the classification claimed by the respondent on the shipping bills. 5.4 The C.B.E. & C. Circular No. 7/2011-Cus. set out the guidelines for examination of handicrafts/artware as follows : "every consignment which does not have Development Commissioner (Handicrafts)/EPCH certificate, need not be examined. The Board's Circular No. 6/2002-Cus., dated 23-1-2002 [2002 (140) E.LT. T10) wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the case weighs heavily in favour of the respondent department and the applicant party is unable to satisfactorily establish the details of individual (product-wise) category of artistic handicraft nature as well as handmade criterion. 5.5.1 The respondents stated that the observation made by the Revision Authority in para 11 of its order cannot be held as conclusive in view of the fact that the case was eventually remanded for de novo proceedings. Precisely for the above reason, the Revision Authority considered it only fit to remand the matter for de novo adjudication so as to enable the department to make good its lapse as is highlighted in para 12, cited above. Unfortunately, the de novo order is a mere reiteration of the earlier adjudication order, passed by the Adjudicating Authority defying completely the directives of the Hon'ble Revision Authority as also C.B.E. & C. Circular. 6. Personal hearing in the case was scheduled on 7-12-2012 and 22-2-2013. Shri A.K. Raha and Shuchimoy Burman, Representatives, appeared for hearing on behalf of the respondents who reiterated the memorandum of cross-objection of the revision application and stated that order-in-ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation on the grounds stated above. 9. The applicant department has mainly contended that exporter has not given the certificate of EPCH/MHSC on the body of Shipping Bills under which goods were exported as required under Circular No. 56/99-Cus., dated 26-8-1999; that the certificate submitted along with drawback claim later on was meaningless as the goods were not available for verification; that the logic of Commissioner (Appeals) about not taking Commissioner's approval before disagreeing with the EPCH certificate is baseless and far from facts that party nowhere mentioned in the shipping bills the item as Handicraft and that some of the processes involving in manufacturing of said item cannot be undertaken without the aid of machines. The applicant department has argued to uphold the impugned order-in-original. In counter submissions, the respondent party has reiterated the findings of Commissioner (Appeals) and prayed to uphold the impugned order-in-appeal. 9.1 Government observes that the respondent in their reply has stated that Government in its revision Order No. 37/2011-Cus., dated 22-2-2011 set aside earlier Order-in-Original and Order-in-Appeal rejecting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing judgments for the correct and binding applicability of relevant Notifications/Circulars including C.B.E. & C.'s Circular No. 3/2010-Cus., dated 12-2-2010 which is in continuation of earlier Board's Circulars No. 128/39/95-CX., dated 25-5-1995 No. 280/114/96-CX., dated 19-12-1996 (regarding applicability of above Apex Court decision in Louis Shoppe case) and No. 56/99-Cus., dated 26-8-1999. Paras 4 & 5 of this circular stipulates as under :- "4. It is hereby clarified that the assessing authorities should normally accept the certificates issued by the Development Commissioner (Handicrafts)/EPCH. A decision to reject the certificate issued by the Development Commissioner (Handicrafts)/EPCH certifying the goods as artware/handicraft should be taken only with the approval of the Commissioner of Customs/Central Excise and alter discussions with the certificate issuing authority. The export should not, in the mean time, be held up. 5. Doubts have also been expressed relating to interpretation of note and condition (3) of the Drawback Schedule notification No. 103/2008-Cus. (N.T.), dated 29-8-2008. The note and condition provides as follows : &emsp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... process including its possible use in household/gardens and other connected details in respect of this specific export. A reasonable opportunity of hearing should be afforded to the applicants for reaching to final re-considered decision." 9.2 From perusal of above order it is ample clear that this authority has not given any finding as to whether goods are classifiable under 7321 or 7323 or 7326. There is no specific finding of GOI regarding classification of impugned goods. The Government had held in para 12 of said order dated 22-2-2011 that while rejecting EPCH certificate, no approval was taken from Commissioner of Central Excise nor discussion were held with certificate issuing authority viz. EPCH in terms of said C.B.E. & C. Circular No. 3/2010-Cus., dated 12-2-2010. Hence, such unilateral decision taken by the lower authorities did not appear to be appropriate as per statutory requirement of the said circular. The case was accordingly remanded back for de novo proceedings to decide the issue in terms of said Board's circular regarding admissibility of EPCH certificate and the other submission of the exporter. 9.3 The Board's Circular No. 3/2010-Cus., dated 12-2- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n C.B.E. & C. Circular No. 3/10-Cus., dated 12-2-2010 was not followed, Assistant Commissioner, Customs would have not rejected the said certificates on his own. As such Commissioner (Appeals) has rightly accepted the certificate of EPCH and held the classification under Sl. No. 7326 of DBK Schedule. The contention of the department that exporter had not mentioned handicrafts in the shipping bill and so the exporter cannot claim classification under Heading 7326 is not correct. Since exporter has claimed the alternative classification of said goods as handicrafts under Heading 7326 in his reply to show cause notice and adjudicating authority has also mentioned the said plea of exporter in the order-in-original, dated 25-4-2009, therefore, in view of the judgments cited by the respondent in the counter reply, the alternate classification can be claimed and it has to be examined on merits. 10. Hon'ble Supreme Court in its judgment in case of M/s. Paper Products Ltd. v. C.C. [1999 (112) E.L.T. 765 (S.C.)] and CCE, Vadodra v. Dhiren Chemicals Industries [2002 (143) E.L.T. 19 (S.C.)] has also upheld the binding sanctity of such clarificatory Circulars having guidelines for applyin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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