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2019 (3) TMI 831

7113 liable to 1.5% CGST + 1.5% SGST for sale within state of Gujarat? - Held that:- The applicant gets the jewellery prepared by artisans, which consist of gold, diamond, precious stones like ruby, emerald, sapphire etc. and pearls. A small watch is fitted in it. As per the Explanatory Notes to heading 9101, watches of this heading must have cases wholly of precious metal or of metal clad with precious metal, which may be set with gem stones or with natural or cultured pearls and may be fitted with a cover or have a bracelet of precious metal (gem set or not). The product of the applicant is thus undisputedly watch with case of precious metal and covered by Chapter Heading 9101 in view of Chapter Note 2 of Chapter 91 as well as Explanatory Notes to heading 9101. - In view of the Explanatory Notes to heading 9101 read with Explanatory Notes to Heading 9102, timekeeping instruments with case and movement, of a kind intended to be worn or carried and designed to function in all positions, which indicate the time or measure intervals of time are covered under the said heading, which include wrist-watches, pocket-watches, fob-watches, watches for carrying in handbags, watches mount .....

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Titan Ind. Ltd., in Tax Appeal No. 46 of 2017 dated 03.02.2017 reported in (2017 GSTB - 1- GH 32) = 2017 (2) TMI 521 - GUJARAT HIGH COURT, in which the company had sold NABULA WATCH, Hon ble Gujarat High Court confirmed the order of the Hon ble Tribunal holding as jewellery covered by entry 13 (ii) of schedule - II of VAT Act. 2.4 The applicant further submitted that such jewellery are prepared and sold by jewellery show room only. Such jewelelry are prepared by the job worker who is having technique of preparing such costly jewellery in which apart from high cost of gold, diamond, etc., cost of watch is very nominal. 2.5 The applicant submitted that item sold by the applicant is falling in chapter 71 tariff item 7113 liable to 1.5% CGST + 1.5% SGST for sale within state of Gujarat. 3.1 In the further written submission, it has been submitted that the applicant is engaged in the manufacture of various articles of jewellery. Amongst others, the applicant also sells jewellery articles in which a watch is fitted for a value addition. As per the desire and requirement of the customers, the applicant gets the jewellery prepared by artisans. Such jewellery articles consist of gold, diam .....

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ary principle to be adopted for classification and referred to the judgements of Hon ble Supreme Court in the case of Ramavatar Budhiaprasad Vs. Assistant Sales Tax Officer, Akola and another [12 STC 286 (SC)] = 1961 (3) TMI 55 - SUPREME COURT OF INDIA, Real Optical Co. Vs. Appellate Collector of Customs and Another [122 STC 555 (SC)] = 2001 (2) TMI 134 - SUPREME COURT OF INDIA, Commissioner of Commercial Tax U.P. Vs. A.R. Thermosets Pvt. Ltd. [94 VST 258 (SC)] = 2016 (9) TMI 410 - SUPREME COURT, Commissioner of Wealth Tax, Orissa, Bhubaneswar Vs. Smt. Binapani Chakravarty [AIR 1995 SC 1380] = 1995 (3) TMI 2 - SUPREME COURT. It is submitted that apart from the Chapter Note 9 of Chapter 71, as per the common parlance meaning also, the articles sold by the applicant are nothing but articles of jewellery and hence they fall in entry 13 of Schedule V of the Notification No. 1 of 2017 dated 28.06.2017. 3.8 The applicant admitted that as per Chapter Note 3 of Chapter 71, there is an exclusion clause, inter-alia providing that this chapter does not cover articles of Chapter 90, 91 or 92 (Scientific instruments, clock and watches, musical instruments). 3.9 The applicant referred to Entry 4 .....

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al characteristic of the articles sold by the applicant. It is submitted that the articles sold by the applicant are expensive not because of their superiority as time keeping devices but because of their ornamental value. The essential character of the articles is as articles of jewellery and not as watch. Thus the goods sold by the applicant are primarily jewellery articles and their time keeping function is only incidental. It is further submitted that a customer purchases these articles not because it is interested in a watch but because it is keen to wear it as a jewellery article. The articles are purchased for their ornamental value and not for their function of showing time. In the mind of the customer, the association is with jewellery and not watch. Thus the dominant and essential character and purpose as well as functionality of the articles sold by the applicant is jewellery and therefore on application of rule 3(b) of the rules for interpretation of the First Schedule to the Customs Tariff Act, 1975, the articles fall under entry 13 of Schedule V to Notification No. 1 of 2017 dated 28.6.17. 3.13 The applicant referred to the judgements of Hon ble Supreme Court in the c .....

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e statements of objects and reasons of the Central Excise Tariff Act, 1985, the Central Excise Tariffs are based on the Harmonious System of Nomenclature (HSN) and the internationally accepted nomenclature was taken into account to reduce disputes on account of tariff classification. Accordingly, for resolving any dispute relating to tariff classification, a safe guide is the internationally accepted nomenclature emerging from the Harmonious System of Nomenclature (HSN). Although, the decision in the case of Woodcraft Products (supra) dealt with the interpretation of the provisions of the Central Excise Tariff there can be no doubt that the HSN Explanatory Notes are a dependable guide even while interpreting the Customs Tariff. 7. The applicant sells jewellery articles in which a watch is fitted. As per the desire and requirement of the customers, the applicant gets the jewellery prepared by artisans. Such jewellery articles consist of gold, diamond, precious stones like ruby, emerald, sapphire etc. and pearls. After the jewellery is prepared and approved by the customer, a small watch is fitted in it. It is the submission of the applicant that these items fall under Chapter Headin .....

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e metal inlaid with precious metal. 9.4 Explanatory Notes to heading 9102 of Harmonised System of Nomenclature inter-alia provides as follows :- This heading covers mechanical and electrical (mostly electronic) timekeeping instruments with case and movement, of a kind intended to be worn or carried and designed to function in all positions, which indicate the time or measure intervals of time, regardless of the thickness of the movement. These include wrist-watches, pocket-watches, fob-watches, watches for carrying in handbags, watches mounted in brooches, rings, etc. ……… 10. In respect of the product in question, the applicant gets the jewellery prepared by artisans, which consist of gold, diamond, precious stones like ruby, emerald, sapphire etc. and pearls. A small watch is fitted in it. As per the Explanatory Notes to heading 9101, watches of this heading must have cases wholly of precious metal or of metal clad with precious metal, which may be set with gem stones or with natural or cultured pearls and may be fitted with a cover or have a bracelet of precious metal (gem set or not). The product of the applicant is thus undisputedly watch with case of preci .....

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pter Note. Therefore, the product is not required to be classified in accordance with Rule 3(b) of the Rules for Interpretation. 13. In respect of similar products, Hon ble Customs, Excise and Service Tax Appellate Tribunal in case of Titan Industries Ltd. Vs. Commissioner of Central Excise, Chennai [Final Order No. 861/2006 dated 04.09.2006 in Appeal No. E/1284/99 reported at 2006 (204) E.L.T. 435 (Tri. - Chennai)] = 2006 (9) TMI 35 - CESTAT, CHENNAI has held that the product is classifiable under Heading 9101. In the said case, it has been held as follows :- 5. Heard both sides. It is not disputed that the product in question is a watch with its case made wholly of precious metal and that the same also has a bracelet of precious metal. The article is studded with precious stones like emerald, ruby and diamond. As per interpretative Rule 1 for classification of goods under CETA 1985, the goods have to be classified in terms of the heading and any relative Section or Chapter Notes. The argument that the subject watches are purchased by a customer to serve his need to adorn himself and not for its function as a time keeping device cannot be countenanced. The dominant character, func .....

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fully satisfy the description contained in CSH 9101.00. The Commissioner has rightly relied on the explanatory notes in HSN under Chapter 91 which fully supports the above classification. 14. The judgement dated 03.02.2017 of the Hon ble High Court of Gujarat in Tax Appeal No. 46 of 2017 in case of State of Gujarat Vs. M/s. Titan Industries Limited pertains to classification of goods under Schedule-II to the Gujarat Value Added Tax Act, 2003. It is pertinent to note that the scheme of classification of goods under Gujarat Value Added Tax Act, 2003 was different than the scheme of classification of goods for the purpose of Notifications issued under the CGST Act, 2017 and GGST Act, 2017, which is based on the First Schedule to the Customs Tariff Act, 1975. Therefore, the said judgement is not applicable in the facts of the present case. For the same reasons, Order dated 10.01.2011 issued under Section 80 of the Gujarat Value Added Tax Act, 2003 in the applicant s own case is not applicable in the facts of the present case. 15. As the scheme of classification of goods for the purpose of GST is based on the first schedule to the Customs Tariff Act 1975, the judgement delivered by the .....

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