TMI Blog2019 (3) TMI 831X X X X Extracts X X X X X X X X Extracts X X X X ..... 2, 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 mounted in brooches, rings, etc. Therefore, the watches in the design of butterfly with a ring, bracelet, bangle, necklace, ring etc. supplied by the applicant are covered under heading 9101. The product in question is specifically covered under heading 9101 in view of the terms of that heading read with the relevant Chapter Note. Therefore, the product is not required to be classified in accordance with Rule 3(b) of the Rules for Interpretation. - GUJ/GAAR/R/2018/20 (In Application No. Advance Ruling/SGST&CGST/2017-18/AR/29) - - - Dated:- 10-10-2018 - SHRI R.B. MANKODI AND SHRI G.C. JAIN MEMBER Present for the applicant : Shri P.K. Soni, Advocate The applicant, M/s. House of Marigold (Prop. Ms. Shilpa Sanjay Choksi) purchases gold, diamond, precious stones (Ruby, Emerald, Sapphire, etc.) pearls and watch. Thereafter, these are handed over to job ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther 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, 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 for value addition. 3.2 It has been submitted that the value of gold and precious stones is almost 90 to 95%, while the value of watch is hardly ₹ 1,000 to ₹ 2,000. Thus value of jewellery article is very high and the value of watch is minimal, in as much as the value of watch is even less than 1% of the total value of the article. The various kinds of jewelry articles sold by the applicant along with watch are as under: (a) Butterfly with a ring (b) Bracelet (c) Bangle (d) Necklace (e) Ring The applicant submitted photographs of the products sold by it. 3.3 The applicant submitted that the above a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les 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 423A and 423B of Schedule III of Notification No. 1/2017-Central Tax (Rate) as amended vide Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017. It is submitted that since entry 423A refer to heading 9101 and cover watches with case of precious metal or metal clad with precious metal, the question is whether the jewellery articles with watches sold by the applicant specifies the description of this entry and hence liable to 18% GST being covered by entry 423A of Schedule III to the notification dated 28/6/17 as amended w.e.f. 14.11.17. 3.10 The applicant referred to Note 1(b) and Note 2 of Chapter 91 and submitted that heading 9101 covers only watches with case wholly of precious metals or of metal clad with precious metal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 case of Xerox India Ltd. v/s Commissioner of Customs [(2010) 260 ELT 161 (S.C.)] = 2010 (11) TMI 20 - SUPREME COURT OF INDIA , Commissioner of Central Excise, Trichy v/s Naga Ltd. [(2007) 212 ELT 452 (S.C.)] = 2007 (4) TMI 10 - SUPREME COURT OF INDIA , Sprint R.P.G. India Ltd. v/s Commissioner of Customs [(2000) 116 ELT 6 (S.C)] = 2000 (1) TMI 194 - SUPREME COURT OF INDIA and Mauri Yeast India Pvt. Ltd. Vs. State of U.P. [14 VST 259 (S.C.)] = 2008 (4) TMI 101 - SUPREME COURT and submitted that the major component of cost and price is the jewellery article, the price of watch is very negligible therefore essentially the articles sold by the applicant are articles of jewellery. 4. We have considered the submissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dable 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 Heading 7113. 8.1 The description of goods under Chapter Heading 7113 of the Customs Tariff Act, 1975 is as follows :- Articles of jewellery and parts thereof, of precious metal or of metal clad with precious metal 8.2 Chapter Note 3 of Chapter 71 of the Customs Tariff Act, 1975 inter-alia provides as follows :- 3. This Chapter does not cover : (a) (b) (l) articles of Chapter 90, 91 or 92 (scientific instruments, clocks and watches, musical instruments) 9.1 As the Chapter Note 3(l) of Chapter 71 specifically mentions that Chapter 71 does not cover the articles of Chapter 91 (clocks and watches), it would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant 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. Further, 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 mounted in brooches, rings, etc. Therefore, the watches in the design of butterfly with a ring, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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, functionality and purpose of the subject watches cannot be categorically claimed to be to serve only as an item of jewellery. The argument that CSH 91.01 confined to watches which had cases wholly of precious metal alone is misconceived. The tariff entry CSH 9101.00 is reproduced below : 91.01 : Wrist watches, pocket-watches and other watches, including stop-watches, with case of precious metal or of metal clad with precious metal. Note 2 to Chapter 91 reads as follows : Heading No. 91.01 covers only watches with case wholly of precious metal or of metal cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Hon ble Customs, Excise 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 = 2006 (9) TMI 35 - CESTAT, CHENNAI is more relevant to the case under hand. It is also not out of place to mention that the case pertains to Jewellery Division of M/s Titan Industries Ltd. 16. In view of the foregoing, we rule as under R U L I N G The product Marigold Butterfly Bridal with Watch and similar jewellery prod ..... X X X X Extracts X X X X X X X X Extracts X X X X
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