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2026 Supreme(Online)(CESTAT) 1629
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
Pullela Nageswara Rao, Technical Member
Ram Aabhoshan – Appellant
Versus
Commissioner of Customs, Bangalore – Respondent
Customs Appeal No. 21961 of 2018
For the Appellants/Petitioners: Purvi Asati, Ashutosh Sharma
For the Respondents: Maneesh Akhoury
Gold chains imported in running lengths, which possess the essential character of finished jewellery and require only minor processes like cutting and adding hooks, are correctly classifiable as 'Articles of Jewellery' under CTH 7113, and penal provisions for confiscation are not applicable to bona fide classification disputes.
Headnote:(A) Customs Tariff Act, 1975 - Heading 7113 - Classification of goods - Gold chains imported in running lengths - Whether classifiable as 'articles of jewellery' (Heading 7113) or 'semi-manufactured gold' (Heading 7108) - Held, goods in running lengths that have attained the essential character of finished neck chains, requiring only cutting and adding of hooks, are classifiable under Heading 7113 as articles of jewellery pursuant to Rule 2(a) of the General Rules of Interpretation.
(B) Customs Act, 1962 - Sections 111(d), 111(m), 112(a), 125 - Confiscation and penalty - Dispute of classification only - No mis-declaration or prohibited import - Penalties and redemption fines are not sustainable in cases of genuine classification disputes where description and value are correctly declared. (Paras 24, 25, 27, 28)
Facts of the case:
The appellant imported '22K Assorted Jewellery' (gold chains of various lengths). The Customs authorities reclassified these as 'semi-manufactured gold' under Heading 7108, ordered their confiscation, and imposed a redemption fine and penalty. The appellant had already re-exported the goods after paying the fine under protest.
Findings of Court:
The Tribunal found that the imported gold chains, even in running lengths, qualify as 'articles of jewellery' under CTH 7113 because they maintain the essential character of finished neck chains. The reliance on Heading 7108 for 'semi-manufactured' forms was incorrect.
Issues: The main issue was whether gold chains imported in running lengths should be classified as finished jewellery under CTH 7113 or semi-manufactured gold under CTH 7108, and whether the consequential confiscation and penalties were justified.
Ratio Decidendi: Applying the General Rules of Interpretation (Rule 2(a)), goods that are incomplete but retain the essential character of the finished product are to be classified as the finished product. Since no mis-declaration occurred, penal provisions for confiscation are unwarranted in a bona fide classification dispute.
Result: Appeal allowed.
| Table of Content |
|---|
| 1. summary of facts regarding the import and disputed classification of gold jewellery chains. (Para 1 , 2 , 3 , 4) |
| 2. arguments based on classification rules (gri) and the definition of manufacture regarding gold chains. (Para 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16) |
| 3. arguments contesting the applicability of penal provisions and confiscation for classification disputes. (Para 17 , 18 , 19 , 20) |
| 4. court determination that goods are finished jewellery and overturning penalty orders due to the absence of deliberate mis-declaration. (Para 24 , 25 , 26 , 27 , 28 , 29) |
FINAL ORDER NO. 20567/2026
PER: PULLELA NAGESWARA RAO
This appeal is filed against the impugned Order-in-Appeal No. 338/2018 dated 05.10.2018 passed by the Commissioner of Customs (Appeals), Bengaluru.
2. Briefly stated the facts of the present case are that the Appellant is a registered proprietary firm engaged in trading different kinds of articles of jewellery and has a retail sale shop located in Agra, Uttar Pradesh. During the relevant period, the Appellant imported ‘22K Assorted Jewellery’ (hereinafter referred to as 'impugned goods") vide Bill of Entry No. 3552165 dated 09.10.2017 classifying it under Customs Tariff Item (CTI) 7113 1990 of the Customs Tariff Act, 1975 . The Appellant paid 'nil' Basic Customs Duty by claiming exemption under Sl. No. 966(I) of Notification No. 46/2011-Cus. dated 01.06.2011 (FTA Notification") and IGST at the rate of 3% in terms of Sl. No. 13 of Schedule V of the Notification No. 1/2017-IGST (Rate) dated 28.6.2017, on the import of the impugned goods. The Appellant obtained Certificate of Origin dated 06.10.2017 under FTA Notification, wherein it was certified that impugned goods are imported from Indonesia.
3. As the goods were not allowed clearance by the customs authorities, the Appellant requested for provisional assessment of the Bill of Entry by executing a provisional duty bond /bank guarantee. However, the goods were not allowed clearance and investigation was initiated and the impugned Bill of Entry was examined on first check basis to determine whether the actual description of goods imported with respect to its purity, weight, quantity and value was correctly declared. The examination order dated 03.11.2017, stated that the goods may be verified by the Jewellers’ Association. Pursuant to the above, the Jewellers’ Association vide letter dated 06.11.2017 certified after examination of the impugned goods that they correspond to the weight, description and purity mentioned in the supplier’s invoice and that the value declared by the Appellant is fair. Further, as per the examination by the Shed Officer dated 07.11.2017, it was reported that the impugned goods imported by the Appellant are ‘gold chains of running lengths which are of different varieties. During the pendency of the above investigation, the Appellant vide letter dated 03.01.2018 and letter dated 05.01.2018 inter alia submitted that impugned goods are in finished condition and are correctly classifiable under Customs Tariff Heading (CTH) 7113 of the Customs Tariff Act, 1975 . The Appellant further requested the Customs Authorities for permission to re-export the goods without issuing a Show Cause Notice.
4. However, Ld. Additional Commissioner of Customs, Airport & ACC Customs, Bangalore issued a show cause notice (SCN) dated 05.01.2018 to the Appellant, proposing to re-classify the impugned goods under Customs Tariff Item (CTI) 7108 1300, it was proposed to hold the impugned goods liable for confiscation under Section 111(d) and 111(m) of the Customs Act, 1962 and to impose penalty on the Appellant under Section 112(a) of the Customs Act, 1962. The show cause notice (SCN) was adjudicated vide the Order-in-Original dated 12.02.2018 by confirming all the proposals in the SCN and reclassifying the impugned goods under Customs Tariff Item (CTI) 7108 13 00 of the Customs Tariff Act. The Ld. Additional Commissioner also allowed for re-ex
