Skip to content


Jay Kay and Company Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1988)(15)LC343Tri(Delhi)
AppellantJay Kay and Company
RespondentCollector of Customs
Excerpt:
1. question involved in this appeal is whether the goods found on examination as "broken pearls" not in powder form, but of non-jewellery quality", are covered by ogl under appendix 6, list 4, part b, si. no.8 of the i.t.c. policy or whether they require an import control licence in terms of si. no. 388 (a) of ap-pendix-3-(a) of i.t.c. policy april, 1985-march' 1988. the other question involved is whether these goods are classifiable under tariff heading 71.01 and enjoy the benefit of notification 247/76-cus., dated 2.8.1976 or whether they are classifiable under chapter 5, heading 05.01/15 (1) as products of animal origin not elsewhere specified or included.2. the department contends that appendix-6, list 4, part-b si. no. 8 read with footnotes (i) and (ii) allows import of pearls, when.....
Judgment:
1. Question involved in this appeal is whether the goods found on examination as "broken pearls" not in powder form, but of non-jewellery quality", are covered by OGL under Appendix 6, List 4, Part B, SI. No.8 of the I.T.C. Policy or whether they require an Import Control Licence in terms of SI. No. 388 (a) of Ap-pendix-3-(A) of I.T.C. Policy April, 1985-March' 1988. The other question involved is whether these goods are classifiable under Tariff Heading 71.01 and enjoy the benefit of Notification 247/76-Cus., dated 2.8.1976 or whether they are classifiable under Chapter 5, Heading 05.01/15 (1) as products of animal origin not elsewhere specified or included.

2. The department contends that Appendix-6, List 4, Part-B SI. No. 8 read with Footnotes (i) and (ii) allows import of Pearls, when the pearls are in powder form and of non-jewellery quality. In other words, the pearls allowed under the aforesaid SI. No. OGL should be both in powder form and of non-jewellery quality. Since the pearl under import are not in powder form, though on non-jewellery quality, these are not permissible to be imported under the OGL under the aforesaid SI. No.and therefore, licence is required, since the goods are covered by SI.No. 388(a) of Appendix- 3A of the said Policy. The appellant on the other hand contends that the expression in Footnote (ii) in Appendix 6 List-4 Part B namely "only in powder form and of non-jewellery quality alone" would imply that Pearls either of powder form or of non-jewellery quality alone would be permissible for import under OGL.

Since the goods under import are admittedly in the form of non-jewellery quality, these are covered under Footnote (ii). The word 'and' occurring in the aforesaid expression should be interpreted, according to the learned Consultant for the appellant as 'or'.

Otherwise, the expression "of non-jewellery quality" would become rebundant. If the intention had been that pearls must qualify both the conditions i.e. it must be in powder form as well as of non-jewellery quality, there was no need to spell out the latter qualification because powder form of pearl by itself would be of non-jewellery quality.

Regarding the classification, the learned Consultant has argued that the pearls are specifically covered by Tariff heading 71.01 of CTA 1975 and that they are further exempted by Notification 247/76 dated 2.8.1976 because the Examination Report clearly reveals that the goods under Import are real pearls (broken/raw). Therefore, the goods are unworked i.e. no machining like cutting, polishing etc. has been done and they are in raw form i.e. they are unworked pearls.

3. The lower authorities having regard to the past practice, had allowed the goods to be imported without ITC licence on caution.

Classification aspect has been decided by the lower authorities for the pearls as classifiable under Chapter 5 on the ground that this heading (Chapter) covers all products of animal origin "not elsewhere specified or Included". The lower authorities have found heading 71.01 as inapplicable to the goods because it refers only to real pearls raw or unworked and worked. The goods, according to the lower authorities cannot be treated as of the same identity as of real pearls. The pearls referred to in Chapter 71, according to them it can only mean by implication, full pearls and not broken pearls and if they are not full pearls, then they must be worked pearls sawn into half or three-quarters. in other words, that Chapter covers either full pearls or pearls on which some work has taken place. It has also been held by the lower appellate authority that there is no reference to the term broken pearl' in CCCN or in other literature. Further, since pearls under Chapter 71 is clubbed with precious, semi-precious stones, precious metals, rolled precious metals and articles thereof, this Chapter would cover pearls of jewellery variety only. The learned Consultant has, in rebutting the finding of the lower authorities, stated that no evidence whatsoever regarding the commercial parlance of broken pearls has been adduced by the department whereas these goods have all along been imported as broken pearls and the very existence of Invoice and description as such thus support that the goods are known as broken pearls. Even earlier, the goods had been imported as broken pearls and this practice has been continuing for a long time. The pearls have been specifically excluded from Chapter 5 as stated in the Explanatory notes to that chapter at page 21 of the said Explanatory Notes (Vol. 1) 4. We have carefully considered the pleas advanced from both sides. As regards ITC classification, we find sufficient force in the plea of the learned Consultant for the appellants that the expression 'and' occurring in the overall expression "in powder form and of non-jewellery quality" should be interpreted as 'or' in this expression. Otherwise, the words 'non-jewellery quality' will have no meaning attached to them inasmuch as powder form by itself would have been a sufficient qualification. Although the word 'and' is normally used as a conjunctive expression, it is not un-common that having regard to the context, this has been interpreted as 'or'. Accordingly, in order to avoid redundancy to the words "non-jewellery quality". The word 'and' referred to above should be read as 'or'. Therefore, the pearls whether in powder form or of non-jewellery quality are permissible to be imported under SI. No. 8 of List 4-B, Appendix-6 of April, 1985 - March, 1988 Policy.

5. Similarly, we are not impressed by the arguments taken by the lower authorities regarding the classification of goods under question in Chapter 5 of the CTA 1975. No evidence has been brought on record by the department that the goods under import are not pearls in commercial parlance. On the other hand, the invoice clearly describes the goods as broken pearls and the Examination Report also describes them as "pearls real (broken/raw)". Therefore, they are to be treated as covered by the expression 'pearls' occurring in Tariff Heading 71.01 Chapter 5 is obviously excluded because pearls are specifically mentioned in Chapter 71. Findings of the lower authorities that the pearls to be covered under Chapter 71 would be of jewellery quality alone is not borne out by the plain expression of the pearls occurring in that Chapter. On the other hand, we observe that "dust and powder of natural or synthetic precious or "semi-precious stones" is covered specifically under Tariff Heading 71.04. Such dust and powder need not be for jewellery purposes and mostly it is for non-jewellery purposes. Tariff Heading 71.02(3) speaks again of 'industrial diamonds' i.e. which are of non-jewellery variety. Therefore, if some of items covered under the said Chapter 71 and not meant for jewellery purposes can be classified under this chapter, there Is no reason whatsoever as to why the pearls of non-jewellery quality alone should be excluded from the purview of the Chapter 71 In the absence of specific words to that effect. Since the goods under Import have been found raw pearls and that also unworked, in the absence of any specific report that they are worked, the benefit of Notification 247/76 dated 2.8.1976 would also be available to the goods.

6. In view of the aforesaid discussion, the Impugned order is set aside while allowing the appeal. Consequential relief If any, will be. given to the appellants.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //