Orient
Ceramics & Inds. Ltd Vs. Commissioner of Customs, New Delhi [2008] INSC 743 (29 April 2008)
ASHOK BHAN & J.M. PANCHAL
Reportable CIVIL APPEAL NO. 5799 OF 2002 BHAN, J.
1. This Appeal has been filed u/s. 35L(b) of the Central Excise Act, 1944
(hereinafter referred to as the 'Act') against the Final Order No. 126/2002-D
dated 08.05.2002 in Appeal No. C/411/2001-D passed by the Customs, Excise and
Gold (Control) Appellate Tribunal, New Delhi (hereinafter referred to as
'Tribunal') rejecting the appeal filed by the appellants.
2. Appellants imported two consignments of unglazed porcelain tiles, as per
appellants, vide Bills of Entry No. 113197 dated 24.10.2000 and No. 113056
dated 23.10.2000. In these two Bills of Entry, the appellants claimed
classification of the tiles under sub-heading 6907.90 of the Customs Tariff
Schedule. Since goods falling under sub-heading 6907.90 were freely importable
without any license, appellants sought clearance of the same on payment of
appropriate customs duty in terms of para 5.1 of the Exim Policy 1997-2002. The
Bill of Entry was assessed as per declaration made by the appellants. After the payment of duty so assessed, the Bill of Entry was presented in
the import shed for physical examination where the goods were examined in the
presence of the appellant's representative. On examination, it appeared that
the goods were glazed tiles. Such tiles were classifiable under heading 6908.90
of the Customs Tariff Schedule and being restricted for importation as per
classification, could not be imported without proper license. The appellants
requested for the provisional release of the goods against the P.D. test bond
pending finalization as per test report from Central Revenue Control Laboratory
(hereinafter referred to as the "CRCL"). The request of the
appellants was accepted and the goods were released to them provisionally.
3. The representative samples of the goods were drawn and sealed in their
presence and sent to CRCL for test. The test report revealed that the goods had characteristics of glazed tiles.
Show cause notice was accordingly issued to the appellants for the confiscation
of the goods and for imposition of penalty on them. The appellants, however,
contested the correctness of that notice and also submitted manufacturing
process of the unglazed tiles. It was also requested by the appellants that the
goods may be sent to the Central Glass and Ceramics Research Institute,
Calcutta for test. The request made by the appellants for sending the goods to
Central Glass and Ceramics Research Institute, Calcutta was rejected. After
considering the material on record, the Commissioner of Customs, held the goods
to be porcelain glazed tiles and ordered confiscation of the same having been
imported without license and also imposed penalty of Rs. 10,00,000/- on the
appellants.
4. Aggrieved against the order passed by the Commissioner of Customs, the
appellants filed appeals before the Tribunal which have been dismissed by the
impugned order.
5. The point involved in the present appeal relates to the classification of
goods in question under Indian Trade Classification (Harmonized System) [ITC
(HS)] Policy. There is no dispute regarding rate of duty payable thereon. But
depending on the classification, the goods will either fall under restricted
list or free list of import. As per the appellants, the imported goods were
unglazed porcelain tiles classifiable under heading 6907.90 and as such, could
be imported without license.
6. To substantiate this plea raised by the appellants, reliance was placed
on the manufacturing process supplied to the appellants by the manufacturer and
the distinction between unglazed and glazed tiles. Admittedly, the
representative samples of the goods were drawn and sealed in the presence of
the appellants. The samples were sent to CRCL for 2nd time for test. The CRCL
again pointed out that the samples had the characteristics of glazed tiles.
The second report was given by the Director of the CRCL, which was conveyed
to the appellants vide letter dated 27.02.2001. The relevant portion of the
CRCL report reads as under:- "The imperviousness test and chemical
resistance test on the samples, have been concluded in this laboratory as
prescribed in the ASTM Methods and found to satisfy the conditions as laid down
in respect of glazed tiles. The test for water absorption as laid down in the
I.S. has also been conducted and found to absorb appreciable quantity of water.
In view of above facts it is clear that the samples under reference are other
than unglazed ceramic tiles as claimed and hence the test as per ISO as
indicated in your letter may not be necessary for further confirmation in this
regard."
7. The appellants in their reply to the show cause notice have brought out
the distinction between unglazed and glazed tiles as under: - "...While
porcelain unglazed tiles are almost completely vitrified and would absorb no
water (impermeable) glazed tiles have a porous body permeable to water..."
8. The manufacturing process supplied by the manufacturer which was in turn
given to the Customs Authorities by the appellants vide letter dated 23.12.2000
also brings out the distinction between the glazed and unglazed tiles. Even in
the subsequent communication dated 30.01.2001, the same very distinction was
reiterated. The relevant portion of the letter reads as under: - "...There
are clear distinctions between porcelain unglazed tiles and glazed tiles from
the point of view of their nature and compositions. While porcelain unglazed
tiles are almost completely vitrified and would absorb no water (impermeable),
glazed tiles have a porous body permeable to water..."
9. From the reading of the report of CRCL and the distinction between the
unglazed and glazed tiles pointed out by the appellants in their correspondence
with the Department, it is evident that the imported goods were not unglazed
but glazed which was classifiable under tariff heading 6908.90. License of
import for such goods was required, as per policy, before importing which the
appellants admittedly did not have. In view of the report submitted by the
CRCL, which is an expert body, we are of the opinion that the tiles imported by
the appellants were glazed tiles and were liable to be classified under tariff
heading 6908.90. Reasons recorded by the Tribunal in affirming the order passed
by the Commissioner of Customs are perfectly valid and we do not find any
reason to disagree with the same.
10. Counsel for the appellants, in order to wriggle out of the restricted
list of the imports, then contended that if the goods were not classifiable
under tariff heading 6907.90, then the goods were classifiable under tariff
item 6914.10 as per classification issued by the Director General of Foreign
Trade (DGFT). In ground 'C' of the grounds of appeal, the appellant has itself
admitted that the difference between the ceramics and porcelain is brought out
from the technical literature from the World Book Encyclopedia, copies of which
have been attached as annexure to the appeal. While ceramics are made from
minerals such as clay, feldspar, silica and talc, the porcelain is made out
from a mixture of ingredients like kaolin, petuntse. Kaolin is a pure white
clay and petuntse is a type of felt spar found only in China. It has not been
proved by the appellants that the tiles imported by it were made from the
mixture of ingredients like kaoline and petuntse. His case was that tiles
imported by it were unglazed ceramic tiles. Since, the material which goes into
production in the ceramic tiles and porcelain tiles is different, in the absence
of any material to show that the tiles manufactured by the appellants were
porcelain tiles made out of kaolin and petuntse, it cannot be held that the
tiles imported by the appellants were other ceramic articles falling under
tariff entry 6914.10. We do not find any substance in the plea that the goods
imported by the appellants would fall under Entry 6914. Entry 6914 pertains to
`other ceramic articles' and tariff sub-heading 6914.10 deals with other
ceramic articles made of `porcelain or china'. We have come to the conclusion that the goods imported by the appellants
were classifiable under tariff heading 6908.90. As the items imported by the
appellants are specifically covered by tariff heading 6908.90, the same cannot
be brought under the residuary clause 6914. Appellants, in their Bills of Entry, did not claim classification under
heading 6914.10. They claimed the classification under tariff heading 6907.90
as unglazed tiles. It had never been their case that the goods were not tiles
or that they were "other ceramic articles" referred to in the DGFT classification under sub-heading 6914.10.
11. For the reasons stated above, we
do not find any merit in this appeal and dismiss the same leaving the parties to
bear their own costs
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