COLLECTOR OF CUSTOMS Vs. ELECTRONIC INDUSTRIES

JUDGEMENT

(1.) THE proceedings relating to proposed review under Section 131(3) of the Customs Act, 1962 by the Government of India in order -in appeal No. 56/81 dated 17 -2 -81 of the Appellate Collector of Customs, Delhi on the appeal of M/s. Electronic Industries (the Respondents) against an order dated 20 -3 -81 of the Assistant Collector of Customs, Foreign Post, New Delhi have been transferred to the Tribunal for disposal under the provisions of Section 35P of the Act.

(2.) THE Respondents imported synthetic industrial diamonds via post parcel D.No. 245879 which was released on 21 -7 -1979 after payment of customs duty @ 100% plus 20% under heading 92.01/13 CTA plus CVD @ 8% under item 68 GET. A claim for assessment under heading 71.02 read with Notification No. 98/78 (should be 131/77) @ 40%. The claim was rejected since note 2(1) of Chapter 71 excludes goods covered among others by Chapter 92 and the goods are used for record player needles i.e. musical instruments. Further, according to Explanatory Note to heading 92.13, "sapphires (usually synthetic) and diamonds (whether or not mounted) for sound recording or reproduction" are classifiable under this heading. The Appellate Collector, however, had that the goods were classifiable under heading 71.02 read with the relevant notification on the grounds that (1) the industrial diamonds in the form imported cannot surely be identified as parts of any goods falling under Chapters 90, 91 or 92 and they general uses in industry including ferrite parts, hard metal points for bearings or traces and points for phonographs, (2) preamble to Notification No. 131 -Cus dated 1 -7 -1977 mentions inter alia, that industrial diamonds whether natural or synthetic, in dust or in powder form falls within Chapter 71, and (3) there is further corroboration in Note 3(f) to Chapter 28 CTA which states that precious and semi -precious stones (industrial, synthetic or re -constructed) or dust or powder of such stones are not covered and the heading would be 71.02/04,

(3.) THE Central Government, being of the tentative view that since the industrial goods had been given specific shape for use as lips of record player needles which the importers are manufacturing and the invoice clearly shows some of the industrial diamonds were for 45 vpm and others for 78 vpm needles, the goods were specially moulded for the purpose and are identifiable parts of musical instruments in terms of Note 2(1) to Chapter 71 and would be classifiable under heading 71.02, the Appellate Collector had erred in his decision, issued the impugned notice to show cause why the appellate order should not be set aside and the order of the Assistant Collector restored.