The Bangalore Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) while quashing Rs. 15 lakh penalty held that gold chains imported in running lengths qualify as “articles of jewellery” and not as semi-manufactured gold.
The bench of Pullela Nageswara Rao (Technical Member) has observed that the imported goods had already attained the essential character of finished jewellery. It noted that merely cutting the chains to desired lengths and attaching hooks does not change their nature or usage as neck chains. Therefore, they squarely fall within the scope of “articles of jewellery” under CTH 7113, as clarified by Chapter Note 9(a) of Chapter 71.
The dispute arose when the appellant, a jewellery trader based in Agra, imported 22K assorted gold jewellery from Indonesia and classified the goods under Customs Tariff Heading (CTH) 7113, claiming exemption under a Free Trade Agreement and paying IGST at 3%. However, customs authorities denied clearance and reclassified the goods under CTH 7108 as “gold in semi-manufactured form,” alleging that the chains, being in long running lengths, were not finished jewellery.
The Department further confiscated the goods under Sections 111(d) and 111(m) of the Customs Act, 1962, and permitted re-export only upon payment of ₹15 lakh as redemption fine and ₹15 lakh as penalty. The importer complied and re-exported the goods but challenged the order.
Before the Tribunal, the appellant argued that the imported goods were complete gold chains requiring only minor customization such as cutting to length and attaching hooks, which did not alter their essential character. It was contended that under Rule 2(a) of the General Rules for Interpretation (GRI), even incomplete or unfinished articles that possess the essential character of finished goods must be classified as such.
Rejecting the Department’s classification under CTH 7108, the Tribunal held that the said entry applies only to unwrought or semi-manufactured forms such as bars, rods, or wires, and not to identifiable jewellery items like chains.
On the issue of confiscation and penalty, the Tribunal emphasized that the case involved a bona fide classification dispute with no allegation of misdeclaration in description or value. It ruled that confiscation under Sections 111(d) and 111(m) was unsustainable and, consequently, the redemption fine and penalty imposed under Sections 125 and 112(a) could not be upheld.
The Tribunal allowed the appeal and set aside the fine and penalty, granting consequential relief to the appellant.
Case Details
Case Title: M/s. Ram Aabhoshan Versus Commissioner of Customs, Bangalore
Citation: JURISHOUR-994-CES-2026(BANG)
Case No.: Customs Appeal No. 21961 of 2018
Date: 27.04.2026
Counsel For Appellant: Purvi Asati and Mr. Ashutosh Sharma, Advocates
Counsel For Respondent: Maneesh Akhoury, Assistant Commissioner (AR)
