The Authority for Advance Rulings (AAR), Gujarat has held that the product Marigold Butterfly Bridal with Watch and similar jewellery products containing watch not classifiable under the head ‘Jewellery’ and the same should be assessable as ‘Watches’ under the heading 9101.
The applicant sells jewellery articles in which a watch is fitted. As per the desire and requirement of the customers, the applicant gets the jewellery prepared by artisans. Such jewellery articles consist of gold, diamond, precious stones like ruby, emerald, sapphire etc. and pearls. After the jewellery is prepared and approved by the customer, a small watch is fitted in it.
The applicant contended that these items fall under Chapter Heading 7113 which covers articles of jewellery and parts thereof, of precious metal or of metal clad with precious metal.
The authority noted that as Chapter Note 3(l) of Chapter 71 specifically mentions that Chapter 71 does not cover the articles of Chapter 91 (clocks and watches),
The authority noticed the fact that the applicant gets the jewellery prepared by artisans, which consist of gold, diamond, precious stones like ruby, emerald, sapphire etc. and pearls. A small watch is fitted in it.
Analyzing the Chapter Heading and Chapter Notes of Chapter 91 of the Customs Tariff Act, 1975, the authority noted that watches of this heading must have cases wholly of precious metal or of metal clad with precious metal, which may be set with gem stones or with natural or cultured pearls and may be fitted with a cover or have a bracelet of precious metal (gem set or not).
“The product of the applicant is thus undisputedly watched with case of precious metal and covered by Chapter Heading 9101 in view of Chapter Note 2 of Chapter 91 as well as Explanatory Notes to heading 9101. Further, in view of the Explanatory Notes to heading 9101 read with Explanatory Notes to Heading 9102, timekeeping instruments with case and movement, of a kind intended to be worn or carried and designed to function in all positions, which indicate the time or measure intervals of time are covered under the said heading, which include wrist-watches, pocket-watches, fob-watches, watches for carrying in handbags, watches mounted in brooches, rings, etc. Therefore, the watches in the design of butterfly with a ring, bracelet, bangle, necklace, ring etc. supplied by the applicant are covered under heading 9101,” the authority said.
It was also observed that the applicant had relied on the decision of the Gujarat High Court wherein it was held that NABULA WATCH is classifiable as jewellery.
Opining that the above High Court decision is not applicable to the instant case, the High Court held that “the judgement dated 03.02.2017 of the Hon’ble High Court of Gujarat in Tax Appeal No. 46 of 2017 in case of State of Gujarat Vs. M/s. Titan Industries Limited pertains to classification of goods under Schedule-II to the Gujarat Value Added Tax Act, 2003. It is pertinent to note that the scheme of classification of goods under Gujarat Value Added Tax Act, 2003 was different than the scheme of classification of goods for the purpose of Notifications issued under the CGST Act, 2017 and GGST Act, 2017, which is based on the First Schedule to the Customs Tariff Act, 1975. Therefore, the said judgement is not applicable in the facts of the present case.”
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