Classification
of Handicrafts
The
following Public Notice was issued by the Commissioner of Customs (Import)
Jawaharlal Nehru Custom House on 12th April 2010.
[Customs Public Notice No. 48 dated 12th April
2010]
Sub: Classification of Artware / Handicraft items and composite goods in the
Drawback schedule.
It is for the information of all Exporters, Custom
House Agents & the Trade that it was brought to the notice of the Board
that difficulties were being faced by exporters in classification of articles
declared as handicraft/artware items. It was also
brought to the notice that divergent practices were being followed in
classifying the goods made of different constituent materials in the Drawback
Schedule and applying Note 14 of the Drawback Schedule Notification
No.103/2008-Cus (N.T) dated 29.08.2008 in this regard.
2. It may recalled that the Board vide Circular No.128/39/95-CX dated
25.05.1995 had clarified that since the office of Development Commissioner
(Handicraft) has treated imitation or real zari as
handicraft the same may be treated as handicrafts by the Customs and Central
Excise authorities. However, the Board vide circular no.280/114/96-CX dated
19.12.1996 modified this guideline by stating that the following criteria laid
down by the Supreme Court in the case of Louis Shoppe [1996(10) CXLT (SC)
CE-277=(1996)(13) RLT 507 (SC)] for treating any goods as handicrafts may also
be followed :-
(i) It must be predominantly made by hand; it
does not matter if some machinery is also used in the process.
(ii) It must be graced with visual appeal in the nature of ornamentation
or in-lay work or some similar work lending it an
element of artistic improvement. Such ornamentation must be of substantial
nature and not a mere pretence.
3. The Board reiterated these guidelines vide circular No.32/99-Cus
dated 04.06.99. The Board vide subsequent circular No.56/99–Cus dated 26.08.99
advised the field formations that they can accept the certificates issued by
either the Development Commissioner (Handicrafts) or by the Export Promotion
Council for Handicrafts (EPCH).
4. It is hereby clarified that the assessing authorities should
normally accept the certificates issued by the Development Commissioner
(Handicrafts)/EPCH. A decision to reject the certificate issued by the
Development Commissioner (Handicrafts)/EPCH certifying the goods as artware/handicraft should be taken only with the approval
of the Commissioner of Customs / Central Excise and after discussions with the
certificate issuing authority. The exports should not, in the mean time, be
held up.
5. Doubts have also been expressed relating to interpretation of note
and condition (3) of the Drawback Schedule Notification No.103/2008-Cus (N.T)
dated 29.08.2008. The note and condition provides as follows
:-
“Notwithstanding anything
contained in the said Schedule, all artware or
handicraft items shall be classified under the heading of artware
of handicraft (of constituent material ) as mentioned
in the relevant Chapters.”
The essence of this condition
is that while the Drawback Schedule is aligned with the Customs Tariff at the 4
digit level, this alignment is not applicable to Artware/Handicraft
items. Artware/handicraft item made of a particular
constituent material has to be classified under the heading of Artware/Handicraft (of that constituent material) as
mentioned in the Chapter relevant to that consitituent
material. It may be noted that according to this note, the artware/handicraft
items may fall in a heading/sub-heading in a chapter other than the chapter in
which they fall according to Harmonized System of classification. To
illustrate, a handicraft table made of stainless steel would fall under CTH
9403 as per HSN. It would, however, fall under Drawback Schedule heading 732606
(Handicraft/Artware of Stainless Steel) as per the
above note. It may also be noted that if the artware
or handicraft item is made of more than one constituent material, it should be
classified as if it is made of that constituent material which predominates in
it by weight. For example, an artware/handicraft item
made of brass, iron and wood, consisting, say, 40% by weight of brass, 35% by
weight of iron and 25% by weight of wood, should be classified as artware/handicraft or brass under Drawback Schedule heading
741903 and granted drawback at the rate and cap prescribed there under.
6. Further, it is also clarified that the relevant headings/sub-headings
in the Drawback Schedule for handicraft/artware items
include handicraft /artware items with
coating/ plating unless specifically provided otherwise.
7. Problems have also been reported in classification of composite
articles. Note and condition No.14 of the Drawback Schedule Notification ibid,
provides that whenever a composite article is exported for which any specific
rate has not been provided in the said Schedule, the rates of drawback
applicable to various constituent materials can be extended to the composite
article according to net content of such materials. It maybe noted that this
Note is applicable only to composite articles for which no specific rate has
been provided in the Drawback Schedule and not to articles which fall in one or
the other headings/sub-headings of the Drawback Schedule (which could be a
residuary heading ‘others’) and have a drawback rate. Therefore, it is
clarified that articles made of more than one constituent material should be
classified under a heading/sub-heading of the Drawback Schedule in accordance
with conditions (1) and (2) of the Drawback Schedule or if the goods are artware or handicraft items in accordance with condition
(3) of the Drawback Schedule as discussed in Para 5 above. Once, classification
of an article (whether artware/handicraft or other)
in a heading/sub-heading of the drawback schedule has been determined, then the
drawback rate and cap prescribed against that heading/sub-heading should be
applied to the whole article irrespective of the value or weight of different
constituents.
8. Note and condition 14 of the Drawback Schedule notification ibid
should be invoked only if it is found that an article cannot be classified in
any of the headings/sub-headings of the Drawback Schedule (not even in
residuary heading/sub-heading “others”), in accordance with the above
principles. However, such cases may be immediately brought to notice of the
Board so that suitable headings/sub-headings may be created in the Drawback
Schedule for future.
9. Any difficulty faced in implementing this Public Notice may be
brought to the notice of Addl./ Asstt..
Commissioner of Drawback Section, JNCH or the undersigned, if not resolved.
F.No.: S/12-Gen-87/09 DBK JNCH