‘Sanitaryware’ cannot be construed as ‘artware’ to deny duty drawback in category of goods falling under Chapter 74 Item No. 741802

While upholding the petitioner’s (M/s United Sanitations) claim for duty drawback, the Delhi High Court acknowledged the petitioner’s argument that brass elements used in sanitaryware were a common industry practice to prevent rusting due to exposure to moisture, and therefore quashed the order passed by the Addl. Secretary to the Government of India exercising its revisional powers under Section 129DD of the Customs Act, 1962, whereby the claim of duty drawback was rejected citing different classification.

The Division Bench comprising of Justice Yashwant Varma and Justice Dharmesh Sharma observed that while some parts of the exported consignment were made of brass, they were still related to sanitaryware, not for use in nuclear reactors, boilers, machinery, or appliances.

The Bench also highlighted that the Authorities had overlooked the brochures showing the essential features of the sanitaryware and the use of brass to enhance elegance and durability.

“It is apparent that the respondent in a mindless manner has failed to even consider the common parlance and manner in which the articles are known, bought and sold in the marketing world,” added the Bench.

Advocate Pradeep Jain appeared for the Petitioner, whereas Advocate Satish Kumar appeared for the Respondent.

In a nutshell, the petitioner was a regular exporter of sanitaryware under the All-Industry Rates Drawback Scheme. They filed a petition challenging an order passed by the Addl. Secretary to the Government of India on July 8, 2022, which dismissed their revision application under Section 129DD of the Customs Act, 1962. The order upheld the original authority’s decision regarding the classification of exported goods and rejected the petitioner’s claim for duty drawback under a different category.

After considering the submission, the Bench found that the consignment was duly inspected vide panchanama dated Sep 12, 2011, and the same was verified to be “sanitary wares”.

The Bench went on to add that “sanitary wares” are that equipment, which in isolation or combined with other objects or appliances may be used to achieve a high standard of cleanliness from germs and bacteria.

“The use of brass in sanitary wares for taps or knobs is by all means a well-known phenomenon in context of the business of kitchen and bathroom wares since such wares invariably come in contact with moisture or water, which has a high erosive value and brass is thus used in order to prevent rusting of the wares or fixtures for longer lasting durability and use”, highlighted the Bench.

Additionally, the bench addressed the petitioner’s claim that duty drawback should be categorized under heading No. 741903A, and found this claim to be misconceived.

The Bench pointed out that a careful examination of the tabulated tariff details revealed that item No. 741902 in Chapter 74 relates to artware/handicraft, and therefore, it was not reasonable to categorize sanitaryware, even with premium aesthetic and sleek design, as falling within the classification of artwork or handicraft.

Accordingly, the High Court concluded that the order passed by the Revisionary Authority approving the original order, cannot be legally sustained, and therefore, directed the authorities to consider the duty drawback claim under the classification of item No. 741802 as per the applicable tariff.

Cause Title: M/s United Sanitations Through Its Partner Sh. Deepak Dhawan vs. Addl Commissioner of Customs [W.P.(C) 3584/2023 / 2023-Enterslice-2-HC-Del-Customs]

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