Exemption for mobile phone parts cannot be denied by using Rule 2(a) to treat them as complete phones.

Imported mobile phone parts and accessories were held eligible for exemption under Notification No. 21/2002-Cus because the notification expressly covered parts, components and accessories of mobile handsets under the specified heading or any other chapter. Rule 2(a) of the General Rules of Interpretation could not be invoked to deny the exemption by deeming the goods to be complete mobile phones in semi-knocked down form. The tribunal also relied on Board circulars and prior authority to treat the goods as presented for exemption purposes. The demand, confiscation and penalty based on denial of the exemption were therefore set aside.

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Issues: Whether imported parts and accessories of mobile phones were eligible for exemption under Notification No. 21/2002-Cus despite being treated by the department as complete mobile phones in semi-knocked down condition and classified under a different heading by applying Rule 2(a) of the General Rules of Interpretation.

Analysis: The imported goods were found to be parts and accessories of mobile phones. The exemption notification extended benefit to parts, components and accessories of mobile handsets falling under the specified heading or any other chapter, so eligibility did not depend on the goods being classifiable under one particular heading. The interpretative fiction under Rule 2(a) could not be used to deny exemption where the notification itself covered parts and components. The Board circular and prior tribunal authority supported classification of goods as presented for the purpose of exemption. The assembly process was not treated as a simple exercise, and the department did not dispute that the appellants had a factory for manufacture of cellular phones.

Conclusion: The exemption was admissible and the confiscation and penalty based on denial of the exemption could not stand.

Final Conclusion: The demand and consequential penal action were set aside and the appeal succeeded.

Ratio Decidendi: Where an exemption notification expressly covers parts, components and accessories, the benefit cannot be denied by invoking the deeming fiction of an interpretative rule to treat the imported goods as a complete article for classification purposes.

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