Purposive customs classification: CKD vehicle parts cannot attract new-vehicle compliance certificates, but assessment may still proceed.

Imported goods brought in as a completely knocked down set of parts could not be treated as a vehicle for insisting on compliance certificates meant for a new vehicle. Applying a purposive interpretation, the HC held that the motor vehicle import requirements attached to an actual vehicle, not to components that had not yet assumed that status, and the certificate demand was set aside. At the same time, Customs retained the power to assess and classify the goods under the Customs Act on their true character, after considering the whole package and giving the importer an opportunity of hearing, by a reasoned order in accordance with law.

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Issues: (i) Whether the Customs authorities could insist on certificates meant for import of a new vehicle while the goods were imported in a completely knocked down condition as parts. (ii) Whether the proper assessment and classification of the imported goods under the Customs law had to be made by the Customs authorities in accordance with law without such insistence.

Issue (i): Whether the Customs authorities could insist on certificates meant for import of a new vehicle while the goods were imported in a completely knocked down condition as parts.

Analysis: The import consisted of the components of a battery-operated tricycle, except the battery, packed together and brought into India as parts. The relevant import licensing note and the provisions governing new vehicles under the motor vehicle regime applied to import of a vehicle, not to goods which had not yet assumed the status of a vehicle. The Court held that purposive interpretation was required and that the import in question could not be treated as a vehicle for the purpose of insisting upon the certificates referred to in the customs query.

Conclusion: The insistence on the vehicle-compliance certificates was not justified and was set aside in favour of the petitioner.

Issue (ii): Whether the proper assessment and classification of the imported goods under the Customs law had to be made by the Customs authorities in accordance with law without such insistence.

Analysis: The Court distinguished between the impermissibility of treating the goods as an imported vehicle at the stage of certificate demand and the separate function of assessment under the Customs Act. It held that the assessing officer must apply a purposive interpretation to the Act, the Rules and the tariff headings, and decide whether the goods were closer to a vehicle or to parts, after considering the entirety of the package. That assessment exercise was left to the Customs officials, but it had to be undertaken without insisting on the certificates mentioned in the query and after giving the importer an opportunity of hearing.

Conclusion: The Customs authorities were permitted to assess the goods under Section 17 of the Customs Act, 1962 in accordance with law, but not by insisting on the disputed certificates.

Final Conclusion: The writ petition succeeded only to the extent that the demand for compliance certificates was rejected, while the Customs authorities retained the power to undertake fresh assessment and classification of the imported goods by a reasoned order after hearing the petitioner.

Ratio Decidendi: Imported goods brought in as a completely knocked down set of parts cannot be treated as a vehicle for insisting on vehicle-compliance certificates; classification and duty assessment must proceed on a purposive reading of the customs tariff and the actual character of the goods.

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