Rule 2(a) may classify SKD/CKD imports as cars, but not override exemption or import-policy permissions.

SKD/CKD motor vehicle imports may be classified as complete motor cars for customs tariff purposes under Rule 2(a) when the consignments show the essential character of finished vehicles, even though physically imported as components. That legal fiction does not automatically defeat customs exemption notifications: where the imported parts satisfy the notification conditions, exemption remains available according to the notification's terms. For import-control purposes, the same deeming rule cannot convert otherwise permitted components and parts into prohibited passenger cars. On the facts considered, the imports were covered by the applicable policy, and confiscation with redemption fine was not justified.

---

---

Issues: (i) Whether motor vehicle components imported in SKD/CKD form were to be classified as complete motor cars under the tariff by applying Rule 2(a); (ii) whether the assessees were entitled to the benefit of the relevant customs exemption notifications; (iii) whether the imports by Sipani Automobiles were permissible under the import policy and whether the goods were liable to confiscation.

Issue (i): Whether motor vehicle components imported in SKD/CKD form were to be classified as complete motor cars under the tariff by applying Rule 2(a).

Analysis: For tariff classification, incomplete or unassembled goods having the essential character of the finished article are classifiable as the complete article. The imported consignments, read with the agreements, invoices, bills of lading and the part-shipment nature of the imports, showed that complete cars were being brought in knock-down form. The legal fiction under Rule 2(a) applied for customs classification, even though the goods physically remained components, assemblies or sub-assemblies.

Conclusion: The goods were correctly classified as complete motor cars for customs purposes.

Issue (ii): Whether the assessees were entitled to the benefit of the relevant customs exemption notifications.

Analysis: The notifications granted exemption to specified components and parts required for manufacture of motor vehicles. The benefit could not be denied merely because the goods were treated as cars for tariff classification by legal fiction. However, the exemption had to be confined to the terms of the notifications and to the goods actually covered by them. On the facts found, the Maruti imports satisfied the conditions of the earlier notification, and the later notification could not be restricted only to the 20 items listed in the table when the imported goods were otherwise covered as parts and components.

Conclusion: The exemption was admissible, and the denial of the benefit was unsustainable.

Issue (iii): Whether the imports by Sipani Automobiles were permissible under the import policy and whether the goods were liable to confiscation.

Analysis: The import policy prohibited passenger cars, but permitted import of accessories, components, parts and spares of consumer durables by actual users under the public notice. The deeming fiction used for customs classification could not be extended to convert otherwise permitted components into prohibited goods for import-control purposes. There was no deliberate violation established, and the goods were covered by the public notice governing such imports.

Conclusion: The imports were permissible under the import policy and confiscation with redemption fine was not justified.

Final Conclusion: The impugned orders were modified. The imports were treated as cars only for customs classification, while the assessees were held entitled to the relevant exemption benefits and, in the Sipani matter, the confiscation and fine were set aside.

Ratio Decidendi: Rule 2(a) can be used to classify SKD/CKD imports as the complete article for tariff purposes, but that legal fiction does not automatically override the express language of an exemption notification or the import-control policy governing permitted imports of components and parts.

---