Essential character test under Rule 2(a) kept Bangalore clearances classified as washing machine parts, not CKD/SKD machines.

Classification under Rule 2(a) turns on the condition of goods as cleared and whether they have the essential character of the complete article. The Bangalore factory clearances were found to consist only of sub-assemblies and loose parts, with no established correlation showing that each clearance amounted to a complete washing machine in unassembled form. Because the goods lacked the essential character of washing machines at removal, they were not assessable as CKD/SKD washing machines merely because they were described as kits. They were correctly classified as parts of washing machines, and the Revenue's appeal failed.

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Issues: Whether the goods cleared from the Bangalore factory were to be classified as washing machines in CKD/SKD condition under Rule 2(a) of the Interpretation Rules, or as sub-assemblies and parts of washing machines.

Analysis: The decisive factor was the nature of the goods at the time of removal from the factory. The Tribunal found that the clearances from Bangalore consisted of sub-assemblies and loose parts, with no established correlation showing that each clearance had the composition of a complete washing machine in unassembled form. The goods were not cleared in the state in which they could be said to have acquired the essential character of a complete washing machine for assessment purposes. Since the goods assembled at the NOIDA unit were cleared on payment of duty, the Bangalore clearances could not be treated as complete washing machines merely because they were referred to as kits.

Conclusion: The goods cleared from the Bangalore factory were sub-assemblies and parts, not washing machines in CKD/SKD condition, and were correctly assessable as parts of washing machines. The Revenue's appeal failed.

Ratio Decidendi: Classification under Rule 2(a) depends on whether the goods as cleared have the essential character of the complete article; where only sub-assemblies and parts are removed without such character, they cannot be assessed as the complete product.

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