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of <h1>Imported arm-and-blade assembly classified as windscreen wiper part, not complete wiper; penalty u/s112(a) quashed</h1> Whether the imported arm-and-blade assembly is a complete windscreen wiper or a part: applying HSN Explanatory Notes and GIR Rule 2(a), the tribunal held ... Classification of the imported goods - “Arm and Blade Assembly for Windscreen Wipers”, complete windscreen wiper under CTH 85124000, or as parts thereof under CTH 85129000 - men's rea or intent to evade duty - essential character of a complete windscreen wiper - HSN Explanatory Notes - penalty under Section 112(a) - HELD THAT:- As per the HSN Explanatory Notes to Heading 8512, windscreen wipers are described as motor-driven devices. In the absence of a motor, the imported goods cannot be regarded as complete windscreen wipers. Heading 85129000 specifically covers “Parts of the articles of heading 8512”. Thus, the subject goods clearly fall within this description. The application of Rule 2(a) of GIR presupposes that the imported article, as presented, possesses the essential character of the complete article. Essential character must be assessed with reference to functionality, and not merely physical appearance. In the present case, without the motor and related mechanism, the Arm and Blade assembly cannot perform the essential function of a wiper. Therefore, we hold that the impugned goods do not attain the essential character of a complete windscreen wiper. We find that Rule 2(a) cannot be mechanically applied. It applies only where the incomplete article substantially represents the complete article. In the present case, the absence of the electrical motor, which is the heart of the system, renders the goods incapable of independent operation. Hence, Rule 2(a) is inapplicable. It is well settled that mere misclassification, in the absence of men's rea or intent to evade duty, does not attract penalty under Section 112(a) of the Customs Act, 1962. Once the confiscation under Section 111(m) has already been set aside by the lower appellate authority, the penalty imposed cannot survive independently. Accordingly, the penalty imposed under Section 112(a) is unsustainable and is set aside. The imported Arm and Blade Assembly is correctly classifiable under CTH 85129000 as parts of windscreen wipers; and Reclassification under CTH 85124000 is unsustainable; Issues: (i) Whether the imported Arm and Blade Assembly is classifiable as a complete windscreen wiper under CTH 85124000 or as parts under CTH 85129000? (ii) Whether Rule 2(a) of the General Rules for Interpretation (GIR) is applicable to the impugned goods? (iii) Whether penalty under Section 112(a) of the Customs Act, 1962 is sustainable?Issue (i): Whether the imported Arm and Blade Assembly is classifiable as a complete windscreen wiper under CTH 85124000 or as parts under CTH 85129000?Analysis: The imported items consist only of Arm and Blade Assembly without the wiper motor assembly. Heading 85129000 covers parts of articles of heading 8512. HSN Explanatory Notes describe windscreen wipers as motor-driven devices; absent the motor the assembly cannot perform the essential function of a complete wiper. Subsequent identical imports were assessed by the Department under CTH 85129000 without objection, reinforcing the classification as parts.Conclusion: The Arm and Blade Assembly is classifiable under CTH 85129000 as parts of windscreen wipers and not under CTH 85124000.Issue (ii): Whether Rule 2(a) of the General Rules for Interpretation is applicable in the facts of the present case?Analysis: Application of Rule 2(a) requires that the incomplete article, as presented, possesses the essential character of the complete article. Essential character is assessed by functionality. Without the electrical motorthe principal driving mechanismthe assembly lacks the essential functionality of a complete windscreen wiper and therefore does not attain the essential character required for Rule 2(a) to apply.Conclusion: Rule 2(a) of GIR is not applicable to the impugned goods.Issue (iii): Whether penalty under Section 112(a) of the Customs Act, 1962 is sustainable?Analysis: There is no allegation or evidence of mis-declaration of description, value or quantity or of mens rea to evade duty; the dispute is confined to classification. Established principles preclude imposition of penalty under Section 112(a) for mere misclassification absent fraudulent intent. Confiscation previously set aside by the lower appellate authority also undermines the independent survival of the penalty.Conclusion: The penalty under Section 112(a) is unsustainable and is set aside.Final Conclusion: The imported Arm and Blade Assembly is to be classified under CTH 85129000 as parts of windscreen wipers; Rule 2(a) of GIR does not apply; the penalty under Section 112(a) is set aside and the appeal is allowed with consequential reliefs as per law.Ratio Decidendi: An incomplete article lacking the functional principal component that imparts essential character to the complete article cannot be classified as the complete article; essential character is determined by functionality, not mere physical resemblance.
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