2026 (2) TMI 1350 - AT - Customs

Import Entitlement for Repairs extends to authorized service centres; provisional release allowed subject to bond.

The note addresses whether Paragraph 2(3)(vi) of S. O. 5379(E) (19/12/2023) permitting up to 24,000 two wheeler wheel rims per financial year for ... Interpretation of S.O. 5379(E) dated 19.12.2023 concerning quantitative import restrictions for 2 Wheeler Automotive Wheel Rims - import entitlement for repairs and after sales service extendable to authorised service agents of the vehicle manufacturer - quantitative ceiling of 24,000 units per financial year for repairs/after sales service - provisional release of imported goods upon execution of bond and bank guarantee - reservation on classification and valuation - HELD THAT:- In the normal course, we find that most of the manufacturers of the cars and 2-wheelers appoint dealers and distributers who act as their service agent for servicing of the vehicles sold by them. Generally, all the service requirements are taken up by such agents and not by manufacturer directly. Therefore, we take a considered view that Para 2(3) (vi) would be applicable not only for the repairs and after sales services directly by the manufacturer but also when the same is provided through their authorized agent. Hence, we do not find that the appellants would invite the prohibition clauses per se on account of they being service providers. A careful reading of the affidavit filed by the manufacturer and letter submitted to Deputy Commissioner show that both the appellants are duly authorized by the manufacturer of PRAKRITI vehicles, for taking up servicing of their branded vehicles. Appellant claims that they are rims but hubs. However, we are not inclined to go into this issue at this juncture. We have already held that the appellants being authorized service centers are eligible to import the same. Since the quantity imported so far plus the present quantity under the live Bills of entry does not exceed 24,000, we hold that the imported goods cannot be held as prohibited items. Thus, we direct the jurisdictional authorities to release the goods on provisional basis upon fulfillment of the bond and bank guarantee and other terms and conditions as specified in the impugned orders. The appeals stand disposed off thus. Issues: (i) Whether Paragraph 2(3)(vi) of S. O. 5379(E) dated 19/12/2023 permitting import of up to 24,000 units of 2-wheeler automotive wheel rims per financial year applies only to vehicle manufacturers or also to their authorized service agents; (ii) Whether the live consignments in question are prohibited imports under S. O. 5379(E) dated 19/12/2023 and whether provisional release should be granted.Issue (i): Whether Paragraph 2(3)(vi) of S. O. 5379(E) dated 19/12/2023 extends to authorized agents/service centres of vehicle manufacturers.Analysis: Paragraphs 2(3)(vi) and (viii) distinguish imports permitted for manufacturing and for repairs/after sales service. In common commercial practice manufacturers appoint dealers, distributors and authorized service agents to perform repairs and after sales services. Documentary evidence before the Tribunal includes authorization from the vehicle manufacturer confirming the appellants as authorized service centres. Applying the language of Paragraph 2(3)(vi) in practical context, the entitlement for repairs and after sales service is not restricted to actions performed directly by the manufacturer but includes services performed through duly authorized agents.Conclusion: Paragraph 2(3)(vi) of S. O. 5379(E) dated 19/12/2023 applies to authorized service centres acting on behalf of vehicle manufacturers; authorized service centres are eligible for the 24,000 units per financial year entitlement.Issue (ii): Whether the live consignments are prohibited under S. O. 5379(E) dated 19/12/2023 and whether provisional release should be directed.Analysis: The cumulative imports by the appellants to date together with the present live Bills of Entry do not exceed the 24,000 unit limit set out in Paragraph 2(3)(vi). The appellants have established authorization by the manufacturer to act as service centres. The Tribunal has not examined or decided classification, tariff heading or valuation issues at this stage. Given the entitlement under Paragraph 2(3)(vi) and the present quantities being within the specified limit, the consignments cannot be treated as prohibited under the notification. The Tribunal directs provisional release subject to fulfillment of bond, bank guarantee and other terms and conditions specified in the impugned orders, and further directs compliance with directions previously issued by the High Court concerning demurrage and handling charges.Conclusion: The live consignments are not prohibited under S. O. 5379(E) dated 19/12/2023 and the goods shall be released provisionally upon execution of bond and furnishing of bank guarantee and compliance with other specified terms; classification and valuation issues are reserved.Final Conclusion: The appellants, being authorized service centres and given that imported quantities are within the limit in Paragraph 2(3)(vi) of S. O. 5379(E) dated 19/12/2023, are entitled to import the specified quantity for repairs and after sales service and to provisional release of the live consignments subject to bond and bank guarantee; ancillary directions of the High Court regarding demurrage and handling charges are to be followed.Ratio Decidendi: Paragraph 2(3)(vi) of S. O. 5379(E) dated 19/12/2023 permitting up to 24,000 units of 2-wheeler automotive wheel rims per financial year for repairs or after sales service extends to imports made by manufacturers' duly authorized service agents, and consignments within that quantitative limit are not prohibited.