TaxTMI 
TaxTMI 
1996 (9) TMI 650
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....e orders-in-original passed on 9.9.1983 and 30.9.1983 passed by Dy. Collector of Customs, Bombay. 1.1. The importers applied on 23.4.1982 for grant of an Industrial Licence under Industries (Dev. and Regulation) Act, 1951 for manufacture of passenger cars and light duty utility vehicles falling under scheduled Industry No. 7(5). The Central Government in exercise of the powers conferred on them by Rule 15(2) of the said rules, granted the importer the licence subject to the conditions stipulated vide letter dt. 30th May, 1982 in No. CIL 212(83) issued by the Under Secretary to Government of India, Ministry of Industry, Department of Industrial Development Secretariat for Industrial Approvals LA II Section. Para 10 of this letter stipulated that-- This Industrial Licence will be valid only for a period of 2 years within which commercial production is to be established.......... 1.2. In order to fulfill their aspiration of manufacturing the passenger cars, the appellants entered into collaboration with M/s. Suzuki Motor Co. Ltd., Japan. They also entered into a Joint Venture Agreement, Agreement between President of India, Suzuki Motor Co. Ltd., Japan and the importer.....
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....ct to the following conditions, namely:-- i) the exemption contained herein shall be applicable only to those components (including components of fuel-efficient motor cars in semi-knocked down packs and completely knocked down packs) which are covered by lists certified by an officer not below the rank of an industrial Adviser or Additional Industrial Adviser in the Directorate General of Technical Development and an officer not below the rank of a joint Secretary in the Ministry of Industry (Development of Heavy Industry) to be required for the manufacture of fuel-efficient motor cars of engine capacity not exceeding 1000 cubic centimeters; ii) the importers produces evidence to the Assistant Collector of Customs to the effect that the said components (including components of fuel-efficient motor cars in semi-knocked down packs and completely knocked down packs) have been imported by such importer under a programme duly approved by the Ministry of Industry (Department of Heavy Industry) and the Industrial Adviser or the Additional Industrial Adviser of the Directorate General of Technical Development in the Ministry of Industry for the manufacture of fuel-efficie....
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....e goods have acquired the essential character of the finished product and as such the consignments are to be treated as 'Motor Cars' and not components and in that event of the matter, the benefit of the notifications being exclusively for parts, was therefore held to be not applicable. He also held that the certificate to be produced under the notification is for "fuel efficient motor cars of engine capacity not exceeding 1000 cubic centimeters". He further held that the items like emblem 'Maruti Suzuki', glasses for door windows, seat assemblies etc. cannot be treated as essential components for manufacture of a 'fuel efficient car'. He also noted that the importers had failed to produce a certificate in accordance with condition (1) of the said Notification. The second condition of the notification was noted by the Dy. Collector and examining the certificate held the certificate do not indicate that the approval granted by the Ministry of Industries and the Industrial Adviser to DGTD is for the manufacture of fuel-efficient cars of less than 1000 cubic centimeters Engine capacity and hence he held that the second condition of the notification has also bee....
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....eals), it is seen that the ld. Collector has elaborated the positionings of the components of welding jigs, welding the parts together, inspection for dents, rectifying the same, assembly by doors, fenders lamp assemblies, bonnet etc. and touching of paint. Hence, it is stated that these are all normal processes, which are done mainly to remove any defects or dents which the body may suffer during the assembly process or in transportation. It is thus pleaded that the essence of operation is that there is no manufacturing process as such, but it is merely putting the parts together and that road test is a requirement under the law and that process of assembly is not anything more than assembly operation. It is further stated that exemption notification relates to the duty of customs leviable on the components under the first schedule of the CTA, 1975, and the additional duty leviable under Section 3 of CTA. The Interpretative Rules are part of the Customs Tariff Act. Therefore, it is pleaded that a notification has to be read in conjunction with the tariff as it is in an exemption notification. As the exemption is available only to the components and by application of Interpretative....
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....showed that the goods covered by both the Bills of Entry formed a ready car except for a battery and when assembled together and battery installed, it would be ready for use as a car. The Assistant Collector accordingly ordered classification of the goods under both the Bills of Entry as a car to be assessed on merits and without the benefit of customs Notification No. 72/93. The Collector (Appeals) in his order upheld this order of Assistant Collector, and held the imported consignment was a motor vehicle without power jack and battery. He held that Motor vehicle without power jack and battery is classifiable as a complete Motor vehicle in terms of the provisions contained in Rule 2(a) of the general Rules of Interpretation of the First Schedule of the Customs Tariff and hence the classification as a complete motor vehicle was upheld. In this context, the Collector has applied the ruling of the Hon'ble Supreme Court in the case of Sharp Business Machines v. Collector of Customs in MANU/SC/0502/1991 : 1990 (49) ELT 640 : 1990 (31) ECR 177 (SC) : ECR C Cus. 1749 SC. 4. In Order-in-Original No. 38/94, the Collector has examined Bill of Entry No. 896 dt. 30.9.1994. The goods ha....
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....d 'body' whereas the 'body' which has been imported virtually consists of all parts except the battery, engine and wheels. The Collector has further held that the very fact that it contains an inbuilt chassis along with other essential parts, shows that it is hit by Interpretative Rule 2(a) which says that an incomplete or unfinished article has the essential character of the complete or finished article. He has also referred to Explanatory Note at page 1423 of HSN wherein a motor vehicle without tyres and battery is classifiable as complete motor vehicle. Therefore, the Learned Collector has directed for confiscation of goods under Section 111(d) of the Customs Act, 1962 read with Section 3(2) of the Import and Export Control Act, 1947, imported vide Bill of Entry No. 896 dt. 30.8.1994. The Learned Collector has further granted option to the importer to redeem the said goods on payment of redemption fine of Rs. 2,00,000/-. He has also rejected the prayer for grant of benefit of Notification No. 72/93. 5. In Order-in-Original No. 41/94 dt. 12.10.1994, the Learned Collector has likewise examined the Bill of Entry wherein the importer had given the description of t....
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....milar lines, hence the details are not extracted here but only a few examples had been noted above. 7. The appellants have contended that they entered into a collaboration agreement for importation of Rover Group Limited for manufacture of cars and their new manufacturing facility at Attibele Bangalore. They have also produced a copy of memorandum of understanding dt. 8.9.1993 reached between them and M/s. Rover Groups Ltd. This Memorandum refers to letter of intent signed by them on 19th January, 1993 to investigate the possible manufacture under licence of the Montego Saloon and estate passenger cars in India. The understanding arrived at by them is that the project will involve RG transferring know-how and technology to the appellants to allow the appellants to manufacture the Vehicle in India. The project volumes are:-- The Rover Groups receive lump sum payments and royalties, net of taxes, calculated as follows:-- Pound Sterling 200,000 on signing 4% Royalty based on the factory selling price as approved by Government of India. 8. They filed their application dt. 27.5.1993 to the Reserve Bank of India seeking approval under FERA, 1973. By letter dt. 11th June....
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.... terms of Section 30(a) of the Customs Act, 1878 which is not applicable to the facts of the present case. The appellants have filed before us the following documents:-- a) Collaboration Agreement dt. 15th August, 1994 with Rover Group Limited and Sipani Automobiles Limited India. b) Non-disclosure Agreement dt. 19th January, 1993. c) Purchase Orders. d) Invoices for some of the locally procured components. e) Copies of Bills of Lading. On perusal of these documents, the following facts are noted for the purpose of deciding these appeals. a) Collaboration Agreement: In para one of the agreement, the following definitions have been set out:-- (1) "Licensed Products" means the vehicle known as the Montego which is at the Effective Date comprised within the range designated Montego Estate and Saloon in such specifications as agreed in writing by ROVER and SIPANI, and current at the Effective date or are subject to modification in accordance with the provisions of Clauses 6 and 10 hereof. (2) "Components" means component parts, assemblies and sub-assemblies for incorporation in Licensed Products whether....
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....ote pertaining to assembly/manufacturing process of Montego Saloon cars Estate Cars. The details given in this are cohesive and on perusal the following points emerged. After all this processes of assembly, the vehicle is taken for various roadworthy tests. 10. The appellants have also filed a letter dt. 30th September, 1994 from Rover Group explaining the mileage noted by the customs in the meters. This letter explains the manufacturers test procedures and to find out the acceptability of the components supplied. 11. The appellants have also filed certificate dt. 3.3.1992 issued by Vehicle Research and Development Establishment, Ministry of Defence: i) Certificate for fuel efficiency dt. 2nd July, 1992 issued by Department of Industrial Development in respect of Montana 4-D car. ii) Corrigendum dt. 10th October, 1983 certificate dt. 31.9.1983 issued by the Ministry of Industry, Government of India. iii) Letter dt. 30.12.1987 issued by Directorate General of Technical Development (DGTD). iv. Letter dt. 5.1.1990 to the DGTD for attestation of list of components. 12. The invoices filed in these case to the respective purchase of the car....
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....also submitted that the Bills of Entry has to be linked with three documents viz. 1. Import manifest; 2. Bill of Lading; 3. Invoices for particular goods. The Learned Advocate submitted that in so far as the classification for ITC purpose is concerned, different criterion is applied, in view of several prohibitions and restrictions in the Policy and therefore the classification for the purpose of ITC and for Customs Tariff should not be mixed but done separately. Emphasising on these points, the Learned Advocate submitted that the clubbing of Bills of Entry is not recognised under the Customs Act for the purpose of classification. 16. As regards non-applicability of Rule 2(a) for the purpose of interpreting the Notification in question, the Learned Advocate submitted that a Notification stands on an independent footing for granting exemption to a class of goods. Therefore, the question of applying interpretative rules to a tariff or for that matter applying Section Note or Chapter Note of a tariff for interpreting the terms of the Notification does not arise and is not permissible. He submitted that Rule 2(a) is a non-legal fiction applied for the p....
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....ase of Sharp Business Machines Pvt. Ltd. v. Collector of Customs, as reported in MANU/SC/0502/1991 : 1990 (49) ELT 640 : 1990 (31) ECR 177 (SC) : ECR C Cus. 1749 SC. He also submitted that the judgment rendered in the case of Usha Micro Process Control Ltd. v. Collector of Customs, as reported in MANU/CE/0114/1989 : 1990 (46) ELT 508 : 1991 (33) ECR 138 (T) and of the same party as reported in 1991 (56) ELT 997 : 1992 (39) ECR 124 (T) are not applicable to the facts and circumstances of the present case and also in view of the fact that the permission was required for importing the prohibited goods indicated in Appendix 6 of the ITC Policy; which is no longer in existence in the current ITC Policy. He argued that the goods imported are consumables and consumers item and therefore, there is no need to obtain import licence. He argued that Rule 2(a) cannot be applied for ITC Policy. In this regard he relied on the ratio of the following judgments:-- 1. MSCO Pvt. Ltd. v. Union of India and Others (MANU/SC/0138/1984 : 1985 (19) ELT 15 : 1985 ECR 110 SC : ECR C Cus. 1095 SC) 2. Tractors and Farm Equipments Ltd. and Others v. Collector of Customs (MANU/CE/0078/1986 : 19....
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....l other equipments. The body had been fully painted and there was nothing which was required to be done except to fit the various assemblies to form a complete car. Therefore, he submitted that the import not being in the nature of components but various assemblies and the order placed by the appellants with their collaborators was for complete cars and the purchase order also is for complete car the invoice and shipping documents also show that it was sent in part shipment in various containers and in view of these facts and circumstances, the entire consignments have to be clubbed together for the purpose of assessment under Customs Tariff by applying Rule 2(a) of the interpretative rules. He submitted that the Bills of Entry although has been assessed independently but the invoice, purchase order and Bill of Lading of which accompanying Bills of Entry showed that it was only a part shipment. Therefore, the components parts not being independently imported but imported in sub-assemblies with a monoblock chassis and a cab already fitted with several components, has been rightly classified as a complete car by applying the said interpretative Rule 2(a). He submitted that by such ap....
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....ires a licence and the appellants have violated the ITC Policy by importing the entire car in the form of components in CKD/SKD condition which is not permissible. He submitted that what is not permissible has been imported by a devious method and hence the order of confiscation of the imported car stands valid in law. The Learned DR submitted that the importer has violated the terms of the ITC Policy and therefore, the lower authorities have rightly applied the Supreme Court judgment rendered in the case of Sharp Business Machines Pvt. Ltd. He further submitted that the judgment of Sharp Business Machines Pvt. Ltd. rendered by the Supreme Court directly applies to the facts of the present case. He further argued that the appellants have played a fraud on the ITC Policy. As regards the manner of interpreting a Notification, the Learned DR relied on the judgment rendered in the cases:-- 1. Naffar Chandra Jute Mills Ltd. v. Assistant Collector of Central Excise (MANU/WB/0198/1993 : 1993 (66) ELT 574) 2. Collector of Central Excise v. Parle Exports Pvt. Ltd. (MANU/SC/0081/1988 : 1988 (38) ELT 741 : 1989 (20) ECR 1 (SC) : ECR C 1315 SC) 3. Collector of Centra....
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....der Section 111(m) of the Customs Act, 1962. Therefore, the confiscation order and imposition of redemption fine is totally unjustified. Merely because the appellants had waived the show cause notice it does not follow that the appellant's import should be held as wrongful import under Section 111(m) and the goods should be confiscated. He submitted that Bills of Entry cannot be kept provisional and that were required to be finalised irrespective of goods being prohibited or not. He submitted that if the goods are provisionally assessed then, Section 18 of the Customs Act does not come into play. He submitted that only Section 15(a) of the Customs Act would come into operation in the present case. He pointed out that Section 47 deals with clearance of goods which are not prohibited items and Section 111(d) refers to confiscation of goods which have been imported contrary to any law in India. He submitted that there has been no importation which is contrary to law, and therefore, the order of confiscation is required to be set aside. He also pointed out to Section 25 (sic should be 125) of the Customs Act which gives discretion to the Collector to release the goods on imposition....
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....acture the passenger vehicle and on which excise duty has been levied. He submitted that Serial No. 3 of the negative list on page 74 of the Policy does not say that a passenger vehicle in CKD/SKD condition is prohibited and the Import Policy only says that a passenger vehicle is a prohibited item. Therefore, it is his contention that if consumer goods are imported in CKD/SKD condition then, they do not fall within the ambit of Serial No. 3 of the negative list of the import policy. He submitted that the importer had been granted licence and their collaboration agreement has been ratified by the Government of India. The components have been defined in the collaboration agreement and therefore, what has been imported is in keeping with the collaboration agreement and the definition appearing in the import policy. He submitted by deeming fiction i.e. by applying Interpretative Rule 2(a) one cannot convert non-prohibited goods into prohibited goods and what the department has done in the present case, is not permissible in law. He submitted that 100% components can be imported in dis-assembled condition. He submitted that the customs authorities have not explained the scope of the neg....
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....mber, 1956. Under the said licence the importer imported certain goods which arrived in two consignments, each containing 17 cases, by two different ships. According to them, the goods so imported by them were motor cycles parts which their licence authorised them to import. The customs authorities, on the contrary, held, on examination of the goods, that they constituted 51 sets of "Rixe Mopeds complete in a knocked down condition". The department initiated the proceedings and the result was confiscation of the said goods with an option to the importer to pay certain sums in lieu of confiscation and also personal penalties. The order was passed on the basis that the goods imported were not parts and accessories of motor cycles and scooters permissible under Entry 295 of the schedule to the Import Control Order but were motor cycles/scooters in completely knocked down condition, prohibited under remark II against Entry 294, a licence in respect of goods covered by it would authorise import of motor cycles and scooters. The Hon'ble Supreme Court, however, disagreed with the findings of the Customs Authorities and held that Entry 294 deals with import of motor cycles and scooters....
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....ered in Industrial Dispute Act, 1947 which had held hospitals, dispensaries and nursing homes were also industries. The importer had relied on the expression "Industry" and also on a passage appearing in Craies on Statute Law (6th Edn.) at page 164. The Supreme Court after considering the arguments of the importer had held that the Notification under which exemption is claimed by the importer, the word "Industry" means only the place where the process of manufacture or production of goods is carried out and it cannot in any event include 'hospitals or dispensaries or nursing homes', and therefore, upheld the judgment of the Tribunal which had confirmed the view of the Assistant Collector that the importer had sold some of the manufactured items to a local dealer and not to the industrial unit for their own use. Some items had been sold to hospitals and nursing homes which were not industrial units. 27. In the case of Tractors and Farm Equipments Ltd. (Supra), the Tribunal has considered the case of import of sub-assemblies for agricultural tractors and the claim of benefit of Notification No. 200/79-Cus., which granted exemption to parts required for manufacture, inter a....
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....one must necessarily refer to rules of interpretation of the schedule and chapter notes and rules of classification in Section notes. The Tribunal also relied on the observation of the Larger Bench of the Tribunal rendered in the case of Surashtra Chemicals v. CC, Bombay 1986 ELT 283 : 1985 ECR 2477 (T) wherein it has been observed that the relevant headings in the Tariff have to be interpreted in the light of the Section Notes and Chapter Notes and that the Section Notes and Chapter Notes have an overriding force on the respective Headings. The Section Notes to Section XVI have also to be read along with the interpretative rules, and Section Notes 2(a) and 2(b) cover classification of components, and it will then be seen on such a logical reading of the Rules and the Section Notes that the claim made by the importer for the exemption stops short with the insistence on the application of interpretative rules only/ignoring the applicability and coverage of the Section Notes in deciding the classification and thereby the eligibility to exemption. Therefore, the Tribunal did not agree with the arguments of the importer and held that the Notification No. 17/82 cannot be held as clarifi....
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....al interpretation should be imparted to the language thereof, provided no violence is done to the language employed. It must, however, be borne in mind that absurd results of construction should be avoided. 30. In the case of O.E.N. India Ltd. (Supra), the Tribunal has held that the Interpretative Rule 2(a) cannot be applied, while interpreting a Notification. 31. In the case of Sharp Business Machines Pvt. Ltd. (Supra), the Hon'ble Supreme Court examines a case of an import of components and consumables in CKD/SKD condition for plain paper copiers. Three consignments were imported from M/s. Parallax Industrial Corpn., Hongkong filed by various Bills of Entry. Similarly, the goods were also imported from M/s. Alpha Papyrus Trading Company Pvt. Ltd., Singapore by various air bills and separate bills of entry filed. The Appraiser of Customs Air Cargo complex, Bangalore, verified the goods and following the statements of the Managing Director, the show cause notice was issued under Section 124 of the Act and by an adjudication Collector held that the quotations given by M/s. Shun Hing Technology Ltd. along with the application for approval of their PMP from July, 1986 on cor....
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....nst different Bills of Entry are to be assessed individually and not in entirety and thus would be covered by the REP licence and import cannot be said to be in contravention of law. 33. In the case of HCL Ltd. (Supra), the Calcutta High Court has held that by prior arrangement, 1400 photocopying machines shipped from Japan to Singapore, dismantled there and imported therefrom in SKD condition minus the selenium drum, a consumable part as held that it is not a case of import of whole machines though substantial of the parts had been imported. 34. In the case of Naffar Chandra Jute Milts Ltd. (Supra), the Calcutta High Court has held that Rules 2(b) and 3(b) of the rules of interpretation to the Central Excise Tariff Act, 1985 or General Rules of interpretation applicable to intersectional admixtures and like all general rules are to be resorted to when the sectional rule does not provide to the contrary. The Court has further held that the item in question is an admixture of the jute and plastic classifiable under Section XI and VIII respectively. The specific rules of interpretation provided for those sections do not provide for intersectional admixtures. Therefore, the gene....
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....ding components of fuel efficient motor cars, in semi-knocked down packs and completely knocked down packs) required for the manufacture of fuel efficient motor cars of engine capacity not exceeding 1000 cubic centimeters subject to the condition that these are covered by lists certified by an officer not below the rank of Industrial Adviser or Additional Industrial Adviser in the Directorate General of Technical Development and an officer below the rank of Joint Secretary in the Ministry of Industry (Department of Heavy Industry) to be required for the manufacture of fuel-efficient motors of engine capacity not exceeding 1000 cubic centimeters; the importer should also produce evidence from Assistant Collector of Customs to the effect that the said components have been imported by such importer under a programme duly approved by the Ministry of Industry (Department of Heavy Industry) and the Industrial Adviser or the Additional Industrial Adviser of the DGTD in the Ministry of Industry for the manufacture of fuel-efficient motor ears of engine capacity not exceeding 1000 cubic centimeters. They should also produce to the Assistant Collector a certificate from the Assistant Collect....
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....tablishment of the Ministry of Defence, on the stipulations noted in the Notification. In view of the importer not having shown that their vehicle has satisfied the conditions laid down in the explanation to the Notification pertaining to fuel-efficient motor cars, therefore, the appellants are not entitled to the benefit of the Notification. Therefore, the Revenue appeals are liable to be allowed and we allow it accordingly. 42. As regards the appeals of M/s. Sipani Automobiles Ltd. our findings are as follows:-- 43. Classification The lower authorities have applied Rule 2(a) of Rules of Interpretation for classifying the goods under Chapter Heading 8703.23 of the Customs Tariff Act. Rule 2(a) reads as follows:-- 2(a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished articles has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled. ....
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.....e. the appellants are not to manufacture any item in India for the duration stated in the agreement. Initially, the appellants have to import the entire car itself in SKD/CKD condition and it is only in phase programme, they would be setting up the unit for manufacture of several components of the car, as per the guidance and transfer of technology from the supplier. The appellants have stated that they are carrying on the process of assembly and such assembly results in manufacture and, therefore, in the trade what has been imported is not a car. As regards this finding of the Learned Collector is that the car having been imported in SKD/CKD condition, the classification has to be proceeded on the basis of rules of interpretation, section note and chapter note and as per the provision of law. He has held that the condition of the final goods is not material for the purpose of classifying the goods in terms of the Customs Act. This finding of the Learned Collector is sustainable and we uphold the same. The Hon'ble Supreme Court has upheld such a finding rendered in the case of Sharp Business Machines Pvt. Ltd. (Supra). The Larger Bench of the Tribunal also in the case of Keltr....
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.... have held that the appellants have imported the entire car itself in SKD/CKD condition and they have not imported few parts/components, and those parts which are required for manufacture of a car in respect of actual user industrial i.e. an industry which has been complete set up for manufacturing cars. Therefore, the Learned Collector's order of confiscation and imposition of fine and penalty is valid. We take into consideration the Supreme Cour CC, Bombay vs. Maruti Udyog Ltd. (10.09.1996 - CESTAT - Mumbai) : MANU/CM/0275/1996 bicycle without saddle and tyres. This chapter also covers parts and accessories which are identifiable as being suitable for use solely or principally with the vehicles included therein, subject to the provisions of the Notes to Section XVII (see the General Explanatory Note to the Section). In view of these Explanatory Notes and for the reasons stated above and reasons assigned by the lower authorities, we confirm the classification arrived at in these cases. 46. Notification: The Customs Authorities have also denied the benefit of the Notification to the importers on the ground stated already. The Notification in question ....
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....rted in MANU/CE/0345/1990 : 1991 (53) ELT 461 : 1991 (36) ECR 124 (T) has held that assembly of bought out items at customer's site amounts to manufacture. In M.J. Exports (P.) Ltd. v. Collector of Customs, Bombay as reported in MANU/CE/0176/1986 : 1986 (26) ELT 972 : 1987 (10) ECR 348 (T), that assembly of fishing rods out of imported components amount to manufacture. Therefore, the appellants having paid excise duty also, on the plea that cars have been manufactured under a licence and cleared by invoices to the purchases therefore, the claim for the benefit of Notification is required to be accepted in respect of those items which fall in specific heading of the Table to the Notification. As such, re-determination of the claim has to be done, and we have to direct the lower authorities to reconsider the claim for the benefit of the Notification and grant the same in respect of those parts which fall within the ambit of the Notification. 47. Violation of Import Policy:-- The appellants have strongly urged that they are having licence to manufacture motor car and therefore, the import of component parts under Import and Export Policy as consumable, is as per law an....
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....oods were entitled to the benefit of the exemption claimed (Notifications No. 29/83 or 29A/83 in the case of M/s. Maruti Udyog Ltd. and 72/93 in the case of M/s. Sipani Automobiles Ltd.). 2. Relating to ITC: (i) Whether the importation was permissible without ITC Licence or it required a licence in terms of the relevant ITC Policy (1992-97) in case of M/s. Sipani Automobiles Ltd. 50. Dealing first with the case of M/s. Sipani Automobiles Ltd., we find that the appellants' main contention that these were components for motor vehicles is factually correct as evident from the agreement between the Importer and the Supplier, the Bills of Lading, the Bills of Entry and the Invoices and the fact that they were subsequently assembled together to form a motor vehicle. Incomplete machines refer to machines which have been imported without certain parts. The parts which are to be further fitted for making them complete would have varying degrees of importance with reference to value, functional importance, etc. The classification of such incomplete machines in terms of Rule 2(a) was considered CC, Bombay vs. Maruti Udyog Ltd. (10.09.1996 - CESTAT - Mumbai) : MA....
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....different consignments, though covered by a single or series of orders. It was considered that in such cases, the goods should be assessed provisionally under Section 18 of Customs Act, 1962 and the assessment finalised when importation of all the parts constituting the full machine is complete. The assessment of such parts would also be as complete machine i.e. as per the present machinery contract procedure. As per HSN explanatory notes relating to vehicles and parts and accessories thereof falling under Chapter 87, the general notes under that Chapter reproduced at page 49 of the order also indicate the same position. Therefore, the sets of components, assemblies and sub-assemblies constitute nearly complete or incomplete vehicles will be required to be classified under the same heading as the motor vehicles themselves. 52. Learned counsel's contention that each Bill of Entry will have to be assessed separately on merits is not acceptable because the Customs procedure permits all part consignments to be assessed together. In the instant case, the Bills of Lading as well as Invoices show that the goods imported from time to time merely represented part consignments. In ....
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....d at all; conversely the fact that excise duty was subsequently charged and paid shows that what was imported were not cars but only parts and components for assembly subsequent to importation, into full cars. This is an important question but can be answered. 57. Although, for customs assessment purpose, they are deemed to be cars as a result of legal fiction, the imported goods factually remain what they are namely, components, assemblies and subassemblies and therefore, if their assembly amounted to an activity of manufacture, excise duty could be charged, unless exempted. 58. A question had also been raised with reference to the angle of marketability and the learned counsel has emphasised that in the form in which the goods were imported they were not recognised or treated as cars but the criteria of common parlance or how they are known in the market do not apply where legislature introduces a distinction or creates a legal fiction by way of a deeming provision or otherwise. There is no doubt that in the present case, the goods were recognised both by the Supplier and the Importer as parts and marketed as such. But it is because legal fiction, as mentioned above, incorp....
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....t the goods shall be used for the specified purpose and produce extracts of records. In contra-distinction to the earlier notification relating to the import of components i.e. No. 29/83, it does not contain any other condition regarding fuel-efficiency and certificates from other authorities. 65. Only if the appellants fail to satisfy the above conditions, they will be required to pay the differential duty. 66. In these circumstances, we are not concerned either with the approval of the programme or otherwise or with the fuel-efficiency or the certificates from any other Ministry. The appellants have produced the central excise registration certificate for manufacture of motor vehicles falling under CET heading 87.03. They have also produced copies of some invoices for removal of excisable goods from their factory relating to clearance of Montego cars. 67. In any eventuality, it was open for the Departmental authorities to call for and for the appellants to produce certificate(s) from the Assistant Collector of Central Excise or the extracts of other relevant records for the purpose of this notification. 68. The main issue which arises for consideration in connectio....
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....s not dependent upon the assessment of the goods under any particular heading for it is significant that the notification uses the words "for the manufacture of cars falling under Chapter 87." In any eventuality, it is nobody's case that what has been imported were factually complete cars and admittedly, only components have been imported and it is immaterial whether the goods were in SKD/CKD packs or not. It is also immaterial that they were full sets for nearly complete cars. What is important is that they answer to the description of the goods mentioned specifically and explicitly in the exemption notification and that is all with which we are concerned. It is, therefore, immaterial from our point of view whether the components were 93% or more or less because there is no quantitative restriction and there is no prohibition regarding import of even 100% components as rightly claimed by the learned counsel. I, therefore, hold that the benefit of the notification was required to be extended subject to the production of required certificate; and the order-in-original of the Collector is required to be modified. 69. As regards M/s. Maruti Udyog Ltd., the first point which att....
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....mpliance with the conditions before finalising the assessment. 73. Learned Collector (Appeals) has also examined the relevant Bill of Entries, the invoices and the agreement between the appellants and the supplier. In support of his finding that the goods imported by M/s. Maruti Udyog were components for the Suzuki motor vehicles SS 80 FR, he has taken note of the Annexure to the Certificate of Fuel Efficiency dated 3.8.1983 which he found duly signed by the Director, Department of Heavy Industries, indicating the model and make of the cars as car SS 80 FR Suzuki-Japan with engine capacity 796 cc and a letter from the Ministry of Heavy Industries dated 1.8.1983 according their approval to the phased manufacturing programme and the modification made in consultation with DGTD and was on that basis satisfied that at the time of importation of the goods, both the Ministry of Industries and the DGTD had accorded their approval. The order of the Collector (Appeals) is, therefore, right to this extent. 74. As far as ITC Policy is concerned in M/s. Sipani's case I find that import of motor cars falling under 87.03 is governed by Part II of the Negative List. Para 156 of Chapter 1....
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....equent to amendment in the definition of consumer goods as mentioned above, accessories, components, parts and spares of consumer durables fall in the Negative List of Imports. 3. In terms of the provision contained in Paragraph 156 of the Export and Import Policy, 1992-97, consumer goods are not permitted to be imported except against a licence or in accordance with a Public Notice issued in this behalf. 4. It is hereby notified that accessories, components, parts and spares of consumer durables, except those which are specifically included in the Negative List of Imports, may be imported by a manufacturer of the consumer durables without a licence. Such imports shall be subject to the Actual User condition and no transfer of the imported goods shall be made without the permission of the Chief Controller of Imports & Exports. Importers will be required to produce evidence of their being engaged in the manufacture of the consumer durables concerned at the time of the Customs clearance (e.g. Industrial licence issued by SIA. Registration as an Actual User with the concerned authority i.e. State Director of Industries etc.). 76. Learned counsel has claimed that t....
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.... disposed of in the above terms with consequential relief, if any due. Dt. 29.2.1996 POINT OF DIFFERENCE S.L. Peeran, Member (J) and S.K. Bhatnagar, Vice-President Dt. 4.3.1996 Dt. 2.3.1996 In view of the difference of opinion between Hon'ble Member (Judicial) Shri S.L. Peeran and Vice-President Shri S.K. Bhatnagar, the matter is submitted to Hon'ble President for reference to a third Member on the following point:-- Whether in the facts and circumstances of the case, the goods were liable to confiscation and consequentially whether the fine imposed was required to be set aside or confirmed in the case of M/s. Sipani Automobiles Ltd. Hon'ble President: Place it before the senior among the Members sitting as single Bench if there is more than one Bench and if not before the Single Bench available. Sd/- (Justice U.L. Bhat) President G.R. Sharma, Member (T) 83. Before going through the arguments in support of or otherwise, on the point of difference referred to the undersigned, Shri L.P. Asthana, the learned Counsel appearing for the appellants and Shri K.K. Jha, the learned SDR submit that there are three more points ....
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....r authorities to reconsider the claim for the benefit of the Notification and grant the same in respect of those parts Notification, as held by M(J) (SLP) in para 47 of his order. or Whether the benefit of the Notification No. 72/93 is required to be extended to the appellants M/s. Sipani Automobiles in terms of the order of Shri SKB (VP). iii. Whether in the facts and circumstances of the case, the goods were liable to confiscation and consequentially whether the fine imposed was required to be set aside or confirmed in the case of M/s. Sipani Automobiles Ltd. PS: The Registry is directed to place the file before the Third Member for hearing. Dated: 3rd July, 1996 G.R. Sharma, Member (T) 89. The points of difference referred to the undersigned are as follows: i. Whether M/s. Maruti Udyog Ltd. is entitled to the benefit of exemption Notification No. 29/83 dated 25.2.1983 (as amended) as held by Shri SKB (VP) or not as held by Shri SLP (MJ) in his order. ii. Whether the Notification No. 72/93 is required to be extended to specified 20 items in the case of Sipani Automobiles by directing the lower authorities to reconside....
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....g of Notification Nos. 72/93 and 29/83 shows that they cover the components. Since components are covered by the notifications, the benefit of the Notifications cannot be denied to them. 91. Distinguishing the judgment of the Apex Court in the case of Sharp Business Machines reported in MANU/SC/0502/1991 : 1990 (49) ELT 640 : 1990 (31) ECR 177 (SC) : ECR C Cus. 1749 SC, the ld. Counsel submitted that the judgment pertains to Import Policy for earlier period; that Import Policy keeps on changing and that in the case of Sharp Business Machines the importer was following the phased manufacturing programme and was permitted to import only a particular percentage of parts whereas in the instant case, the ld. Counsel submitted that there was no such restriction on import of components and therefore, argued that the ratio of the judgment of the Apex Court in the case of Sharp Business Machines is not applicable to their case and as the facts are entirely different inasmuch as there was no phased manufacturing programme nor was there any restriction during the period the imports took place. Referring to paras 22 and 23 of the Export and Import Policy for the year 1992-97, the ld. Counse....
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.... Ltd. and second issue was whether Notfn. No. 72/93 was applicable to the imports of M/s. Sipani Automobiles Ltd. He submitted that admittedly the goods imported were components and parts and therefore, Notfn. No. 29/83 fully covers the goods imported by M/s. Maruti Udyog Ltd. and Notfn. No. 72/93 covers the goods imported by M/s. Sipani Automobiles. He submitted that since P.N. No. 32(PN)/92-97 allowed the import of components, parts and spares under conditions stipulated in the P.N. and since only components and parts were imported and therefore, confiscation of the goods and imposition of penalty was not warranted in the case of M/s. Sipani Automobiles. 92. Shri K.K. Jha, the ld. SDR submitted that Interpretative Rule 2(a) was applicable to interpretation of Notification inasmuch as the Notifications are part of the Customs Act and the Customs Tariff. He submitted that for the purpose of assessment, all the consignments have to be clubbed together to determine the nature of the goods and their classification. He referred to HSN Explanatory Notes at page 1423 and para 83 at page 84 of the Customs Appraising Manual and submitted that Interpretative Rule 2(a) is applicable when ....
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....their wisdom, the legislature has extended the benefit to the components required for the manufacture of motor cars). It is well settled principle of law that a notification has to be construed strictly and the plain meaning of the Notification is to be read in accordance with the words used in the notification. The admitted position is that what was imported was components and parts. It is also an admitted position that both these notifications exempt components and parts. I therefore, agree with the Hon'ble Vice-President that benefit of Notfn. No. 29/83 dated 25.2.1983 should be extended to M/s. Maruti Udyog Ltd. and the benefit of Notfn. No. 72/93 could not remain confined to the 20 items specified in the Table annexed to the Notification but should be extended to other parts also falling in Chapter 87 of the Schedule to the Customs Tariff Act, 1975. 96. Now, the second issue remains whether the import under OGL was permitted to M/s. Sipani Automobiles. The admitted position is that motor cars are consumer durables; that import of motor cars was restricted in terms of para 156 part II of the Export and Import Policy 1 April, 1992--31 March, 1997. It is also an admitted p....
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....be considered as legally imported by the importers. I agree with the findings of the Hon'ble Vice-President and hold that P.N. No. 32(PN)/92-97 specifically allows the import of accessories, components, parts and spares of consumer durables which were imported Actual Users for manufacture consumer durables without licence subject to the fulfillment of the re(sic) conditions and therefore, the goods could be imported without a licence. (sic) goods are not liable to confiscation. In the result the order (sic) goods and imposing penalty is set aside. 97. The file is now sent to the referral Bench for passing majority order on the issues referred to the Third Member. FINAL ORDER S.L. Peeran, Member (J) and S.K. Bhatnagar, Vice-President Dated 9.9.1996 (1) In view of the majority opinion, it is held that for customs classification purposes, the goods have to be deemed to be 'cars' as a result of the legal fiction but for practical purposes, they remain components, assemblies or sub-assemblies. (2) The benefit of notification No. 29/83 is, therefore, required to be extended to M/s. Maruti Udyog. (3) The benefit of notification No. 72/93 cannot remain conf....