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2015 (12) TMI 482

Head Note:
Classification - Rate of duty on Import of components/parts/sub-assemblies of motor vehicles in CKD form - appellant contended that he has imported engine and transmission in a pre-assembled form - Held that:- Applicant proposes localization of six essential components / parts / sub-assemblies, which will be manufactured by local third party vendors on payment of Central Excise duty and supplied to the applicant for manufacture of motor vehicle. These local third party vendors are reputed companies. Revenue has not produced any tangible evidence to indicate that the applicant has entered into any fictitious arrangement to evade Customs duty. It is noticed that the Hon'ble Supreme Court in case of Commissioner of Customs, New Delhi vs. Sony India Ltd [2008 (9) TMI 19 - SUPREME COURT] distinguished the judgment in case of Phoenix International Ltd and observed that all parts were imported in Phoenix case by two units in same container, unlike in Sony India Ltd case. It was also held that Rule 2(a) of Rules of Interpretation of Tariff are applicable only if all components intended to make a final product presented at same time for customs clearance. - In fact they are not even likely to be imported at same time and require further manufacture by different local third party vendors.

Tariff Item 8703 is in respect of "Motor Cars and other Motor Vehicles etc." Note 2 to Section XVII, which also covers 'vehicles' gives a list of 11 articles, where expressions 'parts' and 'parts and accessories' do not apply. Further, Note 3 to Section XVII states that references in Chapter 86 to 88 to 'parts' or 'accessories' do not apply to parts or accessories which are not suitable for use solely or principally with the articles of those chapters. Note further mentions that a part or accessory which answers to a description in two or more of the headings of those chapters is to be classified under that heading which corresponds to the principal use of that part or accessory. Therefore, in order for an article to fall under headings covered by Section XVII, those parts or accessories should comply with all conditions - The import of components / parts/ sub-assemblies by the applicant will not be classified as motor vehicle under Tariff Heading 87.03 or as Completely Knocked Down (CKD) kit under Sr. No. 437 of Notification No. 12/2012-Cus., dated 17.3.2012 - The import of components / parts / sub-assemblies by the applicant will be classified under their respective headings / sub-headings of the Customs Tariff Act, 1975 - Appeal disposed of.


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