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2022 (3) TMI 560 - AAR - CustomsClassification of goods - partially assembled vehicles, described by the applicant as Completely Knocked Down (CKD) kits of vehicles - classifiable under Customs Tariff Entry 8703 and eligible for exemption under Serial No. 437(1) of the Notification No. 12/2012-Cus. dated March 17, 2012 or not - HELD THAT:- In the instant case, the applicant has stated that they will be importing kits of passenger cars and it is also settled, if all the parts are presented in knocked down condition and they have the essential character of a complete article, they have to be assessed as complete article, in terms of said rule 2(a) of GIR. In the present case, the motor vehicles are initially assembled at site to a substantive extent for thorough verification and testing, albeit with few missing components. It is held that at this stage the vehicles have acquired the essential characteristics of motor vehicle to merit classification under heading 8703. Their subsequent disassembling and import in such disassembled form as a kit, will not change the essential character of the goods. Therefore, these disassembled parts of motor vehicles, with specified missing parts, will be classified as the motor vehicles under heading 8703, noting that they are principally designed for the transport of persons, numbering less than ten persons. C.B.E.C. Circular F. No. 528/128/97Cus-TRU, dated 5-12-1997, wherein explaining the scope of said Rule 2(a), it is mentioned that engine, gear box, chassis, transmission assembly system, body/cab suspension system, axle front and rear are among the parts or components or sub-assemblies, considered most essential to bring into effect a finished motor car. Whether the vehicle kits being imported by the applicant would be covered under sub-category 1 as Completely Knocked Down kit or under sub-category 2 as motors cars in any other form, and if under sub-category 1, whether under 1(a) or 1(b), attracting effective rate of BCD of 15% or 30% respectively? - HELD THAT:- Further sub-categorisation under the aforesaid notification and eligibility for the lowest rate of 15% duty is based on the state of assembly of three critical parts/components of car, namely engine, gearbox and transmission mechanism. It is found that the applicant has clearly stated that the CKD kits include pre-assembled engine and gear-box, which has also been accepted by the concerned Commissioners of Customs - the CKD kits will fall under sub-category 1(b) and attract effective rate of BCD of 30%, being ineligible of the lower rate of 15% since the engine and gear-box are being imported in pre-assembled condition. The CKD kits, as described by the applicant and presented together as a kit merits classification under heading 8703 - the CKD kits are eligible for 30% rate of BCD under notification No. 50/2017-Cus. dated 30.06.2017, since they are covered under S.No.526(1)(6).
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