TMI Blog1996 (9) TMI 650X X X X Extracts X X X X X X X X Extracts X X X X ..... y. 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. In this Joint Venture Agreement, the definition of CKD components is g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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-efficient motor cars of engine capacity not exceeding 1000 cubic centimeters; and iii) the importer shall, within such peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 been not satisfied. Hence, the imported goods were assessed as 'Motor Cars' under sub-heading 87.02(2) of the Customs Tariff, 1975. 1.6. The ld. Collec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectifying 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 Rules, the goods ceased to be components and a car has been imported in CKD condition, the benefit of the Notification, hence will not be available to the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 had been declared as Montego DLX Saloon Shells 9 Nos. The body shells including parts such as windscreen glass, Rear Glass, Door Glass, Winding Mechanism, Door S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or 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 ₹ 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 the goods as components for manufacture of Montego cars and the said goods were covered under Invoice No. 6007260/5.7.1994 and 6007259/5.7.1994 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 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, 1993, the Reserve Bank of India granted approval in such foreign collaboration on the terms and conditions stated in the said letter. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 in original build or as replacement parts. (3) Component Processes means the processes of assembling and finishing (including painting) of Licensed Products and the processing of any part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave 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 discloses the price of the vehicle Montana 4-D Saloon car 200 CC diesel as ₹ 7 lakhs out of which Trade discount of ₹ 21,000/- has been granted. The assembly value has been shown as ₹ 4,84,394.50 and the Basic Excise Duty at 40% and Cess of 8% has been paid totalling to ₹ 1,94,606/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied, 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 purpose of classifying the goods and cannot be applied for interpreting the terms of a Notification. In this regard, the Learned Advocate relied on the ratio of the following rulings. 1. Keltron Power Devices Ltd. v. Collector of Customs Cochin [MANU/CE/0267/1986 : 1987 (28) ELT 93 : 1987 (10) ECR 565 (T)] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 : 1986 (25) ELT 235) 3. Kumar Associates v. Collector of Customs (MANU/CE/0239/1992 : 1993 (65) ELT 500 : 1993 (46) ECR 205 (T)) 4. Naffar Chandra Jute Mills Ltd. v. Assistant Collector of Central Excise (MANU/WB/0198/1993 : 1993 (66) ELT 574) 5. Universal Commercial Corpn. v. Collector of Customs (MANU/CE/0258/1993 : 1994 (69) ELT 150) 6. Kalpa Ghosh v. Collector of Customs (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipping 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 application of the said rule, consignment in SKD/CKD condition even if without engine, tyres or batteries when imported are required to be assessed as a complete car. In this regard, the Learned DR also relied on the HSN Explanatory Notes at page 1423 wherein the Explanatory Notes have clearly stated that such import of a car in SKD/CKD condition is required to be classified as a complete car. He also referred to par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 Central Excise v. Protein Products of India (MANU/SC/0086/1988 : 1988 (38) ELT 749 : 1989 (20) ECR 134 (SC) : ECR C 1328 SC) 4. (1982 (1) SC(c) the fuel-efficient test shall be carried out on a selected level test track at a steady speed of 50 kilometres per hour for a minimum stretch of one kilometre and the average of 20 runs, comprising of 10 runs in eac CC, Bombay vs. Maruti Udyog Ltd. (10.09.1996 - CESTAT - Mumbai) : MANU/CM/02 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ective 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 of redemption fine. He referred to para 22-23 of Import Policy which lays down the import of capital goods, raw materials, intermediaries, components, consumables, spare parts, accessories, instruments and other goods, which may be imported without any restrictions except to the extent that such goods are regulated by the negative list of imports or any other provisions of the Policy or any other law for the time being in force. He submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 negative list or the general interpretative rules. So long as the Public Notice No. 32-PN/92-97 permits import of all components, then in that event the objection raised by the customs authorities is totally unjustified. He admitted on a query from the Bench that the appellants had imported (?)7 consignments against a common purchase order, which is for a complete car, which has been sent in part shipment. He submitted that deeming fiction cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment 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 and the import only by number of manufacture of motor cycles and scooters in CKD conditions. The Entry is complete in itself so far as the import of motor cycles and scooters, complete and assembled and also in CKD condition. The Hon'ble Supreme Court has held that the words completely knocked down condition in the entry are not used in any technical sense and, therefore, must be given their ordinary dictionary meaning i.e. made or cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 alia, of tractors from so much of duty as is in excess of 25% subject to certain conditions. The department held that the item could not be imported under OGL, if considered as having the essential characteristics of complete engine because diesel engines are covered under Serial No. 407 of Appendix 5 and not allowed for import under OGL. The importer raised in the refund claim that as per Rule 2(a) of the Rules for the Interpretation of Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 clarificatory. 28. In case of Keltron Power Devices Ltd. (Supra), the Tribunal held that resort to Interpretative Rule 2(a) is permissible for determination of classification but not for determining the eligibility to the benefit of the Notification. The Tribunal has, however, held that Rule 2(a) of the Rules for Interpretation covered even unfinished or incomplete articles and takes them to the category of finished and complete products for the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme 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 correct of goods imported and the plea of the company that it had received a special discount in view of the bulk purchases and promise of future purchases was not accepted. Therefore, the Collector determined the price of the goods at ₹ 7,15,485/- for the purpose of Section 14(1) of the Act and also upheld misdeclaration of the value, and admitted to evade duty. Therefore, the goods confiscated under Section 111(m) of the Act. The Collector ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 general rules of interpretation will thus apply. 35. In the case of Universal Commercial Corpn. (Supra), the Tribunal has held that the imported items declared as Condensing Unit satisfies the definition of air-conditioning machines described under Chapter Heading 84.15 and there is no doubt that the goods air-conditioning machines having essential character of air-conditioning machines as understood in Rule 2(a) and are, therefore, classi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Collector of Central Excise in whose jurisdiction the factory manufacturing such fuel-efficient motor cars is situated to the effect that such imported components (including components of fuel-efficient motor cars in semi-knocked down packs and completely knocked down packs) have been used in the manufacture of fuel-efficient motor Cars of engine capacity not exceeding 1000 cubic centimeters. For the purpose of this Notification, fuel-efficient m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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. The Note 3 to Chapter 87 reads as follows:-- 3. Motor chassis fitted with cabs fall in heading Nos. 87.02 to 87.04 and not in heading No. 87.06. The Tariff Heading 87.03 and Tariff sub-heading 8703.23 of Customs Tariff reads as follows:-- On a reading of the above Rule 2(a), Note 3 and Chapter heading, the findings arrived at by the lower authorities is correct and valid. The reasons being that Note 3 of the Chapter 87 states that motor chassis fitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacture 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 Keltron Power Devices Ltd., Naffar Chandra Jute Mills Ltd. and Delhi High Court ruling in the case of M/s. Khandelwal Metals has upheld the applicability of rules of interpretation, Section note and Chapter notes. We have extensively extracted the findings of the Hon'ble Supreme Court rendered in the case of Sharp Business Machines Pvt. Ltd. and we are of the opinion that the same applies fully to the facts of the present case in all fours and that it is not distinguishable. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 exempts specified components and parts for manufacturing motor vehicle falling within Chapter 87 of the First Schedule to the Customs Tariff Act, 1975. We have gone through the terms of the Notification. The Notification grants exemption on the condition that the same shall be applicable only to those goods which are required for manufacture of motor vehicle and the importer producing a certificate from the Assistant Collector of Central Excise in whose jurisdiction the factory manufacturing motor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 and therefore, the order of confiscation and imposition of penalty is not justified. On this aspect, we 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 val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ponents 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) : MANU/CM/0275/199651. However, legally the position is different in terms of the Rules of Interpretation of Customs Tariff Section/Chapter Notes, as in effect, the parts (including components and assemblies and sub-assemblies) which are solely or principally suitable for an item are required to be classified under the same heading as the main item unless specified otherwise. Furthermore, an article incomplete or unfinished is also required to be classified in the same heading as the complete or finished article imported unassembled or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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 fact, the words (part of shipment) have been used by the suppliers and the shippers in a series of Bill of Ladings, copies of which have been filed before us. Therefore, it is actually a case in which shipment(s) has been split into several part consignments and a Bill of Entry has been filed in respect of each part separately as it arrived. 53. The correct procedure, therefore, was to assess all these Bill of Entries provisionally and then make a final assessment after the entire shipment of full consignment had been received. This finds support from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harged, 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, incorporating the Rules of Statutory Interpretation and were applicable that they are deemed to be cars. Hence, this argument does not help the appellants. 59. The case law in this respect also does not help the appellants because the case of Tata Chand Gupta Bros, is with reference to ITC Policy and not with reference to the assessment under the Customs Act. 60. The case of MSCO Pvt. Ltd. is not relevant at all as the focus there was on as to whether 'hospitals or dispensaries or nursing homes' could be treated as Industry . Again, the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny 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 connection with the benefit or otherwise of this notification relates to the question arising from the assessment of the above goods under heading 87.03 read with the Rules of Interpretation as deemed cars (in SKD/CKD condition). There is, however, no reason to deny the benefit merely because due to legal fiction, the goods were classified as deemed cars on account of the Interpretative Rules. These rules are basically meant for the purposes of the tariff i.e. for determining the correct heading and sub-heading in which the goods were required to be classified. These could be utili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 attracts our attention is the learned Collector (Appeals) surprising observation that the assessment was still provisional and his direction to the effect that his observations and findings may be kept in view while finalising the assessment themselves; inasmuch as, if the assessment was still provisional, (then) the appeal was premature, for an appeal lies only against a decision or order passed by the A.C. which had attained finality at the original stage. 70. However, at the same time, it appears from a perusal of the Order-in-Original that there is no indication to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 15 covers all consumer goods whether in SKD/CKD condition or ready to assemble sets or in finished form. These are not permitted to be imported except against licence or in accordance with the Public Notice issued in this behalf. Further, the Import Licensing Note under Section XVII reads as follows:-- (1) Consumer durables xincluding automobiles in SKD/CKD condition or in ready to assemble sets are in the restricted category. They are not permitted for import except against a licence or Public Notice issued in this behalf. The classification of SKD/CKD packs shall be go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacturer 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 they have satisfied the conditions of this Public Notice inasmuch as they are actual users engaged in the manufacture of consumer durables. 77. Here again, it is immaterial whether for classification purposes, they were required to be treated as motor cars since this Public Notice specifically allows import of accessories, components, parts and spares of consumer durables which are imported by actual users for manufacture of consumer durables without licence, subject, of course, to the fulfillment of the required conditions. Therefore, the goods could be imported without licence. 78. Summing up, while the goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 on which there appears to be a difference in the views of the Vice-President on the one side and Member (Judicial) on the other. 84. The points are--Member (Judicial) in para 42 at page 46 has held Therefore, the Revenue appeals are liable to be allowed and we allow it accordingly whereas Vice-President, in his order, in para 74 at page 64 holds The order of the Collector (Appeals) is, therefore right to this extent. Both the Counsel and the SDR submit there is a difference in the findings of the two Members of the Bench in as much as Member (Judicial) allowed the appeals of revenue without any modification wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 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. 90. Shri L.P. Asthana the ld. Advocate appeared for the appellants in the case of M/s. Sipani Automobiles Ltd. v. CC, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reas 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. Counsel submitted that para 22 provides Capital goods, raw materials, intermediates, components, consumables, spares, parts, accessories, instruments and other goods may be imported without any restriction except to the extent such imports are regulated by the Negative List of Imports or any other provision of this Policy or any other law for the time being in force and submitted that motor cars are not as such listed in the Negative List. He submitted that the appellants are actual users and that para 23 of the Policy for the relevant period provides Capital goods, raw materials, intermediates, components, consumables, spares, parts, accessories, instruments and other goods, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the goods are imported in SKD/CKD condition. The ld. SDR submitted that components and parts of motor vehicle mentioned in the Table annexed to Notfn. No. 72/93 are alone entitled to the benefit of this Notification. 93. Arguing on the contentions of the ld. Advocate, the ld. SDR submitted that according to the Interpretative Rule 2(a), the goods imported were motor cars; that motor cars cannot be imported without a licence; that in the instant case what were imported in the garb of components were nothing but disassembled or dismantled motor cars; that the importer tried to do a thing which was not permitted and therefore, the ratio of the judgment of the Apex Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfined 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 position that the nature of restriction was Not permitted to be imported except against a licence or in accordance with a Public Notice issued in this behalf. The ld. Counsel referred to P.N. No. 32(PN)/92-97 dated 17 July, 1992. This Public Notice provides that consumer goods will include accessories components, parts and spares of consumer durables. In para 4 of this P.N. it was clarified 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 importers shall be subject to the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 confined to 20 items in the Table annexed and therefore, M/s. Sipani Automobiles are entitled to its benefit as observed by the Vice-President. (4) Further, Public Notice No. 32-PN/92-97 specifically allows import of accessories, components and spares of consumer durables imported by actual users for manufacture of consumer durables. Therefore, the goods were not liable to confiscation and imposition of penalty was required to be set aside in case of M/s. Sipani Automobiles Ltd. (5) Hence, in view of the majority opinion, the impugned orders are modified and it is held that both the importers are entitled to consequential benefit, if any due, in terms of the observation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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