2001 (8) TMI 1086 - AT - Customs

Summary

Issues Involved:

1. Classification of imported items under Customs Tariff Heading 98.01 as Project Imports versus Heading 95.03 as finished toys.
2. Consideration of documents and evidence submitted by the importer.
3. Interpretation of "auxiliary equipment" under the Customs Tariff.
4. Adherence to procedural requirements for classification under Project Import Regulations.

Issue-wise Detailed Analysis:

1. Classification of Imported Items:

The primary issue was whether the imported items should be classified under Customs Tariff Heading 98.01 as Project Imports or under Heading 95.03 as finished toys. The Commissioner of Customs (Appeals) upheld the assessment order classifying the items as finished toys under Heading 95.03. The imported items included molds and components for bumper cars, various toy prototypes, and bases, which were argued by the importer to be patterns for making molds and not complete toys.

2. Consideration of Documents and Evidence:

The CEGAT had previously remanded the case, directing the Commissioner (Appeals) to reconsider the matter with a detailed speaking order addressing the following documents submitted by the importer:
- Declared end-use of the items imported.
- The Chartered Engineer's Certificate.
- The importer's affidavit.
- Technical opinion of the professor of IIT Madras.
- Recommendatory letter of Director of Industries, Andhra Pradesh.

The Commissioner (Appeals) did not provide detailed findings on these documents, merely stating that the items were finished toys and not auxiliary equipment. The importer argued that these documents supported their claim that the items were patterns used for making molds and not marketable as toys.

3. Interpretation of "Auxiliary Equipment":

The Commissioner (Appeals) rejected the importer's contention that the imported items were auxiliary equipment under Heading 98.01. The term "auxiliary equipment" was interpreted strictly, and the Commissioner concluded that the items did not qualify as machinery, instruments, appliances, or apparatus required for the initial setting up of a unit. The Tribunal, however, referenced the definition of "auxiliary" as something that provides aid or assistance and noted that the imported items, used for making molds, could be considered auxiliary equipment essential for the project.

4. Adherence to Procedural Requirements:

The Tribunal observed that the Commissioner (Appeals) failed to provide a reasoned order as directed in the remand. The Commissioner did not dispute the project registration, specific import license, or the documents provided by the importer but did not adequately address why these were not acceptable. The Tribunal emphasized the need for a liberal interpretation of Heading 98.01, as supported by previous judgments, and noted that the items should be considered auxiliary equipment aiding in the manufacture of final products.

Conclusion:

The Tribunal concluded that the imported items were not finished toys but patterns used for making molds, falling within the definition of auxiliary equipment under Heading 98.01. The appeal was allowed, and the items were classified as Project Imports, granting the benefit of concessional assessment under Heading 98.01. The Tribunal emphasized the importance of considering all evidence and providing detailed, reasoned findings in classification disputes.