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2011 (5) TMI 134 - AAR - CustomsClassification - Notification No. 39/96-Cus dated 23.7.1996 - Customs Duty Exemption Certificate (CDEC) - since the goods imported by the applicant will be used as parts of aircrafts the same would be eligible for classification under a more specific description as parts of aircrafts under heading 8803 of the First Schedule - the applicant was explained the basis adopted by the Department for the classification under HSN of the various parts proposed to be imported by the applicant - the applicant has revised the HSN classification of the goods which they intend to import and sell in India and therefore there were no disputed classifications - Decided in the favour of the assessee Regarding exemption - whether the applicant can be said to have fulfilled the conditions specified against Serial No.10 by furnishing a duty exemption certificate obtained by it from the HAL in the form described in the application - As a result of the amendment imports by State Governments were taken out of the scope of the said exemption whereas Public Sector Undertakings (PSUs) under the Ministry of Defence or sub-contractors of such PSUs were allowed to import goods under the said notification - The exemption shall apply only if the certificate contains the prescribed information and is signed by an officer not below the rank of a Joint Secretary to the Government of India in the Ministry of Defence.
Issues Involved:
1. Classification of goods under Tariff Classification 8803. 2. Eligibility for exemption from basic Customs duty and additional Customs duty under Entry No. 10 of Notification No. 39/96-Cus dated 23.7.96. Detailed Analysis: 1. Classification of Goods under Tariff Classification 8803: The applicant proposed to classify the imported goods under heading 8803 of the First Schedule to the Customs Tariff Act, 1975, which covers "Parts of goods of heading 8801 or 8802." The applicant argued that since the goods would be used as parts of aircraft, they should be classified under heading 8803. The applicant cited Rule 3 of the General Rules for the Interpretation of the Import Tariff and referenced a previous ruling by the Authority and a decision by the Customs, Excise & Gold (Control) Appellate Tribunal (CEGAT). The Commissioner of Customs contested this classification for items such as connectors, washers, nuts, bolts, screws, switches, o-rings, and plugs, suggesting they should be classified under specific headings like 8536, 7318, 4016, etc., rather than under heading 8803. The Commissioner referred to the Explanatory Notes of heading 8803 of the Harmonized System of Nomenclature (HSN) and noted the exclusion clauses in Section XVII. After discussions and clarifications between the applicant and the Commissioner, the applicant revised the HSN classification of the goods, and there were no disputed classifications. The Authority decided not to rule on the classification due to the lack of detailed information and the mutual agreement between the applicant and the Commissioner. 2. Eligibility for Exemption from Customs Duty: The applicant sought to claim exemption from basic Customs duty and additional Customs duty under Entry No. 10 of Notification No. 39/96-Cus dated 23.7.1996, based on a Customs Duty Exemption Certificate (CDEC) provided by HAL. The exemption applies to various goods, including aircraft parts, subject to specific conditions. The applicant argued that the exemption is not restricted to goods classified under heading 8803 but is available to all goods falling within the First Schedule to the Customs Tariff Act, 1975, provided the conditions are met. The applicant cited a decision of the CEGAT to support this contention. One of the conditions for availing the exemption is furnishing a certificate at the time of import, showing the details of the purchase order placed by the Ministry of Defence and the purchase order placed by the contractor on the foreign suppliers. The applicant proposed to submit a certificate signed by the General Manager, Procurement Division, and countersigned by the Managing Director of HAL, claiming it would substantially comply with the requirements. The Authority examined the conditions specified in the notification and concluded that the applicant does not fall under clause (ii) of the Explanation, which applies to imports by Public Sector Undertakings of the Central Government under the Ministry of Defence. The applicant, being the importer, is required to submit a certificate signed by an officer not below the rank of a Joint Secretary to the Government of India in the Ministry of Defence, as per clause (iii) of the Explanation. A certificate signed by the General Manager or Managing Director of HAL would not suffice. The Authority also reviewed the legislative history of the exemption and found a consistent pattern in the certification requirements, emphasizing the need for strict compliance due to the sensitive nature of the goods eligible for exemption. The Authority rejected the applicant's argument that certification is merely procedural and emphasized the importance of adhering to the specified conditions for claiming the exemption. Rulings: 1. The Authority declined to issue a ruling on the classification of goods under Tariff Classification 8803 due to the mutual agreement between the applicant and the Commissioner and the lack of detailed information. 2. The exemption from basic Customs duty and additional Customs duty under Entry No. 10 of Notification No. 39/96-Cus dated 23.7.1996 is available to the applicant irrespective of the classification of the goods, provided the conditions specified in the notification are met. The exemption is not available if the duty exemption certificate is signed by the General Manager, Procurement Division, HAL, and countersigned by its Managing Director. The certificate must be signed by an officer not below the rank of a Joint Secretary to the Government of India in the Ministry of Defence. Conclusion: The ruling emphasizes the necessity for strict compliance with the specified conditions for claiming exemptions under Notification No. 39/96-Cus. The applicant must ensure that the duty exemption certificate is signed by the appropriate authority to avail of the exemption benefits.
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