2014 (6) TMI 716 - AT - Central Excise

Waiver of pre-deposit of duty - import of electric bicycles in CKD condition - assembling the electric bicycles by procuring certain indigenous parts such as tyres, tubes and shock absorbers - duty as per Notification No. 6/2006-C.E., dated 1-3-2006 - Held that - goods were declared as electric bicycles in CKD condition and paid appropriate customs duty by classifying the same under Heading 8711.9091 which covers other electrically operated motor cycle. In view of this, prima facie the applicant has a strong case in their favour. Pre-deposit of the dues is waived and recovery of the same is stayed during the pendency of the appeal - Stay granted.

Summary

Issues:
1. Waiver of pre-deposit of duty
2. Classification of electric bicycles under customs duty
3. Liability of duty on assembling electric bicycles
4. Entitlement for credit of CVD duty and duty paid on indigenous parts

Waiver of Pre-Deposit of Duty:
The applicant filed an application for waiver of pre-deposit of duty amounting to Rs. 1,63,927 along with interest. The Revenue contended that assembling electric bicycles amounts to manufacture and duty is liable as per Notification No. 6/2006-C.E. The applicant argued that they already paid customs duty at the time of import under a specific classification, hence duty cannot be demanded again for assembly.

Classification of Electric Bicycles under Customs Duty:
The goods were imported as electric bicycles in CKD condition and appropriate customs duty was paid under Heading 8711.9091, covering other electrically operated motor cycles. The Tribunal found that the applicant had a strong case in their favor based on the bill of entry and the classification at the time of import. Consequently, the pre-deposit of dues was waived, and recovery stayed during the appeal process.

Liability of Duty on Assembling Electric Bicycles:
The Revenue argued that procuring indigenous parts for assembling electric bicycles makes them marketable, thus constituting manufacture and attracting duty liability. However, the Tribunal noted the initial classification at import and the absence of a clear basis to impose additional duty for assembly, leading to the decision in favor of the applicant.

Entitlement for Credit of CVD Duty and Duty on Indigenous Parts:
The applicant also claimed entitlement to credit of CVD duty and duty paid on indigenous parts, which would significantly reduce the duty liability. The Tribunal acknowledged this claim, indicating that if allowed, the duty would amount to approximately 10% of the present demand. As a result, the stay petition was allowed, and recovery of dues stayed pending appeal.