2015 (8) TMI 1048 - SC - Customs

Benefit of Concessional rate of duty Serial No. 89 of List 10 of Notification No. 11/97-Cus - Assesse had purchased 12 sets of second hand embroidery machines and 12 Jacquard Control Device Reading System Appellant wanted to take benefit of concessional rate of duty in terms of Serial No. 89 of List 10 of Notification No. 11/97-Cus which mentions Computerised embroidery machine Tribunal affirmed view of Commissioner denying benefit of notification Held that - Tribunal held that old mechanical embroidery machines and Jacquard Control Devices System, were not independent and complete by themselves and were incomplete or unfinished articles Jacquard Control Devices System were installed on textile machines after importation and customs clearance at premises of appellant and only thereafter, said machines have become computerised textile machines Tribunal was conscious of fact that there can be situation where particular machine is brought in unassembled form and in such case, it can still be considered as computerised if ingredients thereof are satisfied However, on facts of present case, it has come to conclusion that even this aspect is not satisfied Thus, no merit found in appeal Decided against assesse.

Summary

Issues:
1. Whether imported machines can be treated as computerised embroidery machines.
2. Interpretation of General Interpretative Rule (GIR) 2(a) in relation to the imported machines.

Detailed Analysis:
1. The case involved the appellant who imported second-hand embroidery machines along with auxiliary machines from foreign suppliers. The appellant sought to benefit from a concessional duty rate for "computerised embroidery machines." The dispute arose regarding whether the imported machines could be classified as computerised embroidery machines. The Commissioner and the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) held that the old machines were non-computerised at the time of import, even though a Jacquard Control Device Reading System was later installed to make them computerised. The CESTAT's decision, affirming the Commissioner's view, led to the dismissal of the appellant's appeal, which was then brought before the Supreme Court for consideration.

2. The main issue revolved around the interpretation of General Interpretative Rule (GIR) 2(a), which states that incomplete or unfinished articles can be classified based on the essential character of the complete or finished article. The CESTAT found that the old mechanical embroidery machines and the Jacquard Control Devices System were incomplete articles at the time of import. It was noted that the Jacquard Control Devices were installed post-importation, transforming the machines into computerised textile machines. The appellant argued that the intention was to make the machines computerised, presenting them as such, and thus, GIR 2(a) should apply. However, the CESTAT emphasized that classification should be based on the state of the goods at the time of importation, not the importer's or purchaser's purpose. The CESTAT's decision highlighted that the goods were not computerised at the time of import but were later computerised, leading to the dismissal of the appeal by the Supreme Court.

In conclusion, the Supreme Court upheld the CESTAT's decision, emphasizing that the classification of goods should be determined based on their state at the time of importation, not based on subsequent modifications or intended use. The judgment clarified the application of GIR 2(a) in classifying imported goods and highlighted the importance of the essential character of the goods at the time of import. The ruling serves as a precedent for cases involving the classification of imported articles and the interpretation of relevant rules and regulations.