1996 (9) TMI 650 - AT - Customs

Summary

Issues Involved:
1. Classification of imported goods.
2. Applicability of Exemption Notifications.
3. Import Trade Control (ITC) Policy compliance.
4. Liability for confiscation and imposition of penalties.

Summary:

1. Classification of Imported Goods:
The primary issue was whether the imported goods were classifiable as components for motor vehicles or as motor vehicles in SKD/CKD condition. The Tribunal applied Rule 2(a) of the Interpretative Rules, which states that incomplete or unfinished articles having the essential character of the complete or finished article should be classified as the complete or finished article. Consequently, the imported components were classified as motor vehicles under Chapter Heading 87.03.

2. Applicability of Exemption Notifications:
- M/s. Maruti Udyog Ltd.: The Tribunal held that the benefit of Notification No. 29/83-Cus. dated 25.2.1983, which exempts components required for the manufacture of fuel-efficient motor cars, should be extended to M/s. Maruti Udyog Ltd. The importer had fulfilled the conditions stipulated in the notification, such as producing the necessary certificates from the relevant authorities.
- M/s. Sipani Automobiles Ltd.: The Tribunal held that the benefit of Notification No. 72/93 should not be confined to the 20 items specified in the Table annexed to the Notification but should be extended to other parts falling under Chapter 87. The imported goods were components and parts, and the notification explicitly covers such items.

3. Import Trade Control (ITC) Policy Compliance:
The Tribunal examined whether the importation of motor cars in SKD/CKD condition was permissible without an ITC license. The Tribunal referred to Public Notice No. 32(PN)/92-97 dated 17 July 1992, which allows the import of accessories, components, parts, and spares of consumer durables by actual users for manufacturing consumer durables without a license. Since the appellants were actual users and the imported goods were components and parts, the Tribunal held that the import was permissible under the ITC Policy.

4. Liability for Confiscation and Imposition of Penalties:
- M/s. Maruti Udyog Ltd.: The Tribunal found no evidence of deliberate or intentional violation of the Customs Act or ITC provisions. Therefore, the goods were not liable for confiscation, and the imposition of penalties was unwarranted.
- M/s. Sipani Automobiles Ltd.: The Tribunal held that the goods were not liable for confiscation, and the imposition of penalties was not justified. The importers had complied with the conditions of the Public Notice and the ITC Policy.

Final Order:
1. For customs classification purposes, the goods are deemed to be 'cars' as a result of legal fiction but remain components, assemblies, or sub-assemblies for practical purposes.
2. The benefit of Notification No. 29/83 is extended to M/s. Maruti Udyog Ltd.
3. The benefit of Notification No. 72/93 is extended to M/s. Sipani Automobiles Ltd. beyond the 20 items specified in the Table annexed to the Notification.
4. Public Notice No. 32-PN/92-97 allows the import of accessories, components, and spares of consumer durables by actual users for manufacturing consumer durables, thus the goods were not liable for confiscation, and penalties were set aside.
5. Both importers are entitled to consequential benefits as observed by the Vice-President.