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Issues: Classification of imported goods under customs duty and additional customs duty based on Interpretative Rule 2(a) of the Customs Tariff Act, 1975; Departure from earlier classification by successor authorities.
In the judgment delivered by the Appellate Tribunal CEGAT, New Delhi, a common issue was involved in 19 appeals regarding the classification of imported Connecting Rod forgings and Cross forgings made of steel for use in the manufacture of scooters. The lower authorities had classified the goods under Heading 84.06 and 87.09/12(1) for basic customs duty and under Item 26AA or Item 68 of the Central Excise Tariff for additional customs duty, applying Interpretative Rule 2(a) of the Customs Tariff Act 1975 to deem the goods as finished components. The appellants contended that the goods were only rough forgings, not subject to Rule 2(a, and should be classified differently for customs duty. The arguments of the appellants were based on the nature of the imported goods and the applicability of Rule 2(a) as per a previous Tribunal judgment. The Department argued that the goods satisfied the norms laid down by a Larger Bench judgment and should be classified as finished components. The Tribunal considered the provisions of Rule 2(a) and the norms established by the Larger Bench to determine the classification of the goods. It found that the imported goods had attained the approximate shape of the finished articles and were specifically forged to fit the appellants' vehicles, thus confirming the classification by the lower authorities for basic customs duty. Regarding the departure from the earlier classification by the successor authorities, the Tribunal noted that there were valid reasons for the change in classification. It pointed out that the earlier Appellate Collector's order had not been revised by the Central Government, and subsequent authorities had the discretion to change the classification based on sound and cogent reasons. The Tribunal highlighted a Tribunal order and a Delhi High Court judgment that supported the successor authorities' decision to alter the classification based on the interpretation of Rule 2(a. It concluded that there were legitimate grounds for the change in classification by the lower authorities. However, concerning the additional customs duty, the Tribunal agreed with the Department's position that it should be levied according to Item 26AA of the Central Excise Tariff. Therefore, the appeals were allowed only in relation to the additional customs duty, while the classification for basic customs duty was upheld, and the appeals were otherwise rejected.
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