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Issues: Liability for additional duty of customs on imported 1C engines' components
The judgment by the Appellate Tribunal CEGAT, New Delhi, dealt with the issue of liability for additional duty of customs, commonly known as CV duty, on goods described as 1C engines' components. The customs authorities had levied CV duty on these imported parts under Tariff Entry 34A of the CET, considering them as 'motor vehicle parts.' However, the appellants argued that these components should be classified as 'machinery parts' for basic customs duty purposes, as they held a license for manufacturing 1C engines and predominantly produced stationary/industrial engines. The appellants contended that they were not manufacturing motor vehicles and, therefore, should not be subject to additional duty as motor vehicle parts. The appellants relied on previous orders of the Tribunal and requested that the matter be decided based on their earlier submissions. The Asstt. Collector had accepted that central excise duty was not leviable on such goods due to specific notifications exempting them. However, the Appellate Collector considered these parts as motor vehicle parts since they were to be used on engines for dumpers, leading to the imposition of CV duty. The Tribunal, after reviewing the case with the Departmental representative as the appellants waived personal hearing, found that the imported parts were primarily used for machinery, such as shovels, cranes, compressors, etc., with only a small percentage used in dumpers. Based on previous Tribunal orders and the principal use of the engines, the Tribunal held that the imported parts were not liable for CV duty as motor vehicle parts. The Tribunal emphasized that the goods were not meant for motor vehicle engines, as held by the lower authorities, and that no evidence was presented to support this classification. The Tribunal disagreed with the reasoning behind denying the benefit of certain notifications, stating that strict compliance with the Central Excise Rules was not practical or feasible given the nature of the imported goods' use. The Tribunal allowed the appeal, concluding that the imported goods should not be treated as motor vehicle parts for CV duty purposes. The appellants were granted consequential relief following the appeal's acceptance.
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