2024 (5) TMI 472 - AT - Customs

Classification of Goods - Goods declared as Electric Tricycle Spare Parts under CTH No. 8708.99.00 - Imports goods in the nature of e-rickshaw in CKD condition - Validity of enhancement of value - contemporaneous import - Mandate for following the due process as laid down in the Act and CVR-2007 - Violation of the principles of natural justice - HELD THAT - We observe that the interpretation of the GIR by the adjudicating authority is not proper. The Ld. Commissioner (Appeals) has given a clear finding in the impugned order as to why the imported goods cannot be considered as a fully finished e-rickshaw. As per the reading of descriptions as provided under Import Tariff, Section Notes to Chapter XVII and Explanatory Notes to HSN/CTH 8703 and 8708, the goods imported will have the essential characteristic of e-rickshaw only when the same are assembled to create a T-shaped vehicle mounted on a chassis, whose two rear wheels are independently driven by separate battery-powered electric motors. Also, it is observed that the goods as imported by the Respondent fulfil the description as provide in explanatory notes to CTH 8708 as mentioned at Sl. Nos. (a) to (n). Moreover, the lower authority in its findings has not adduced any evidence that the goods imported by the Respondent are in CKD condition and provides the essential characteristic of e- rickshaw. As per the terminology of CTH 8703 in order to have the essential characteristics of three wheeled vehicle the same has to be powered or there should be propulsion through a battery which provides the power to the motor in order to thrust a vehicle. It is on record that there is no battery available in the goods imported to provide power supply to the e-rickshaw. We agree with the findings of the Ld. Commissioner (Appeals) that the interpretation of statutes should be in line with the Act i.e., the Customs Tariff Act, 1975, and should be purposive in nature and not strictly as a literal interpretation which will not serve the purpose of the Act and the other literal description as provided. Accordingly, we uphold the findings of the ld. appellate authority in the impugned order and hold that the goods imported would not constitute a fully finished e-rickshaw as it did not have all essential components for a fully finished e-rickshaw. Enhancement of value , No evidence was provided to the respondent as to why the value as declared by the respondent was rejected by the lower authority. Accordingly, we hold that the enhancement of value without following the due process as laid down in the Act and CVR, 2007 and in violation of the principles of natural justice is not sustainable. Since the mis-declaration of the description, classification and value as alleged by the Department has not been established, we hold that the goods imported are not liable confiscation. Accordingly, we hold that the Ld. Commissioner (Appeals) has rightly set aside the redemption fine and penalty imposed under the provisions of the Customs Act, 1962. Thus, we uphold the impugned order and reject the appeal filed by the Department.

Summary

Issues involved:
The issues involved in this case are the classification of imported goods declared as "Electric Tricycle Spare Parts" under CTH No. 8708.99.00, the re-determination of assessable value, confiscation of goods, imposition of redemption fine and penalty under various sections of the Customs Act, 1962, and the appeal against the Order-in-Appeal passed by the Commissioner of Customs (Appeals).

Classification of Goods:
The Department contended that the imported goods, declared as spare parts of an electric tricycle, were actually complete e-rickshaws in CKD condition. The Departmental officers argued that if all the parts were assembled, they would form 220 sets of e-rickshaws. The Ld. Additional Commissioner re-assessed the goods under Tariff Item No. 87038040, re-determined the assessable value, imposed a redemption fine, and a penalty. However, the Ld. Commissioner (Appeals) classified the goods as spare parts of an electric tricycle under CTH 8708.99.00. The Department appealed against this decision.

Interpretation of General Rules:
The Revenue argued that incomplete goods with the essential character of complete goods should be classified as complete goods. They cited various cases to support their stance. The Respondent maintained that the goods imported were spare parts and not a fully finished e-rickshaw. The Tribunal observed that the imported goods did not have all the essential components required for a fully finished e-rickshaw, as they lacked a battery for propulsion. The Tribunal upheld the findings of the Ld. Commissioner (Appeals) and rejected the Department's appeal.

Enhancement of Value:
Regarding the enhancement of value, the Ld. Commissioner (Appeals) found that the value declared by the respondent was rejected without logical reasons and without following the due process as per the Customs Valuation Rules, 2007. The Tribunal agreed with this assessment, stating that the enhancement of value was not sustainable and violated the principles of natural justice. As mis-declaration of description, classification, and value was not established, the goods were not liable for confiscation, and the redemption fine and penalty were set aside.

Decision:
The Tribunal upheld the impugned order, rejecting the appeal filed by the Department. It was concluded that the imported goods did not constitute a fully finished e-rickshaw due to the lack of essential components, and the enhancement of value was deemed unsustainable. The redemption fine and penalty imposed were set aside as mis-declaration was not proven.