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Issues: Classification of imported goods under Tariff Item 9110.11, applicability of exemption under Notification No. 43/85, interpretation of components for exemption eligibility.
In this judgment by the Appellate Tribunal CEGAT, New Delhi, the case involved the classification of goods imported by the appellants under Tariff Item 9110.11 and the applicability of exemption under Notification No. 43/85. The goods in question were claimed to be watch movements but were assessed as step motors by the authorities, leading to a demand notice. The appellants argued that the components imported constituted complete watch movements in unassembled condition and should be classified under heading 9110.11, making them eligible for exemption under the notification. The Revenue contended that the components should fall under Chapter 91 for exemption and that electric motors like step motors are classified under Chapter 85, not qualifying for the exemption. The tribunal noted that the notification exempts components of mechanical and quartz analog wrist watches falling under Chapter 91, emphasizing that the requirement for classification under Chapter 91 applies to finished products, not components. The tribunal also highlighted that the impugned goods, Rotor, Stator, and Coil, did not qualify as electric motors under Chapter 85 and were part of the watch movement assembly process, thus eligible for exemption under heading 9110.11. The tribunal examined the arguments presented by both sides, emphasizing the need for components to be classified under Chapter 91 for exemption eligibility under Notification No. 43/85. It noted that the impugned goods were part of the watch movement assembly and did not meet the criteria to be classified as electric motors under Chapter 85. The tribunal referred to a previous case to support the interpretation that parts of an article should refer to the article itself to qualify for exemption under specified headings. Additionally, the tribunal dismissed the Revenue's argument regarding the import under Appendix 2(B) as it was not raised during the proceedings related to the short levy under Section 28 of the Customs Act. Ultimately, the tribunal allowed the appeals, setting aside the impugned order and providing consequential relief to the appellants in accordance with the law.
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