2014 (5) TMI 125 - AT - Customs

Classification of Goods imported Parts or unassembled/disassembled in CKD condition - Whether Goods imported by Assessees are parts and not motherboards, Modems, Fast Ethernet Adapters, Ethernet Cards etc. in CKD Condition HSN Explanatory Notes, Rule 2 (a) - Bar of Limitation Held that - It is found that HSN Explanatory Notes, Rule 2 (a) covers the complete or finished articles presented in unassembled or disassembled condition and the same is to be classified in the same heading as the assembled article - It is usually for reasons such as requirements or convenience for handling, transportation and packing - The rule further provides that articles presented in unassembled or disassembled condition means articles, the components of which are to be assembled either by means of simple fixing devices or by riveting or welding for only simple assembly operations are involved - The Notes further provides that components shall not be subject to any further working to form complete into finished article - The processes undertaken by assessee are not in dispute. It is found that manufacturing processing undertaken by assessee such as screen printing of solder paste, mounting of individual components on the PCB etc cannot be held to be that the parts imported by Assessee are not further worked upon Therefore, no merits are found in the contention of the Revenue - In respect of time bar also it is found the appellant had declared the description of the imported goods in the Bills of Entry and there is no evidence on record to show that the appellant had mis-declared the description of the imported goods So, the allegation of suppression with intent to evade duty is not sustainable - No infirmity in the impugned order found Decided in favour of assessee.

Summary

Issues:
Classification of imported goods as parts or complete finished articles, Allegation of suppression of facts by the respondent, Manufacturing processes undertaken by the respondent, Application of Rule 2(a) of the General Rules for Interpretation, Time bar for assessing customs duty.

Classification of imported goods:
The appeal was filed against the Order-in-Original where the Commissioner classified the imported goods as parts and not complete finished articles like motherboards, modems, etc. The Revenue argued that the imported electronic parts were assembled to make finished products, relying on Rule 2 of the General Rules for Interpretation. However, the Respondent contended that they imported components for manufacturing motherboards and other products, undertaking various manufacturing processes. The Tribunal found that the processes undertaken by the Respondent indicated that the imported parts were not merely assembled but further worked upon, leading to the dismissal of the Revenue's contention.

Allegation of suppression of facts:
The Revenue alleged that the Respondent misled them by importing goods for assembling instead of manufacturing finished products. The Respondent, on the other hand, explained their detailed manufacturing operations involving skilled workers and paying excise duty on the finished goods. The Tribunal noted that the Respondent's processes demonstrated a genuine manufacturing operation, refuting the Revenue's allegation of suppression.

Manufacturing processes undertaken:
The Respondent detailed their manufacturing operations involving storage, handling, baking, screen printing, gluing, mounting, re-flow oven, inspection, and testing. These processes indicated a comprehensive manufacturing operation rather than mere assembling. The Tribunal acknowledged the complexity and precision involved in the manufacturing processes, supporting the Respondent's claim of genuine manufacturing activity.

Application of Rule 2(a) of the General Rules for Interpretation:
The Revenue sought to classify the imported parts under specific headings based on Rule 2(a) of the General Rules for Interpretation. However, the Tribunal analyzed the provisions of Rule 2(a) along with the HSN Explanatory Notes, emphasizing that unassembled articles should not undergo further working to be classified as unassembled. The Tribunal found that the Respondent's manufacturing processes went beyond simple assembly, leading to the rejection of Revenue's classification argument.

Time bar for assessing customs duty:
Regarding the time bar issue, the Tribunal noted that the appellant declared the imported goods accurately in the Bills of Entry. There was no evidence of misdeclaration, and the allegation of suppression to evade duty was based solely on the Revenue's opinion. The Tribunal concluded that there was no intent to evade duty, dismissing the allegation of suppression and upholding the original order.

In conclusion, the Tribunal found no merit in the Revenue's contentions, upheld the original order, and dismissed the appeal along with the cross objections.