2015 (1) TMI 1027 - HC - Customs

Import of all the components of a battery operated tricycle except its battery packed together - Whether this can be called as motor vehicle - Held that - this kind of importation of an entire vehicle except the battery broken down into its parts was not contemplated by the legislature - The cardinal test of a motor vehicle appears to be that it should be capable of mechanical propulsion from power derived from a source external or internal in the state in which it is. - It is true that when an entire motor vehicle or a substantial part thereof is imported which includes the description of motor vehicles in the explanatory notes cited by Mr. Bharadwaj only accessories like wheels tyres batteries are to be joined to it. - This kind of importation by the petitioner in my opinion does not fit into this description. What is imported cannot be called a vehicle by any principle of purposive interpretation. Therefore the insistence of the Customs authorities on the certificates mentioned in their query was not proper. It is not part of their job to ask for the certificates because the vehicle has not been manufactured as yet. After the parts are assembled and the vehicle assumes its status then it is upto some other authority to deal with it in accordance with law. The imported items may not be parts wholly and are not a vehicle according to my interpretation. Then will they not be assessed to duty? While making an assessment of duty it should be the duty of every officer to make a purposive interpretation of the Act the Rules the subject headings and the tariff thereunder. If it is found on taking into account the entirety of the parts in one package that it is closer to a vehicle the assessment should be made accordingly. On the other hand if it is found that they are closer to the description parts and if assembled may constitute a vehicle assessment should be made treating them as parts. Therefore the assessment part is left to the Customs officials. Writ application is disposed of with the direction that the respondent authorities will be free to make the assessment under Section 17 of the Customs Act without insisting on the certificates mentioned in their query - Petition disposed of.

Summary

Issues:
Interpretation of statutes, assessment under Section 17(3) of the Customs Act, 1962, query regarding import licensing note, definition of motor vehicle, classification of incomplete vehicles, duty assessment on imported items.

Interpretation of Statutes:
The Court emphasized the need for a purposive interpretation of statutes, stating that a strictly literal approach may not serve justice. This principle was applied to the Customs Act, 1962 and related statutes like the Customs Tariff Act, 1975. The judgment highlighted the importance of considering the overall purpose of the law in interpretation.

Assessment under Section 17(3) of the Customs Act, 1962:
The case involved the importation of components of a battery-operated tricycle, excluding the battery, into India. Customs authorities disputed the self-assessment by the petitioners, invoking Section 17(3) of the Customs Act for assessment. The disagreement centered on whether the imported items constituted parts of a motorcycle or an entire vehicle.

Query Regarding Import Licensing Note:
The Customs authorities raised a query regarding import licensing note 2(II)(c) to Chapter 87 of the Import and Export Policy. The petitioners argued that the note related to importing a vehicle, not parts thereof. This query was a crucial aspect of the assessment dispute.

Definition of Motor Vehicle and Classification of Incomplete Vehicles:
The judgment examined the definition of a motor vehicle under the Motor Vehicles Act, 1988, emphasizing the capability of mechanical propulsion for classification. It also delved into the classification of incomplete vehicles under the explanatory notes of Chapter 87 of the Tariff Act, distinguishing between incomplete vehicles and parts suitable for use with vehicles.

Duty Assessment on Imported Items:
The Court analyzed the duty assessment on the imported items, noting that the importation of an entire vehicle, except the battery, in a dismantled state was not foreseen by the legislature. It stressed the importance of a purposive interpretation in duty assessment, directing Customs officials to assess based on whether the items were closer to a vehicle or parts. The judgment concluded by allowing Customs authorities to proceed with the assessment under Section 17 of the Customs Act, without insisting on specific certificates, while ensuring a fair hearing for the petitioners.