2017 (5) TMI 272 - HC - Customs

Levy of CVD on imported CKD E-bike kits - N/N. 06/2006 (S.No.35) dated 01.03.2006 - Whether on the basis of the classification under the Customs Tariff Act can a benefit under the Exemption Notification be granted, when the language of the notification is clear and unambiguous? - Held that - In the context of CVD what has to be seen is whether goods of a like nature if manufactured in India would be exigible to excise duty. Where such goods are not exigible to excise duty, then naturally there would be no corresponding CVD on such goods when imported. In the domestic manufacturing context, the question of goods being in either in CKD condition or a Semi Knocked Down (SKD) does not arise. When goods are imported, as in the present case, in a CKD condition, what in fact is imported is the entire vehicle. All that is required to be done is to assemble the various components to obtain the complete vehicle. That is why it is called a CKD kit. Since virtually what is imported is in fact an entire electrically operated vehicle, in this case is E-bikes, there would be no justification in denying the exemption from excise duty under the Notification in question. Therefore, no CVD would be applicable on such imported CKD E-bike kits - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Interpretation of Exemption Notification under Customs Act
2. Applicability of Exemption Notification to goods in CKD condition
3. Classification of goods under Customs Tariff Act for exemption benefits

Issue 1: The first issue in the judgment involves the interpretation of the Exemption Notification under the Customs Act. The appeal questioned whether the benefit under the Exemption Notification can be granted based on the clear and unambiguous language of the notification. The Respondent claimed the benefit of Notification No.06/2006-CE for the CKD E-Bike kit, contending that the countervailing duty (CVD) should be at a 'Nil' rate. However, the Assistant Commissioner of Customs denied the benefit, stating that the Notification granted exemption only to complete vehicles. The CESTAT, in its order, held that the assembled goods would be covered under the Notification, as they are complete electrically operated bikes.

Issue 2: The second issue revolves around the applicability of the Exemption Notification to goods in CKD condition. The Respondent imported E-Bike kits in CKD condition and claimed the benefit of the Exemption Notification. The Commissioner of Customs (Appeals) dismissed the appeal, but the CESTAT allowed it, stating that the goods, when assembled, qualify for exemption under the Notification. The judgment emphasizes that since what is imported is essentially an entire electrically operated vehicle in CKD condition, there is no justification for denying the exemption from excise duty, resulting in no CVD applicable to the imported CKD E-bike kits.

Issue 3: The third issue pertains to the classification of goods under the Customs Tariff Act for exemption benefits. The judgment highlights that in the context of CVD, the focus should be on whether goods of a similar nature, if manufactured in India, would be subject to excise duty. It clarifies that when goods are imported in CKD condition, what is essentially imported is the entire vehicle, requiring assembly of components to obtain the complete vehicle. The judgment dismisses the appeal, stating that no substantial question of law arises from the CESTAT's order, which correctly found the non-applicability of CVD on the imported E-bikes in CKD condition, despite erroneous reliance on a Supreme Court decision by the CESTAT.