2019 (11) TMI 255 - AT - Customs

Classification of imported goods - AG 401 Laser Level Transmitter with battery pack and charter - Single Grade Laser Package W/RC 602, Remote, HL 750 receiver - AG GCS 100 Rigid Mass Package for Agriculture - Yuma 2CLX Tablet PC - whether classifiable under Customs Tariff Heading 84328090 or under Customs Tariff Heading 90319000? - benefit of N/N. 12/2012-Cus. Dated 17 March 2012 Sl. No. 399-A. HELD THAT - In the appellant own case MANOJ KUMAR SHARMA, DIRECTOR OF M/S. SPL TECHNOLOGIES PVT. LTD. VERSUS PRINCIPAL COMMISSIONER OF CUSTOMS (PREVENTIVE) 2019 (8) TMI 141 - CESTAT NEW DELHI where it was held that The parts and components as have been imported by the appellants since do not require any activity which can be called as manufacture, but when cabled at the site they can be used as a laser land levelling, an agricultural machine, the product qualifies to fall under serial No. 399(A) of the Notification No. 12/2012 dated 17.03.2012 to which a concessional/exceptional duty @ 2.5% is applicable. Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Classification of imported goods under the correct Customs Tariff Heading (CTH).
2. Eligibility for the benefit of Notification No. 12/2012-Cus dated 17 March 2012.
3. Determination of whether the assembly of parts constitutes "manufacture."
4. Imposition of penalties on the importer and its director.

Detailed Analysis:

1. Classification of Imported Goods:

The appellant classified the imported goods under CTH 84328090, claiming they were agricultural machinery eligible for concessional duty. The Department contended that the correct classification was under CTH 90319000, which did not qualify for the concessional duty.

The Tribunal referred to its previous decision, which clarified the classification of similar goods. It was determined that the imported parts, when assembled, constituted a complete laser land leveller, an agricultural machine. This classification aligns with the General Rules of Interpretation under the Customs Tariff Act, which allows incomplete or unassembled articles to be classified as complete articles if they have the essential character of the finished product.

2. Eligibility for Benefit of Notification No. 12/2012-Cus:

The appellant claimed the benefit under Serial No. 399(A) of Notification No. 12/2012-Cus, which provides a concessional duty rate of 2.5% for specified agricultural machinery. The Department argued that the appellant was importing parts and components, which fall under Serial No. 399(B) and require compliance with additional conditions.

The Tribunal found that the imported parts did not require any manufacturing activity beyond simple cabling to function as a complete laser land leveller. Therefore, the goods qualified under Serial No. 399(A) for the concessional duty rate. The Tribunal cited the Supreme Court's decision in Commissioner of Central Excise Vs. BHEL, which supported the classification of parts capable of forming a complete machine without further manufacturing.

3. Determination of Whether Assembly Constitutes "Manufacture":

The Tribunal examined whether the assembly of the imported parts into a laser land leveller constituted "manufacture" under Section 2F of the Central Excise Act, 1944. It referenced the Supreme Court's rulings, which define "manufacture" as a process that results in a new commercial product with a distinct name, character, and use.

The Tribunal concluded that the simple cabling required to assemble the parts did not amount to manufacture, as it did not result in a new commercial product. This finding was supported by previous judgments, including Union of India Vs. Keshedeo Shivprasad and XI Telecom Limited Vs. Superintendent, which held that assembling duty-paid items into a kit does not constitute manufacture.

4. Imposition of Penalties:

The Tribunal addressed the penalties imposed on the importer and its director. It found that the importer had a bona fide belief that the goods were correctly classified under CTH 84328090 and eligible for the concessional duty. The Department failed to provide evidence of any mala fide intent to evade duty.

The Tribunal cited Hindustan Steel Ltd. Vs. State of Orissa, which states that penalties should not be imposed for technical or venial breaches of the law or when the breach arises from a bona fide belief. Consequently, the Tribunal held that the penalties were unwarranted and should be dropped.

Conclusion:

The Tribunal set aside the impugned order-in-appeal, holding that the imported goods were correctly classified under CTH 84328090 and eligible for the concessional duty under Serial No. 399(A) of Notification No. 12/2012-Cus. The assembly of parts did not constitute manufacture, and the penalties imposed on the importer and its director were unjustified. The appeal was allowed.

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