2021 (9) TMI 1140 - AT - Customs

Confiscation of goods - import of e-rickshaw in CKD condition without battery - requirement to produce the Type Approval Certificate under the provisions of Rule 126 of Central Motor Vehicle Rules - HELD THAT - The issue is no longer res integra. The applicability of the Rule 2(a) of General Rules of Interpretation read with Chapter 87 of the Customs Tariff, have been held to be not applicable for interpretation of the Import Export Policy or the Foreign Trade Policy, as early as in 1983 by the Hon ble Supreme Court in the case of UNION OF INDIA VERSUS TARACHAND GUPTA BROS. 1971 (1) TMI 53 - SUPREME COURT and again a constitution bench of the Apex Court in COLLECTOR OF CUSTOMS VERSUS RELIANCE INDUSTRIES LTD. 1999 (12) TMI 62 - SUPREME COURT . The show cause notice and the impugned order are in the teeth of the rulings of Apex Court. The e-rickshaw kits in CKD condition imported in the facts and circumstances of the present case, can be treated as a complete vehicle only for the purpose of customs tariff, and not for interpretation of the Import Export Policy /Foreign Trade Policy, or for the purpose of the CMV Act and the Rules thereunder. In the similar facts and circumstances, in LML LIMITED VERSUS COMMISSIONER OF CUSTOMS, BOMBAY 1998 (7) TMI 244 - CEGAT, NEW DELHI , wherein M/s.LML had imported scooters in CKD condition, the Division Bench of this Tribunal had held that Rules of interpretation of tariff and Explanatory Notes to HSN, cannot be applied for the purpose of interpreting the import Trade Policy - there is no legal requirement for production of any Type Approval Certificate for clearance of e-rickshaw in CKD condition, which is applicable only for import of new vehicle(s). Admittedly, the goods in question are freely importable, there being no restriction under the Foreign Trade Policy - The requirement of Type Approval Certificate is not warranted for import of spare parts or kits in CKD condition. The appellant shall not be responsible to pay any warehousing charges, and all such charges, if any, shall be borne by the Customs Department /Government - the appellant is awarded litigation cost of ₹ 50,000/- (to be paid by the Customs Department) - the goods under import, presently lying in warehouse shall be released forthwith to the appellant (within a period of 15 days) from the date of receipt/service of a copy of the order - All demurrages, if any, suffered by the appellant shall also be re-imbursed by the Customs Department. Appeal allowed.

Issues Involved:
1. Requirement of 'Type Approval Certificate' under Rule 126 of Central Motor Vehicle Rules for clearance of imported e-rickshaw in CKD condition without battery.
2. Legality of the order confiscating the goods for lack of such certificate.
3. Applicability of Rule 2(a) of General Rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975.
4. Interpretation of Import Policy and Foreign Trade Policy in relation to the import of e-rickshaw parts in CKD condition.
5. Alleged violation of Section 111(d) of the Customs Act, 1962.
6. Admissibility of judicial precedents cited by the appellant.

Detailed Analysis:

1. Requirement of 'Type Approval Certificate':
The primary issue was whether the appellant needed to produce a 'Type Approval Certificate' under Rule 126 of the Central Motor Vehicle Rules (CMVR) for the clearance of imported e-rickshaw in CKD condition without battery. The Revenue argued that the imported goods were battery-operated vehicles falling under CTH 8703 and required a valid certificate of compliance as per Rule 126 of CMVR. The appellant contended that Rule 2(a) of the General Rules of Interpretation under the Customs Tariff Act is not applicable for interpreting the provisions of Import Policy or Foreign Trade Policy.

2. Legality of the Order Confiscating the Goods:
The impugned order confiscated the goods under Section 111(d) of the Customs Act for not having the 'Type Approval Certificate.' The appellant argued that the confiscation was unwarranted as the goods were imported in CKD condition, and the requirement for a 'Type Approval Certificate' applies only to complete vehicles, not parts. The Tribunal found that the confiscation order was based on an incorrect interpretation of the law and judicial precedents.

3. Applicability of Rule 2(a) of General Rules for Interpretation:
The Revenue's reliance on Rule 2(a) of the General Rules for Interpretation was challenged by the appellant, citing several judicial precedents where it was held that these rules are for customs duty purposes only and not for interpreting Import Policy. The Tribunal agreed with the appellant, stating that Rule 2(a) is not applicable for interpreting Import Policy or Foreign Trade Policy.

4. Interpretation of Import Policy and Foreign Trade Policy:
The Tribunal referred to various judicial precedents, including the Supreme Court rulings, which established that parts imported in CKD condition should not be treated as complete vehicles for the purposes of Import Policy. The Tribunal held that the import of e-rickshaw parts in CKD condition does not require a 'Type Approval Certificate' as per the Import Policy or CMV Rules.

5. Alleged Violation of Section 111(d) of the Customs Act:
The show cause notice alleged that the appellant violated Section 111(d) of the Customs Act by importing goods contrary to the provisions of the Motor Vehicle Act. The Tribunal found that the goods were freely importable and there was no restriction under the Foreign Trade Policy. Therefore, the appellant did not violate Section 111(d).

6. Admissibility of Judicial Precedents:
The appellant cited several judicial precedents to support their case, including rulings from the Supreme Court and High Courts. The Tribunal acknowledged these precedents and found them applicable. The Tribunal also noted that the Revenue failed to provide a test report for the samples drawn, which violated the principles of natural justice.

Conclusion:
The Tribunal concluded that the appellant was not required to produce a 'Type Approval Certificate' for the import of e-rickshaw parts in CKD condition. The confiscation order was set aside, and the appeal was allowed with directions for the release of the goods, reimbursement of warehousing and demurrage charges, and litigation costs to be paid by the Customs Department. The Tribunal emphasized that the legal fiction under Rule 2(a) of the General Rules of Interpretation is only for customs duty purposes and cannot be extended to other statutes.

← Previous Next →