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TMI Blog1990 (4) TMI 156X X X X Extracts X X X X X X X X Extracts X X X X ..... ude a reference to that article incomplete or unfinished, provided that, as imported, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished by virtue of this rule, imported unassembled or disassembled. 3. There appears to be a substantial conflict of opinion at the lower appellate levels on this issue as is apparent from the appeals filed by TELCO and filed by the department. Some Appellate Collectors/Collectors (Appeals) have held that the product is classifiable as automobile parts under Tariff Heading 87.04/06(1) whereas some others have held that the said product is classifiable under Tariff Heading 74.03(1). 3.1 Sole question to be resolved in these cases is whether the product as imported by TELCO has acquired the essential character of an automobile part. If it has acquired the character of automobile part it would be classifiable under Tariff Heading 87.04/06 (1). If it has not then undoubtedly the product would be classifiable under Tariff Heading 74.03 (1) CTA 1975. 3.2 The original adjudicating authorities of the department have held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 2(a) and of determining the essential character of an article as imported has also come up for consideration in a number of decisions before the Tribunal. There had been a conflict of decision on this point in different Benches of the Tribunal as well. The matter had been, therefore, referred to a Larger Bench consisting of 5 Members of the Tribunal in the case of BHEL Ltd. v. CCE, Madras [1987 (28) E.L.T. 545]. Decision of the Tribunal, in short, has been that no general principles can be laid down as to how and in what circumstances Rule 2(a) could be pressed into service for assessment of the imported unfinished article. To appreciate the Tribunal s decision on interpretation of Rule 2(a) of the CTA 1975 para 8 of the said Report is reproduced below :- 8. It, therefore, appears that in order to apply the provisions of Rule 2 (a) it has to be seen (1) whether the imported product had attained the approximate shape or outline of the finished article; (2) whether the said imported article can only be used for completion into the finished article and (3) these would have to be determined with reference to the nature of the material, its bulk, quantity, weight or value. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further operations required are slitting holes and slots which have not been done on the imported forgings. The cone side require drilling of holes. Above all shot-blasting with silicone carbide is required for the synchrocone to perform the clutch function. Shri Malhotra s contention is that the synchrocone acts as gear box as well as clutch and this function cannot be performed by the goods in the form in which they have been imported." 6. In view of the aforesaid submissions, learned advocate for TELCO explained and elaborated the above submissions with the help of two samples (one each for the goods as imported and of the product as finally converted by them at their Works in India.) He has also relied upon a few decisions of the Tribunal which are as follows :- (1) 1984 (16) E.L.T. 613 - Tribunal - para 13 [CC, Bombay v. Anti-Friction Corporation, Lonawala], (2) 1986 (26) E.L.T. 419 - Tribunal [New Standard Engg. Co. Ltd., Bombay v. C.C., Bombay]. (3) 1987 (28) E.L.T. 545 - Para 8 - Tribunal [BHEL v. CC., Mad.]. The learned advocate also submitted that the extensive nature of the operations carried out by TELCO in their works in India can be gauged from the fact tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... take it within the scope of automobile part. 7. Learned SDR, Shri K.D. Tayal arguing for the Revenue has submitted that the matter has been considered in detail by a Larger Bench of the Tribunal in BHEL case mentioned supra. He relies in particular on paras 9 and 12 of the said Report. Para 9, according to the Ld. S.D.R. rules out the principle of addition to the cost of the imported product for determining whether the imported product has acquired the character of the finished article or not. He relies on the following observations of the Tribunal in the said para :- Taking into consideration all the above considerations it appears to us that to lay down a general rule, that the applicability of rule 2(a) would depend on the percentage of cost of post-importation operation as compare to the c.i.f. value of the import, would not be a proper criterion. Reliance on para 12 of the said Report has been placed by the Ld. S.D.R. on the ground that some of the operations carried out by TELCO in that case cost them only 1.5% of the c.i.f. cost. Some of the operations, submits the Ld. SDR, in the instant case are of the same nature as were undertaken by the appellant in BHEL s case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essential character of an article in terms of interpretative rule 2 (a) can be laid down. Facts and circumstances of each article have to be looked into to grasp the essential character of that article. Therefore, the citations made by either side in respect of specific articles would not be of relevance in determining the essential character of synchrocones for the purpose of assessment of the imported forgings in the instant case. 9.1 We find that there is nothing in the judgment of the Tribunal in 1984 (16) E.L.T. 613 which renders the judgment of the Larger Bench of the Tribunal reported in 1987 (28) E.L.T. 545, redundant. The judgment in the case of Antifrication Bearing Corporation has been dealt with purely on the facts of that case and no attempt has been made to define the scope of interpretative Rule 2(a) of the CTA, 1975. 9.2 Having regard to the nature of extensive operations carried out by TELCO, as set out above, it cannot be said that the imported product has acquired the essential character of the automobile part synchrocones which is ultimately manufactured by the appellants at their Works in India as explained by TELCO in their appeal. The finished synchrocone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f no return laid down by the Collector of Customs, Bombay to determine whether an incomplete or semi-finished article has acquired the essential character, we are of the view that this would lead to anomalies. It is well-known that forgings or castings of specific articles can be completed into finished articles only of which they are forgings or castings. If the test laid down by the Collector of Customs, Bombay is accepted then all castings and forgings would be treated as having reached a point of no return since they could be finished or completed only into the predetermined article. In other words, the Tariff entries relating to forgings or castings would become redundant and they would have all to be assessed, according to the test laid down by the Collector, as components of machinery of which they are forgings or castings. 12.2 In this view of interpretation of Rule 2 (a) the citations given by the learned advocate in support of his case for determining the essential character of other articles as imported would not be relevant to the facts of this case. Similarly, the citations given during the course of hearing by learned SDR in support of his case in respect of the ot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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