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TMI Blog2018 (9) TMI 1151X X X X Extracts X X X X X X X X Extracts X X X X ..... on of redemption fine in lieu of confiscation under Section 125 of the Customs Act, 1962. Held that:- The changes brought about by Notification No. 31/2011-Cus. not only created an additional slab of concessional duty, but also further clarified what exactly would be considered as CKD. Notification 31/2011-Cus. in fact expanded the types of imports which could be considered as CKD unit. In the Notification 31/2011 if the engine, gearbox and transmission mechanism was not in a pre-assembled condition, this would be considered as a CKD kit, meriting the lowest rate of 10% BCD - At the same time, even if the engine, gearbox and transmission mechanism was in a pre-assembled form, however not mounted on the chassis or a body assembly, even if such imported kit may well be considered as a CKD kit for the purposes of the notification, that will be required to suffer BCD @ 30%. If the imports do not fit into any of these two categories, they would have to pay customs duty @ 60%. As clarified by the TRU in their letter dt. 25.04.2011, only those CKD kits where all the parts and components including engine/gearbox and transmission assembly which are imported in a completely knocked down c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f goods supplied . It appears to reason that assembly engine imported is already a complete preassembled engine. So also, the packing list does not contain items like gearsets, torque converters, mechatronic parts etc. which are components that go into the assembling of an automatic gearbox. Hence it appears to reason that the imported transmission sub-assembly / assembly auto gearbox / automatic transmission are gear box / transmission which are already preassembled at the time of import - Reference is also made to letters of appellants dt. 22.03.2013 and 04.04.2013 wherein it has been clarified that they do not assemble internal components of engine and automatic gearbox at the Chennai plant. We have then no doubt in our mind that the goods imported by the appellants were not of the type and nature which would merit the lowest B.C.D rate of 10% as extended vide the Notification No.21/2011-Cus. and later in No.31/2011-Cus. as amended by Notification No.12/2012-Cus. The allusion made to the rulings of the AAR will also not help the case of the appellants - the goods imported by the appellants will not benefit from the B.C.D rate of 10% but will only be eligible for higher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocate Shri Rahul Khurana, Advocate And Ms. Divya Jaskant, Advocate, For the Respondent : Shri P.R.V. Ramanan, Special Counsel And Shri P. Hemavathy, Commissioner (A.R) ORDER PER BENCH M/s. BMW India Pvt. Ltd. (hereinafter referred to as appellant ) have been importing through Chennai Sea Port, goods declared in the Bills of Entry as BMW CARS IN CKD classifying them under Customs Tariff Heading (CTH) 8703. In these imports, BMW claimed concessional rate of customs duty @ 10% under clause (i) of Sl. No. 344 of Table appended to Notification 21/2011Cus. and sub-clause (1)(a) of Sl. No. 437of Notification 12/2012-Cus. The Department took the stand that as the imported goods namely, Engine Assembly and the Transmission Sub-assembly/Gear Box were in a pre-assembled form, the appellant was not eligible to avail the concessional rates provided in the said Notifications. 2. Accordingly, a Show Cause Notice dt. 26.08.2013 was issued to the appellants inter alia demanding differential customs duty in respect of CKD kits for motor cars imported during the period 24.03.2011 to 11.04.2013 and imports of motor cars in a form other than CKD for the period 01.03.2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued, which provided for a 25% rate of BCD for motor cars imported as Completely Knocked Down ( CKD ) kit, and a 60% rate if imported in any other form. However, no definition of CKD was provided for. Notification No.18/2004-Cus., dated 12.1.2004 was issued, which reduced the rate for CKD imports from 25% to 20%. Notification No.11/2005-Cus., dated 1.3.2005 was issued, which reduced the rate for CKD imports from 20% to 15%. iii) In the absence of a definition of CKD, and in order to obtain certainty on the position qua its proposed imports, the appellant applied for an Advance Ruling. The entire set of items imported by the Appellant was submitted as Annexure-III to the Application. Vide Order dated 28.10.2005, In Re: Bayerische Motoren Werke Aktiengesellschaft, 2006 (193) ELT 138 (AAR), the question framed for consideration was as follows : Whether the import of car parts, listed at Annexure III would be considered as import of completely knocked down ( CKD ) unit, eligible to the concessional rate of customs duty of 15% being covered by Entry 344 of CTH No.8703 (1) of Notification No.21/2002-Cus., dated March 1,2002 as amended by Notification No.11/2005-Cus., date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of motor cars at its Chennai plant after achieving certainty on the legal position qua imported goods from the BMW AAR. v) Notification No.20/2007-Cus., dated 1.3.2007 was issued, which reduced the rate for CKD imports from 25% to 20%. vi) As and when the appellant initiated imports of new models of cars (5 series, XI Series and X3 Series), which were in the same state of disassembly as the 3 Series submitted before the AAR, the appellant wrote to the department to obtain confirmation that the benefit of the Customs Exemption Notification would continue to be available. As and by way of illustration, the appellant addressed letter dt.5.7.2010 seeking confirmation that the benefit of the lower rate of BCD would be equally applicable to the X1 and X3 Series. The Department responded vide letter dt. 23.7.2010 confirming that the benefit of the Customs Exemption Notification can be extended to the X1 and X3 Series, subject to first check examination. vii) Thereafter, Harley-Davidson Motor Company, made an application before the AAR seeking to claim CKD benefits even if the engine and gearbox were mated / inter-connected in a single unit, in a motor cycle (here, it must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ote to the Government vide letter dt.1.3.2011, again stressing on the need for the usage of the word interconnected in the first exclusion clause of the CKD definition. SIAM also met with the Government on 8.3.2011 to discuss the newly inserted definition. xi) Meanwhile the Volkswagen Group India also wrote to the Government seeking the following clarifications : 1. That all operations not running as a kit basis are not affected by this change 2. Reading the Explanation and the memorandum together gives us an impression that one is eligible to import all critical components including a pre-assembled engine, gearbox, transmission mechanism as a CKD so long as these are not installed on the chassis or body assembly. 3. If only the three critical components namely engine, gearbox and transmission mechanism are imported as standalone subassemblies and not interconnected to each other, the same should qualify for clearance as parts. xii) The CBEC clarified as follows vide Instruction F.No.354/38/2011-TUR, dated 11.3.2011 : 4. In view of the above, it is to inform you that while point nos.1 and 3 of the interpretation of the new definition, as mentioned in your ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons is that the concessional rate of 10% customs duty can be denied only if the engine and transmission are mated or inter-connected in the form as imported (ii) It is well settled law, that whenever a court is called to interpret an amended provision it has to bear in mind the history of the provision, the mischief which the legislature attempted to remedy, the remedy provided by the amendment and reasons for providing such remedy. Reliance in this regard is placed on the decisions of the Supreme Court in the case of State of Madras Vs K.M. Rajagopalan - AIR 1955 SC 817. (iii) Taking resort to the mischief rule of interpretation it is clear that the purpose of the two March, 2011 amendments are only to overcome the position in law set out in the AAR Ruling in the Harley Davidson case, the amendments notifications should, therefore, be read and interpreted in light of the same. Therefore, the finding in the impugned order, that the argument that the said amendment dated 24.03.2011 was also to overcome the effect of the Advance Ruling in the case of M/s.H-D Motor Co. Pvt. Ltd. is without any iota of documentary evidence, is without any sustainable basis in fact or in law a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be read as and when giving or its natural meaning would defeat the very object and intention of the provision and lead to absurdity. (vii) If clause (b) of the relevant Exemption Notification is read as referring to ... with engine (and) gear box or transmission mechanism in preassembled form but not mounted on a chassis or a body assembly which would attract a higher rate of 30%, then there would be no incongruity or repugnance between clause (a) and clause (b) as where the imports of engine, gearbox and transmission assembly when taken together are not in preassembled condition the applicable duty rate would be 10% (basic customs duty) under clause (a) and when in pre-assembled condition would attract 30%, and, therefore this is the correct interpretation to be adopted. (viii) Therefore, in terms of the well settled rules of statutory interpretation, the proper and correct construction of Exemption Notifications is that : a. Imports of engine sub-assembly or transmission sub-assembly which are not mated / assembled together will qualify as CKD imports entitled for the concessional rate of BCD at 10%. b. Imports of engine and transmission assembly mated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... automatic transmission is made complete and functional in the Chennai plant of the appellant, by the various activities undertaken at the Chennai plant, is also evident from the two technical reports of the experts which has been relied upon by the appellant and has not been controverted by any other technical report by the Department. (xii) No reliance can be placed by the Department on the report of Shri Ramesh Babu. The expert has issued the report remised on incomplete facts and without fully understanding or analysing the assembly operations undertaken by the appellant without even visiting the Chennai plant of the appellant and without physically observing the assembly operations undertaken at the said plant on the imported engine and transmission sub assemblies. Dr. N. Ramesh Babu, has not been offered for cross examination despite many requests by the appellant. It is well settled law that when cross examination of the expert is not afforded, then no reliance can be placed on such expert report. (xiii) Submissions on Extended period of limitation (a) Invocation of the extended period of limitation in the OIO is erroneous and unsustainable inasmuch as there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, the CFS officer has held that consignment are in CKD kit form with engine, gearbox and transmission mechanism not in a preassembled form . (xiv) Submission on penalty and interest and confiscation (a) The extended period of limitation has wrongly been invoked for the reasons set out hereinabove, there can be no levy of penalty under section 114A of the Act on goods which have already been cleared. In terms of Section 114A of the Act, penalty is attracted only when short levy is caused by reason of collusion or wilful misstatement or suppression of facts and that in the present case, none of these circumstances exist as has already been set out herein above. It is submitted that the appellant has not violated any provision of the Act or the Rules there under as alleged or at all to warrant the levy of penalty. (b) Furthermore, as the issue involved is only one of interpretation of the provisions of the exemption notification, it is well settled law that no penalty can be imposed in such a case. (c) As the duty demand on the appellant is itself not sustainable in light of the submissions set out hereinabove, there can be no question of payment of any interest by the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 465 (S.C.) Saraswati Sugar Mills (iv) Automatic gear box and auto transmission are synonymous with each other. This fact has not been disputed by BMW. Hence, the use of the word and has to be read as or because it would lead to an absurdity if we adopt the appellant s interpretation since both gearbox and transmission mechanism cannot be mated with an engine. (v) As may be seem from the letter dt. 18.02.2011, SIAM s suggestion for incorporating a certain definition of CKD kit was not accepted as it was not in line with Government s policy. This is evident from TRU letter dated 11.03.2011 Para 3, reiterated by the Circular dt. 24.03.2011. The AAR decision in Harley Davidson case was rendered on 24.07.2010 and SIAM was requested to give their suggestion on 06.12.2010. Thus, changes made w.e.f. 01.03.2011 was not on account of rejection of application for review filed by department in HD case. (vi) If appellant s interpretation of notification is to be adopted it would mean that mere fastening by four bolts to hold together the pre-assembled engine and pre-assembled gearbox or pre-assembled transmission should result in 20% rate difference. (vii) The ordinary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, hydraulic system, clutches, seals and gaskets, torque converter and mechatronic parts. Thus, in both cases, all the integral components are incorporated in the article under import in a pre-assembled condition. (xi) The argument that the imported goods are not operational is not relevant to the present case. The expression used in the Notification merely refers to the physical condition of the goods in question. Nowhere there is any mention of the operational aspect in the subject Notifications. (xii) The expression complete and functional was used in the SCN and O-I-O since the engine and transmission under import were complete and no parts integral to the engine and transmission were absent. They were functional on account of the same. The operational aspect was never alluded to in the SCN or O-I-O. (xiii) On a scrutiny of the copy of Annexure III submitted to the AR Authority by the importer, it was observed that among the parts listed therein were parts of description ASSY ENGINE N46 E90 B20 OL LHD A (under heading : Engine, Compressor and Generator) and LU AUTO TRANSM 6HP 19 CODE MB N46 OL (under heading : Gearbox/Transmission Wiring Harness). The importer ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircular dt. 11.03.2011 issued after the amendment dated 01.03.2011, which only reconfirmed the necessity of the engines and the gearboxes not being in pre-assembled condition to avail 10% BCD and the introduction of amendment vide Notification No. 21/2011-Cus. dt. 24.03.2011, BMW did not seek any further clarification either from SIAM or from CBEC or from Chennai Customs as admitted by Ms. PayalTuli in her voluntary statement given on 06.05.2013. On the other hand, they started projecting their imported engines and gearboxes as being in the form of sub-assemblies. (b) BMW have not been able to demonstrate or describe as to how the imported part declared by them as transmission sub-assembly in the Detailed Packing List is different from a gearbox and they have also not been able to describe or demonstrate as to how the said transmission sub-assembly would constitute a sub-assembly of the gearbox. (c) Hence, the submission made by BMW India in their letter dt. 30.03.2011 that they imported their engines and gearboxes in sub-assembly form appears to be a clear misdeclaration aimed at misleading the Customs Authority. (d) BMW have also never declared in any of their Bill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... car and not from the limited point of view of the completeness and functionality of the automatic gearbox per se. This observation is factually correct and cannot be faulted. (b) The adjudicating authority has also correctly held that the experts nowhere address the technical literature uploaded by BMW and manufacturers of transmission mechanism, the assembly process, constituent parts and the testing of the subject goods carried out prior to export, based on which the manufacturers themselves are describing and marketing the products as fully assembled automatic transmission and engine . (xix) Point raised in appeal : No reliance can be placed on the report of Dr. Ramesh Babu. (a) With regard to the contention of appellant that reliance cannot be placed on the report of Dr. Ramesh Babu, the said expert had inspected the representative samples of imported goods declared by BMW as ASSY Engine / ZB Engine and Transmission sub-assembly / ASSY Auto Gearbox and was of the opinion that the above representative samples of engines were pre-assembled engines which could be readily integrated to build the motor car and that the samples described as transmission sub-assembl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation under Section 125 of the Customs Act, 1962, is justified ? 11.1 The concessional rate of duty for motor cars and motor vehicles imported as Completely Knocked Down (CKD) unit came into being w.e.f. 1.3.2003 vide Notification No.26/2003-Cus. by which such imports benefited from a lower Basic Customs Duty of 25%. This concessional rate was further reduced to 20% vide Notification No.18/2004-Cus. dt. 12.1.2004 and to 15% vide Notification No.11/2005-Cus. dt. 1.3.2005, however none of these notifications provided any Explanation or definition of what constituted a CKD unit. 11.2 It is in this scenario that the appellants approached the Advance Ruling Authority. The question that was raised by the appellant for Advance Ruling was as under : Whether the import of car parts, listed at Annexure III, would be considered as import of completely knocked down ( CKD ) unit, eligible to the concessional rate of customs duty of 15% being covered by Entry 344 of CTH No. 8703 (1) of Notification No. 21/2002-Cus., dated March 1, 2002 as amended by Notification No. 11/2005-Cus., dated 1-3-2005? 11.3 In their Ruling dt. 28.10.2005, as reported in 2006 (193) ELT 138 (AAR), the maj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t do not mention that the car is not imported in completely knocked down (CKD) unit. What they say is that some parts of the car are in SKD form, thereby meaning, they can be further knocked down into components. This, in our view, may not be a relevant factor because it is clear from the report that Annexure III represents completely knocked down unit of motor cars. If that be so, the contention of the Commissioner that Sl. No. 344 (2) prescribing 60% duty would apply, cannot be accepted; the applicable rate of duty would be 15%. We hasten to make it clear that the motor cars if imported in any form other than completely knocked down (CKD) unit, the rate of duty applicable would be 60%. 11.4 It is interesting to note that in the said AAR Ruling, the Authority have found that there are some parts in the total list which could be taken as component form while there are other parts which could be termed as SKD form . The Authority has also noted the usage of words by and large in the report of the Automotive Research Association of India, Pune (ARAI) and noted that inasmuch as without seats the vehicle could not be treated as complete, the words by and large have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the question whether import of motor cycle in the form of components, parts and sub assemblies proposed to be imported by the applicant would constitute import of motorcycle in CKD form and as such would be eligible for concessional ratio of BCD as provided in Notification No.21/2002-Cus. as amended. The Authority, vide a ruling dt. 27.7.2010, reported in 2011 (270) ELT 432 (A.A.R), held that if the engine and transmission assemblies are designed to be housed in a single housing, and are so assembled, the engine and transmission assembly is generally referred to as Engine Assembly only and merits to be treated as a component for the purposes of CKD units. The authority noted that in the list of components and parts and sub-assemblies in Annexure III of the application filed by BMW related to the earlier ruling, the engine assembly and the transmission assembly have been indicated as two separate assemblies. The authority ruled that motor cycles imported by H-D will be eligible for concessional rate of import duty if they are imported in the form of identifiable basic sub-assemblies or components as per the illustrative list of components, parts and sub assemblies. The autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used for assembling a finished vehicle or a semi-finished vehicle, but does not include any of the following : (i) Inter-connected sub-assemblies of two or more of the following : (i)Engine, (ii) Gear Box, (iii) Transmission shaft, (iv) Axles, (v) Suspensions, (vi) Steering system, (vii) Glasses, (viii) Seats, (ix) Instrument cluster, (x) Wiring Harness (ii) A chassis/Body assembly of a vehicle on which any of the above components or sub-assemblies is installed. The definition of CKD, as finally approved by the law makers, inserted by Notification 21/2011 dt. 01.03.2011 in respect of motor cars and motor vehicles, read as under : Explanation. For the purposes of this exemption, Completely Knocked Down unit means a unit having all the necessary components, parts or subassemblies for assembling a complete vehicle but does not include, - (a) A kit containing a pre-assembled engine or gearbox or transmission mechanism; or (b) A chassis or body assembly of a vehicle on which any of the component or sub-assembly viz., engine or gearbox or transmission mechanism is installed; Evidently, the actual definition of CKD as brought about vide Notific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if imported, - (1) As a Completely Knocked Down (CKD) kit containing all the necessary components, parts or subassemblies, for assembling a complete vehicle, with, - (a) Engine, gearbox and transmission mechanism not in a pre-assembled condition; (b) Engine or gear box or transmission mechanism in pre-assembled form but not mounted on a chassis or a body assembly (2) In any other form 10% 30% 60% The clarifications in respect of these changes made in the definition of CKD were conveyed by the TRU, CBEC, vide letter dt. 25th March, 2011 as under : 9. As you are aware, a definition of Completely Knocked Down Unit had been prescribed in the Budget. However, considering the representations by the industry, the custom duty rate on vehicles imported in the form of completely knocked down kits having all the necessary components, parts and sub-assembly including the pre-assembled engine, gearbox and transmission mechanism of Motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 87.02) including motor cycles is being reduced from 60% to30%. Such imports of vehicles in completely built form or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. Quite evidently, the sub-assemblies covered in sub entry 344 (1) (b) are only engine or gearbox or transmission mechanism . From a plain reading of this sub entry, it is also clear that it will not cover engine mated to a gear box or transmission. Hence if the goods as imported for an engine mated to a gearbox or transmission, they will go out of the scope of entry 344 (1) (b) and will necessarily fall within the residual entry namely 344 (2) in any other form and suffer BCD @ 60%. Hence, in our view, therefore not only will entry 344 (1) (b) not include automobile kit imported with engine or gearbox or transmission in preassembled form and mounted on a chassis / body assembly but also will not include such sub-assembly engine and / or gearbox and / or transmission mechanism if they are imported mated to each other. 19. It is also pertinent to note that if the imported automobile CKD kit has the engine or gearbox or transmission in preassembled condition, the entire kit will not get the benefit 10% BCD under entry 344 (1) (a) but will have to suffer 30% BCD under entry 344 (1) (b). 20. The Ld. Advocate has been at pains to emphasise that various representations we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the necessary components, parts or sub-assemblies, for assembling a complete vehicle, with,- (a)engine, gearbox and transmission mechanism not in a pre-assembled condition; (b)engine or gearbox or transmission mechanism in Pre-assembled form but not mounted on a chassis or a body assembly. (2) in any other form,- [(a) with CIF value more than US $ 40,000 or with engine capacity more than 3000 cc for petrol run vehicles and 10% 30% [100%] more than 2500 cc for dieselrun vehicles, or with both] (b) other than (a) above 60% It is thus seen that definition of CKD kit has continued to remain unchanged except that for the words engine or gearbox or transmission mechanism not in a preassembled condition meriting rate of 10% BCD, the Notification 12/2012 had the words engine, gearbox and transmission mechanism not in a preassembled condition , also with the same concessional BCD rate of 10%. 22. Having understood the scope and canvas of the relevant notifications, we proceed to apply this knowledge to the actu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansmission has to necessarily to be read as or , since, any other interpretation would lead to absurdity and defeat the intention of the legislature, which obviously is to extend the lowest concessional rate to the highest level of knocked down parts . 25. True, in the ordinary course the word and is normally employed to express the relation of addition, adding of something to that, which preceded and generally has a cumulative sense requiring the fulfilment of all the conditions that it joins together. However, even in such a connection, it is, by force of contents, read as or (Ishwar Singh Bindra v. State of Uttar Pradesh - AIR 1968 SC 1450 / (1969) (1) SCR 219; Mohd. Abubakar Siddique v. Mustafa Shahidul Islam (2000) 2 SCC 62. The word or is normally disjunctive and the word and is normally conjunctive. But at times, the word is read vice versa to give effect to manifest the intention of the legislature as disclosed from the context. [Cable Corporation of India Vs Commission of Labour (2008) 7 SCC 680]. In our view, the word and in the above sentence necessarily have to be read in the disjunctive sense, as or , since otherwise it would lead to a absurd interpre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority has adequately addressed this contention in page 23 of the impugned Order. The adjudicating authority has found that the list of Add-on Parts includes parts like nuts, screws, hoses, cables, drive shafts, gear shaft, levers, cross members and mounting brackets . The adjudicating authority has correctly found that the manufacturer was supplying the subject goods in the form of a single product only without supplying any other part and supplying the single product under the nomenclature Automatic Transmission ; that all the other so-called Add-on Parts are merely required for integrating the gearbox/engine assembly with the car body and mounting the same on the chassis/body of the car. We find ourselves in agreement with these conclusions. 30. There is also no caveat in the concerned Notification that noninclusion of such Add-on parts would have the effect of treating the otherwise pre-assembled engine/transmission mechanism/gearbox as not pre-assembled. 31. The adjudicating authority has also exhaustively alluded to the parts physically contained in the said assemblies in their imported form as per the technical literature of the manufacturerssuppliers, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HD TRANSMISSION SUB ASSEMBLY 8HP45 N4701HI 5 9621600/20.3.2013 ASSY ENGINE N47 E84 D20OL RHD TRANSMISSION SUB ASSEMBLY 8HP45 N4701HI 6 9827661/11.4.2013 ASSY ENGINE N16 A US/KOREA ASSEMBLYTRANSMISSION GA6F21WA ANJ The detailed packing list does not include any items of description like cylinder heads, cylinder blocks, pistons, connecting rods, crankshaft, cam shaft etc. which are the components that go into the assembling of an engine. It therefore appears to reason that assembly engine imported is already a complete preassembled engine. So also, the packing list does not contain items like gearsets, torque converters, mechatronic parts etc. which are components that go into the assembling of an automatic gearbox. Hence it appears to reason that the imported transmission sub-assembly / assembly auto gearbox / automatic transmission are gear box / transmission which are already preassembled at the time of import. 34. Reference is also made to letters of appellants dt. 22.03.2013 and 04.04.2013 wherein it has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odel No.8HP45 actually manufactured by M/s.ZF Friedrichshafen AG. It does not appear to common sense that the manufacturer supplier of the gearbox would supply unfinished goods transmission mechanism to the appellants for onward exportation to their Indian arm (appellant). In any case, it has been found that each individual gearbox imported has a unique identification number which is engraved on each individual unit s metal casing by the manufacturer. The adjudicating authority has therefore correctly concluded that no manufacturer supplier would assign such a unique identification number as well as model name to a subassembly and refrained from supply remaining parts of that product. 38. Testing of transmission sub assembly / automatic transmission / auto gear box. From the facts on record, it emerges that the automatic transmission / gear box supplied by M/s.ZF, Germany have undergone standard testing procedures before they are supplied to M/s.BMW AG Germany, a fact which has been admitted by BMW India. It has also been admitted by appellants that the imported transmission sub assembly is not tested in any manner at the Chennai plant before the car assembling process. The adju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of parts pertaining to engine and transmission to be assembled to the imported engine and transmission assembly as claimed by the appellants. Only after a comprehensive analysis of all these aspects, has Dr. Ramesh Babu opined that parts list merely comprises of nuts, screws, clips etc.; that the imported engine assemblies are actually fully assembled condition which can be readily integrated to build motor car; that similarly transmission sub assemblies are automatic transmission units, otherwise known as automatic gear box. On the other hand, it is pertinent to note that the experts appointed by the appellants namely Professor A.R.Mohanty and Shri Balraj Bhanot have not mentioned in their reports that they have examined the kits in the stage that they were imported. Both have submitted their reports based on their visits to the Chennai plant of BMW India. On the other hand, Dr. N.Ramesh Babu, whose report has been relied upon by the Department, has inspected the imported goods at the stage of import itself. 41. A grievance has also been brought by appellant that crossexamination sought by them of Dr. Ramesh Babu was not granted. True, refusal to grant cross-examination in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpreted in favour of the revenue. (3) The ratio in Sun Export case (supra) is not correct and all the decisions which took similar view as in Sun Export Case (supra) stands over-ruled . 43. We have then no doubt in our mind that the goods imported by the appellants were not of the type and nature which would merit the lowest B.C.D rate of 10% as extended vide the Notification No.21/2011-Cus. and later in No.31/2011-Cus. as amended by Notification No.12/2012-Cus. The allusion made to the rulings of the AAR will also not help the case of the appellants since as pointed out, the rulings not only in the appellant s own case but also in the matter of Harley-Davidson (supra) were made firstly without any actual import of the kits and secondly before any definition of what constituted a CKD kit was inserted into the Exemption Notification No.21/2011-Cus. We are therefore of the considered opinion that the goods imported by the appellants will not benefit from the B.C.D rate of 10% but will only be eligible for higher B.C.D. rate since the CKD kits imported contained engine or gearbox or transmission mechanism in preassembled form (but not mounted on chassis or body assembly). B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re in the form of sub-assemblies; that their CKD operations fall within the purview of 344(1)(a) of the definition of CKD; that they will continue to file their Bills of Entry as was done in the past. 48. During the hearings, Ld. Senior Advocate had submitted details of 20 such instances where the imported kits had been examined by Customs Officers during the period March 2011 to April 2013 and in most of these reports, it has been confirmed that the impugned goods have been found in CKD condition. No objection was raised in the concerned inspection report. In certain cases it was also directed to verify whether the engine, gearbox and transmission mechanism are in a pre-assembled condition or not, which was also examined and answered in the negative. 49. These are facts and happenings that will stare the Customs Authorities in the face and demolish the allegation that appellant has suppressed facts of import of pre-assembled engine and preassembled transmission mechanism or that they have misstated the description of the goods to avail concessional rate of duty. 50. In arriving at these conclusions, we draw sustenance from the ratio laid down by the Hon ble Apex Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onclusion that there has been suppression on the part of the importer (respondent). We find that the assessment was done by the Customs Officers. The goods were also examined by the Customs Officers and they have found that goods as per description given in the invoice. Therefore, if there has been mistake on the part of Customs Officer in proper assessment of the goods, the respondents cannot be held liable for any suppression of facts as they have neither colluded or suppressed the facts. Therefore, the findings of the Commissioner are correct and based on evidence on record. We, therefore, find no reason to interfere with the order of the Commissioner in dropping the demand for imports made under Bill of Entry No. 82, dated 26-5-94. The appeal of Revenue is accordingly rejected. 51. Precisely for these reasons, we have no hesitation in holding that the extended period of limitation cannot be invoked in this case and hence, the differential duty liability can be confirmed and demanded only for the normal period of limitation from the date of issue of the Show Cause Notice. For this limited purpose, the matter would be required to be remanded to the adjudicating authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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