9911796707
TMI Blog2022 (3) TMI 560X X X X Extracts X X X X X X X X Extracts X X X X ..... heir subsequent disassembling and import in such disassembled form as a kit, will not change the essential character of the goods. Therefore, these disassembled parts of motor vehicles, with specified missing parts, will be classified as the motor vehicles under heading 8703, noting that they are principally designed for the transport of persons, numbering less than ten persons. C.B.E.C. Circular F. No. 528/128/97Cus-TRU, dated 5-12-1997, wherein explaining the scope of said Rule 2(a), it is mentioned that engine, gear box, chassis, transmission assembly system, body/cab suspension system, axle front and rear are among the parts or components or sub-assemblies, considered most essential to bring into effect a finished motor car. Whether the vehicle kits being imported by the applicant would be covered under sub-category 1 as Completely Knocked Down kit or under sub-category 2 as motors cars in any other form, and if under sub-category 1, whether under 1(a) or 1(b), attracting effective rate of BCD of 15% or 30% respectively? - HELD THAT:- Further sub-categorisation under the aforesaid notification and eligibility for the lowest rate of 15% duty is based on the state of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the O/o AAR, New Delhi on 16.01.2017 had lapsed since no ruling was given within three months as mandated under Sub-section 6 of Section 28-1 of the Act. However, on constructive interpretation of the law, the applicant was advised to intimate whether they continued to be interested in obtaining ruling of this Authority, and if so re-submit an application in the Fom CAAR-I appended to CAAR Regulations, 2021, or simply affirm that the declarations made in the earlier application to AAR remain valid and unchanged. The applicant through their authorized representative affirmed vide email dated 14.05.2021 that they are desirous of obtaining the ruling and that the declarations made by them in their earlier application are valid and remain unchanged. 4.1 In response to the original application dated 16.01.2017, Airport and Air Cargo Complex, Bangalore Commissionerate had opined vide letter dated 23.02.2017 that the cars proposed to be imported in CKD condition by the applicant falls under CTH 8703 provided it satisfies the condition of rule 2(a) of the General Rules of Interpretation of Import Tariff and such cars shall be principally used for transport of persons; further, the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the importer would not be eligible for concessional rate of duty of BCD 10%. He has further submitted that however, pre-assembled engine, pre-assembled gear box but not mounted on chassis or a body assembly is eligible for BCD of 30% under Sl. No. 437(1) (b) Notification No. 12/2012-Cus dated 17.03.2012. Further, other goods mentioned in the application falls under the category of Sl. No. 437(2) (b) attracting BCD of 60% under Notification No. 12/2012-Cus dated 17.03.2012. 4.5 Commissioner of Customs, Chennai Import Commissionerate vide letter dated 03.08.2021 has submitted the following: 4.5.1 It is seen from the packing list that the CKD kit consisting of listed parts are giving an essential characteristics of motor vehicle. If these items are brought together, they can be classified under Chapter 8703. He cited Rule 2(a) of the General Rules for Interpretation and relied upon the case law of Procal Electronics India Pvt. Ltd. Vs Commissioner-2005 (185 E.L.T.A58 (S.C.); 4.5.2 Notification No. 12/2012-Customs dated 17.03,2012 has been replaced by the Notification No. 50/2017-Custons dated 30.06.2017. At present, the importer is availing the benefit of S. No. 526 (1) (b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the earliest, which has since been received vide email dated 20.07.2021.. 5.2 The applicant vide e-mail dated 20.07.2021 has submitted the following: 5.2.1 M/s VAIPL has been importing goods in CKD units condition since September 2017 for the purpose of commercial production in India; 5.2.2 M/s VAIPL has been paying BCD @ 30% as per Notification No, 50/2017-Cus. dated 30 June 2017, under Sl. No. 526(1)(b), since the engine or gearbox or transmission mechanism are imported in pre-assembled form but not mounted on a chassis or a body assembly; 5.2.3 Engine as well as gearbox are pre-assembled individual units, however, not integrated with each other in any shape or form; 5.2.4 All above mentioned imports have been assessed provisionally by the Customs Authorities ever since 2017; 5.2.5 The CKD kits are being imported at the Chennai port. Further, certain replacement items (as required) are imported in Bangalore on need basis; 5.2.6 Any parts imported in excess of CKD kits, such as replacement parts, nuts, bolts etc. are assessed on merits. 6. Having completed the procedure laid down in the CAAR Regulations, I proceed to examine the advance ruling application o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question of classification of the semi-assembled cars and the eligibility for appropriate rate of duty under the relevant notification issued under section 25 of the Customs Act, viz. No. 50/2017-Customs dated 30.06.2017. Therefore, on the basis of the scrutiny of the application, submissions made during the personal hearing and comments of the concerned Principal/Commissioner of Customs, the application is found to be valid in terms of the provisions of the Customs Act and the CAAR Regulations, and is allowed in terms of section 28-1(2) of the Customs Act, 1962 read with regulation 10 of the CAAR Regulations, 2021. 7. I now proceed to discuss the questions posed in the application and pronounce my rulings. 7.1 The first question relates to classification of partially assembled vehicles, described by the applicant as Completely Knocked Down (CKD) kits of vehicles . The following are the salient features of the said kit (refraining from describing them as CKD kits): 7.1.1 Kits relate to passenger car models of Volvo brand with their hybrid variants, i.e. (i) XC9O-D5 T8; (ii) S90-D5 T8; and (iii) XC60-D5 and T8; 7.1.2 Kits will consist of various separately identifia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished articles 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 (or falling to be classified as complete or finished by virtue of this rule), presented un-assembled or disassembled. 8.3 In the instant case, the applicant has stated that they will be importing kits of passenger cars and it is also settled, if all the parts are presented in knocked down condition and they have the essential character of a complete article, they have to be assessed as complete article, in terms of said rule 2(a) of GIR. I find that in the present case, the motor vehicles are initially assembled at site to a substantive extent for thorough verification and testing, albeit with few missing components. I hold that at this stage the vehicles have acquired the essential characteristics of motor vehicle to merit classification under heading 8703. Their subsequent disassembling and import in such disassembled form as a kit, will not change the essential character of the goods. Therefore, these disassembled parts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) As a Completely Knocked Down (CKD) kit containing 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. 15% 30% - - - - (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 more than 2500 cc for diesel-run vehicles, or with both; (b) other than (a) above 100% 60% - - - - 9.1 The question before me, therefore, narrows down to whether the vehicle kits being imported by the applicant would be covered under sub-category 1 as Completely Knocked ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
