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TMI Blog2024 (8) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned order holds that this port restriction applies to new vehicles imported in CKD condition and, accordingly, upheld the confiscation of the goods imported by the appellant through ICD Garhi Harasu (which is not a permitted ICD), imposition of redemption fine and imposition of penalty. Revenue supports this position. According to the appellant, this port restriction does not apply to vehicles imported in CKD condition. 4. We have heard Shri B L Narasimhan, learned counsel for the appellant and Shri Rakesh Kumar, learned authorised representative for the Revenue and perused the records. 5. There is no dispute that the appellant had imported motor cycles in CKD condition under two Bills of Entry through ICD, Garhi Harasu. There is also no dispute that under the Customs Tariff they were correctly classified as motor cycles and the appropriate amount of duty, after applying the exemption notifications, was paid. However, since they were imported through ICD Garhi Harasu- an ICD through which import of new vehicles is not permitted, the Joint Commissioner confiscated the goods under section 111(d) of the Customs Act, 1962 [the Customs Act] and allowed them to be redeemed on a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rhi Harasu since it was close to their factory and that it was a bonafide mistake, waived personal hearing and requested that the consignment may be cleared; (iii) Since the goods were imported contrary to prohibition imposed under the FTP, they were liable to confiscation under section 111(d) of the Customs Act and the appellant was liable to penalty under section 112 of the Customs Act; (iv) Import of vehicles is restricted to some large ports and ICDs which have better control and regulations and they are not allowed to be imported through other ports and ICDs; (v) Therefore, there was no error in the impugned order upholding the confiscation, imposition of redemption fine and penalty; (vi) Since motor cycles were imported in CKD condition, they were classified as such and duty was paid. It is not open to the appellant to argue that while they were motor cycles for the purpose of paying duty and claiming exemption, they cease to be so for the purpose of port restrictions under the FTP. He placed reliance on M/s. Olympic Exports vs. Commissioner of Customs, New Delhi [2019 (365) ELT 114 (Tri-Del)] in which this Tribunal held that vehicles imported in CKD condition also re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nto India shall, (i) at the time of importation, have valid certificate of compliance as per the provisions of rule 126 of Central Motor Vehicle Rules(CMVR), 1989, for the vehicle model being imported, issued by any of the testing agencies, specified in the said rule; (ii) be responsible for all the provisions assigned to the manufacturer as per Rules 122 & 138 of CMVR, 1989 and for issuing Form 22, as per provisions of CMVR, 1989; and (iii) give an undertaking in writing that the proof of compliance to conformity of production as per rule 126A of CMVR shall be submitted within six months of the imports. In case of failure to do so, no further import of new vehicle of that model shall be allowed thereafter. d. The import of new vehicles shall be permitted only through the Customs port at Nhava Sheva, Kolkata, Chennai and Chennai Airport, Cochin, ICD-Tughlakabad and Delhi Air Cargo, Mumbai Port and Mumbai Air Cargo Complex, ICD Talegaon Pune. xxxxxxxx " 11. The question to be decided is whether the expression ' motor vehicles' in 2(II) (d) above also includes vehicles imported in CKD condition or it includes only completely built units. The submission of the learned couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st each should be examined applied. Some parts may not even fall under the same Chapter (for instance, tyres, battery, etc, may fall under different chapters themselves). 15. It will also open a new set of complications. Where import of a good is prohibited or restricted, one may simply divide it into two parts by opening a few nuts and bypass restrictions. Conversely, if the entire good is allowed to be imported, an ingenious officer may start examining individual parts to see if any of them is prohibited and seize some parts. 16. Therefore, the appellant correctly classified the imported goods in its Bills of Entry correctly by applying GIR 2(a) both under Customs Tariff and under ITC (HS). 17. The policy conditions mentioned in any Chapter of the policy stand on a different footing because they are not linked to the ITC (HS) classification and are in the form of plain text. 18. The question that remains to the be decided is what is the scope of 'motor vehicles' in Note 2 (II) (d) and whether it includes those in CKD condition. The Note itself is silent and it neither says that it includes vehicles in CKD condition nor does it say that it does not. So, the meaning of this exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Automotive Technology, Manesar, or the Northern Region Farm Machinery Training and Testing Institute, Hissar (for testing of combine harvester) and such other agencies as may be specified by the Central Government for granting a certificate by that agency as to the compliance of provisions of the Act and these rules: Provided further that the procedure for type approval of certification of motor vehicles for compliance to these rules shall be in accordance with the AIS: 0117-2000, as amended from time to time. Provided that in that in respect to the vehicles imported into India as completely built units (CBU), the importer shall submit a vehicle of that particular model and type to the testing agencies for granting a certificate by that agency as to the compliance to the provisions of the Act and these rules." 22. The above Rule requires the prototype to be tested by testing agencies and approved. It goes without saying that when the motor vehicle is imported in CKD condition, it will not be possible to test it nor will it be possible to grant type approval to a vehicle which has not even been assembled. Therefore, this can only be meant for motor vehicles which have been fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 of the Central Motor Vehicles Rules, 1989 which reads as under :- "126. Prototype of every motor vehicle to be subject to test. - On and from the date of commencement of Central Motor Vehicles (Amendment) Rules, 1993, every [manufacturer or importer] of motor vehicles [including trailers, semi-trailers and modular hydraulic trailer] [including registered association (identified by the concerned State Transport Department) for E-rickshaw wherever applicable] shall submit the prototype of the vehicle to be manufactured or imported by him for test by the Vehicle Research and Development Establishment of the Ministry of Defence of the Government of India or Automotive Research Association of India, Pune, or the Central Farm Machinery Testing and Training Institute, Budni (MP) or the Indian Institute of Petroleum, Dehradun, or the Central Institute of Road Transport, Pune, or the International Centre for Automotive Technology, Manesar, or the Northern Region Farm Machinery Training and Testing Institute, Hissar (for testing of combine harvester) or the Global Automotive Research Centre, Chennai and such other agencies as may be specified by the Central Government for granting a cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under ITC(HS). The appellant itself also classified the goods accordingly in the Bills of Entry indicating the same heading under Customs Tariff and in RITC. (b) The policy conditions in Chapter 87 are, however, not linked to any particular heading and are in plain language. (c) The expression 'motor vehicles' has been used at multiple places in Condition 2 to Chapter 87 and if this expression is interpreted as including motor vehicles in CKD condition, it will result in absurd consequences. Therefore, this expression cannot mean 'motor vehicles' in CKD condition and can only mean completely built vehicles. (d) Therefore, policy condition no. 2 II (d) to Chapter 87 of ITC (HS) classification which restricts the ports and ICDs through which the vehicles can be imported does not apply to vehicles imported in CKD condition. Vehicles in CKD condition can be imported from any port or ICD. (e) Therefore, in importing motor cycles in CKD condition through ICD, Garhi Harasu, the appellant had not violated any prohibition and the imported goods were therefore, not liable to confiscation under section 111(d). Consequently, no redemption fine or penalty was imposable on the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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