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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 ..... placed on M/S. RAMA KRISHNA SALES PVT. LTD. VERSUS UNION OF INDIA AND ORS. [ 2019 (2) TMI 149 - DELHI HIGH COURT] in which Delhi High Court dealt with a case where some parts of E-rickshaw were imported by the petitioner and those parts together deserved to be classified under the Customs Tariff as e-rickshaw. The question was whether the petitioner was also required to meet the policy condition for import of new vehicle of the import policy, where it was held that 'There is merit in the petitioner s contention that it cannot obtain a type approval under Rule 126 of the Motor Vehicles Rules, since it is not importing a motor vehicle but only certain parts thereof. The petitioner has imported these parts for selling the same to manufacturers. The manufacturers in turn are required to obtain a type approval under Rule 126 of the said Rules for manufacture of the E-Rickshaw.' From the above, it is obvious that the term motor vehicle used in various clauses of Policy Note II to Chapter 87 can only apply to complete vehicles and cannot apply to vehicles in CKD condition or to incomplete vehicles. In importing motor cycles in CKD condition through ICD, Garhi Harasu, the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 5,00,000/- under section 125 and also imposed a small fine of Rs. 2,00,000/- under section 112(a) on the appellant. 6. Shri B. L. Narasimhan, learned counsel made the following submissions: (i) The port restriction as per the policy condition no. 2(II) (d) of Chapter 87 of ITC (HS) of the Foreign Trade Policy only restricts the import of new vehicles; (ii) As per condition no. 2(I)(a), for the purpose of this policy, new vehicle means a vehicle that is not manufactured/ assembled in India. The motor cycles in CKD condition were not manufactured at all. They will be manufactured /assembled in their factory after import; (iii) General Interpretative Rule 2(a) of the Customs Tariff requires such vehicles in CKD condition to be classified as vehicles under the Customs Tariff but this GIR 2(a) does not apply to the policy conditions of ITC (HS). He placed reliance on: LML Limited vs. Commissioner of Customs, Bombay [1999(105) ELT 718 (Tri-Bom)] upheld by the Supreme Court [1999(107) ELT A 119 (SC)] Rama Krishna Sales Pvt. Ltd. vs. Union of India [2019 (2) TMI 149- Delhi High Court] (iv) Since there is no port restriction on import of motor cycles in CKD condition, there was no viol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authority under the Motor Vehicle Rules as per the FTP; (vii) In view of the above, the appeal may be dismissed. 8. We have considered the submissions advanced on both sides and perused the records. 9. Goods imported into India are subject to restrictions and prohibitions under the Foreign Trade Policy framed under the Foreign Trade (Development Regulations) Act, 1992, under the Customs Act and other laws. The Foreign Trade Policy classifies all goods into a 8 digit ITC (HS) classification similar to the Customs Tariff. Against each 8-digit code, the import policy indicates if the import is prohibited (import not allowed), restricted (import requires a licence from the Director General of Foreign Trade) or free . In addition, every Chapter of the ITC(HS) classification has some policy conditions which must also be met in every import. These conditions could be those imposed under the FTP itself or those imposed under some other law and reflected in the ITC(HS) for ease of reference. 10. In Chapter 87 (under which the imported goods fall), policy note 1 deals with import of second hand or used vehicles and policy note 2 deals with import of new vehicles. It reads as follows: (2) (I) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by applying General Interpretative Rule 2(a), they cannot be so classified for the purpose of ITC(HS) classification for deciding whether the goods are freely importable, restricted or prohibited. The submission of the learned authorised representative for the Revenue is that if vehicles in CKD condition are vehicles for classification under the Customs Tariff, they are also vehicles under ITC(HS) classification. 12. The submission of the learned counsel for the appellant insofar as it pertains to classification under ITC (HS) cannot be accepted for more than one reason. ITC (HS) classification, like the Customs Tariff, is based on the Harmonised system of Nomenclature (HSN) which is universally accepted. It is a well settled principle that when deciding classification, HSN notes can be referred to. The General Rules of Interpretation including GIR 2(a) are not an innovation of the Customs Tariff but have been adopted from the HSN according to which goods in CKD and SKD conditions should be classified as complete goods. While classifying the goods under ITC (HS), one cannot take a different stand. 13. Secondly, as is evident from the Bills of Entry submitted by the appellant, it h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons but also some other restrictions. 19. As per Policy Condition 2 (II) (a), a new vehicle shall (i) have a speedometer indicating the speed in Kilometers per hour; (ii) have right hand steering, and controls (applicable on vehicles other than two and three wheelers); (iii) have photometry of the headlamps to suit keep-left traffic; and (iv) be imported from the country of manufacture. Needless to say that in CKD condition, the motor vehicle is just a combination of all parts and it cannot have these parts until they are assembled together. Therefore, a motor vehicle in CKD condition cannot fulfil this policy condition. 20. As per policy condition 2(II) (b), a new vehicle shall conform to the provisions of the Motor Vehicles Act, 1988 and the rules made thereunder, as applicable, on the date of import. The provisions of the Motor Vehicles Act cannot obviously be met at the time of import of vehicle in CKD condition. For instance, there cannot be functioning brakes and headlights until these are assembled. 21. As per policy condition 2(II) (c), the importer should have a valid certificate of compliance as per the provisions of rule 126 of Central Motor Vehicle Rules (CMVR), 1989, f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the policy even in case of incomplete e-vehicles. The relevant portion of this order is reproduced below: 6 . View of the appellants is that, present products will be assembled in India to make a vehicle. We find such narrow view of the issue will not lead to proper appreciation of the licensing condition. Admittedly, the goods imported are motor vehicle brought in CKD condition, for the ease of import and transport. Necessarily, these items are to be used as motor vehicle in India and are governed by Motor Vehicle Rules. There is no dispute on this aspect. When the appellants intended to import motor vehicle , the requirement of Motor Vehicle Rules are to be complied. The Policy stipulations clearly make out that various conditions including Type Approval Certificate by the competent authority is a mandatory requirement for any vehicle imported into India. We also note that the present vehicle (in CKD condition) was imported having electric capacity of more than 250 watt which as per mandatory requirement is to be registered with the Motor Vehicle Authority. 7 . Considering these stipulations of Policy and the conditions of CMVR, we are of the considered view that the importe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icable in respect of a manufacturer or an importer of motor vehicles. However, such manufacturer or importer is required to submit a prototype of the vehicle for testing by the specified organizations. Clearly, a prototype approval is not available for parts of a motor vehicle. The petitioner is an importer of certain parts of an E-rickshaw, which are intended to be sold to manufacturers. There is merit in the petitioner s contention that it cannot obtain a type approval under Rule 126 of the Motor Vehicles Rules, since it is not importing a motor vehicle but only certain parts thereof. The petitioner has imported these parts for selling the same to manufacturers. The manufacturers in turn are required to obtain a type approval under Rule 126 of the said Rules for manufacture of the E-Rickshaw. 25. Both the above cases dealt with the question whether type approval was required for an incomplete vehicle which deserved to be classified as a complete vehicle under the Customs Tariff. The Tribunal held in Olympic exports that type approval was required. Later, in Rama Krishna Sales, Delhi High Court examined the question and the actual CVMR 126 and held that it applies to only manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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