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TMI Blog2025 (2) TMI 1119X X X X Extracts X X X X X X X X Extracts X X X X ..... ance audit of the Appellant's Business premises in April 2021, a consultative letter no. DLCUSADT/104/Circle-3/2021 dt. 20.04.2021 was issued to the appellant stating that the importer had mis-classified the imported items under CTI 8708 9900 and paid BCD@ 15%, SWS@ 10% and IGST @28%. The department alleged that the said items were correctly classifiable under CTI 8703 90 00 and consequently duty payable was BCD@125%, SWS@ 10%, and IGST @28%. Consequently, a show cause notice was issued and the impugned order was passed. 3. Considering the written reply to SCN from the Noticee and the submissions made by the Noticee during the Personal Hearing, the Adjudicating authority vide the impugned has ordered as follows:- "(a) The imported goods is ordered to be classified under 87039000 instead 87089900 as classified by the importer (b) The impugned goods are confiscated under Section 111(m) of the Customs Act, 1962. However, I refrain from imposing any redemption fine under Section 125 of the Customs Act, 1962. (c) I order recovery of differential duty amounting to Rs. 14,82,28,083/- (Rupees Fourteen crore Eighty two Lakh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As per the HSN Explanatory Notes , incomplete or unfinished vehicles are classified under the heading of their corresponding complete vehicles if they have the essential character of the latter, as outlined in General Interpretative Rule 2(a). Examples include motor vehicles missing wheels, tyres, or batteries. Ld. AR submitted that the importer has brought in complete sets of essential E-Rickshaw components, including converters, charging sockets, controllers, throttles, motors, and more. For example, under Bill of Entry No. 3557682 dated 07.06.2019, 1,000 sets of these components were imported, indicating the intent to assemble complete E-Rickshaws. Similar patterns are noted in other Bills of Entry (Annexure D). b) General Rules of Interpretation: Rule 2(a) states that incomplete or unassembled items are classified as complete if they possess the essential character of the finished article, even when imported unassembled. c) CBIC Circular & ICD TKD Office Order: The CBIC Circular No. 55/1995-CUS specifies that incomplete, unassembled articles should be treated as complete if they acquire the essential character when assembled. For automobiles, examples includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant imported 1000 sets of the above mentioned essential items. Thus, it appears from the above that the appellant had imported most of the E-Rickshaw components. 11. After considering the arguments of both the counsels on this issue, we have examined to note as to what the common parts of E Rickshaw are that would constitute a complete E Rickshaw. TABLE-1 The components listed in the above are the most common parts and components of E Rickshaw as noted from websites, which are essential for making up an E Rickshaw. 12. The learned Authorized Representative in his submissions demonstrated as to how the parts of E Rickshaw were imported, which is reproduced below:- TABLE-2 S. PARTS QUAN TITY PARTS QUAN TITY PARTS QUAN TITY PARTS QUAN TITY PARTS QUAN TITY PARTS QUAN TITY NO (Pcs.) (Pcs.) (Pcs.) (Pcs.) (Pcs.) (Pcs.) B/E No. and date 317563 2 10.05. 2019 321846 2 14.05. 2019 355768 2 07.06. 2019 383616 3 27.06. 2019 422763 3 26.07. 2019 461977 7 23.08. 2019 1 Converter 1000 Converter 1000 Converter 1000 Convert er 1000 Converter 1000 Converter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; 18 Axle for motor 200 19 Hall plate for motor 200 13. A comparison of the contents of Table-2 with the contents of the with Table 1, it is clear that most of the common & essential parts of E-Rickshaw have been imported . We are convinced from the above tables that that the appellant had indeed imported most of the E-Rickshaw components which by merely assembling these components, an E-Rickshaw can be generated . 14. We find that the HSN Explanatory Notes for the Chapter 87 states as follow: "An incomplete or unfinished vehicle is classified as the corresponding complete or finished vehicle provided it has the essential character of the latter [see Interpretative Rule 2 (a)], as for example: (A) A motor vehicle, not yet fitted with the wheels or tyres and battery, (B) A motor vehicle not equipped with its engine or with its interior fittings, and (C) A bicycle without saddle and tyres". 15. In the instant case, we note tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r attention to the office order dated 12.03.2014 is shed by port of import i.e. Principal Commissioner, Customs (Import) New Delhi (ICD TKD). It was submitted that a Committee was constituted in 2014 by the Commissioner of Customs ICD TKD to decide as to what percentage of components/assemblies combine together make E-rickshaw in CKD SKD as per Rule 2(a) of the Interpretative Rules to the First Schedule to the Customs Tariff Act, 1975. On the basis of recommendations of this Committee, an Office Order dt 12-03-2014 from C.No. VIII/ICD/TKD/6AG/104/2013/pt was issued, which is reproduced as below: "C.No. VIII/ICD/TKD/6AG/104/2013/pt Dated 12-3-2014 OFFICE ORDER A Committee was constituted by Commissioner of Customs ICD TKD New Delhi comprising of following below mentioned officers to decide up as to what percentage of components/assemblies combine together make E-rickshaw in CKD SKD as per Rule 2(a) of the Interpretative Rules to the First Schedule to the Customs Tariff Act, 1975. (1) Shri Karamvir Singh, Joint Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em or the gearbox is essentially connected to the electric motor through a shaft, which then connects to the motor's wiring that would likely be routed through a dedicated connection box for managing the electrical power coming from the battery controller to the motor; effectively making the gearbox indirectly linked to the electrical connection points. This makes the component an integral part of the transmission system. In addition, we also note that the appellant has imported identical numbers of other parts of an e-rickshaw. Therefore, we are of the view that with the three major components/assemblies in addition to the other components provide essential characteristics to make a complete E-rickshaw in CKD SKD condition, classifiable at 8703 have been imported. In addition, a perusal of the proximity of imports vide various Bills of Entry importing the parts of an E-Rickshaw establishes that complete e-Rickshaw in CKD/SKD condition was imported by the appellant. 19. The learned Counsel for the appellant has raised doubts as the extent to which the said Office Order issued by ICD TKD Commissionerate can be relied upon. In this context, we note that the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... motor any two of the essential components mentioned above are missing then it may be considered as parts of electric rikshaw falling under C.H 8708 and will not attract the provisions of Motor Vehicles Act, 1988. All officers are accordingly directed to decide all pending matters on the above lines. 3. This issues with the approval of the Commissioner of Customs, ICD TKD New Delhi. (Karamvir Singh) Joint Commissioner of Customs (SUB) ICD, TKD, New Delhi." 18. It is apparent from the above that the High Powered Committee was constituted to decide as to what percentage of components/assembles combined together should be considered as an E-rickshaw for the purposes of Rule 2(a) of the Interpretative Rules. 19. The aforesaid Office Order indicates the combination of essential components and assemblies of E-Rickshaws that are required to be considered as the finished article (a complete E-Rickshaw). The aforementioned Office Order has to be read in the context of Rule 2(a) o fInterpretative Rules. It is, at once, clear that the import of the Office Order is that the duties as applicable to import of E-Rickshaws would also be applicable to the components which are dete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. reported in 1995 (77) E.L.T. 23 (S.C.)" We note that the aforesaid case relies on the HSN Explanatory Notes of Chapter 87 of the Customs Tariff Act, 1975. The said CESTAT Order has also been upheld by the Hon'ble Supreme Court [1997 (107) ELT A119 (S.C.)]. We also note that the Apex Court in the case of Pioneer Embroideries Ltd. Versus Commissioner of Customs, Mumbai [2015 (322) E.L.T. 602 (S.C.) [22-07-2015] held as follows:- "3. The Commissioner, after adjudicating the matter, held that the old machines were non-computerised and merely because the Jacquard Control Device Reading System was installed in these machines after its import into India thereby making the same as computerised machines, would not give it a character of "computerised embroidery machines" at the time of import. The Customs, Excise & Service Tax Appellate Tribunal (hereinafter referred to as 'CESTAT') has affirmed the aforesaid view of the Commissioner resulting into dismissal of the appeal filed by the appellant-assessee against the order of the Commissioner [2004 (178) E.L.T. 933 (Tri. - Bom.)]. It is this judgment of the CESTAT which is in appeal before us. The matter rests on the meaning t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tem' supplied with all material except belt (as belt was to be procured from market and fitted by buyer) has to be classified as 'Belt Conveyor' as per rule 2(a), as it has essential character of final product. c) In Thomson Consumer Electronics v. CC 2004 (164) ELT 292 (CESTAT),parts of audio system were imported in SKD condition It was held that it has to be classified as 'audio system'. [During relevant period, parts were freely importable but audio system was not freely importable]. d) In Varshatronics v. CC 1999(106) ELT 89 (CEGAT), it was held that washing machine imported in SKD condition (excepting a few parts) would be classifiable as 'washing machine', applying rule 2(a). Further, goods can be confiscated if import of full machine without licence is prohibited. [In this case, import of full machine was prohibited but parts could be imported without import licence. The assessee imported almost all the components to show that he is importing parts and not the whole machine]. e) In CC v. Hindustan Motors Ltd. 2003 (156) ELT 155 (CESTAT), almost all components of engine were imported in one consignment. Invoice showed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y imported in all these consignments( Bills of Entry) is commercially comparable which is around 1200 Nos. In this context, we note that the Tribunal in Commissioner Of Customs (Import), Mumbai Versus Videomax Electronics reported as 2011 (264) E.L.T. 466 (Tri.Bom) [27-08-2010], the CESTAT clubbed the consignments of two different importers namely M/s. Electronic Instrumentation and M/s. Videomax Electronics to come to conclusion that the parts imported by these two importers can be clubbed together and Law is made applicable to the assembled resultant product. The relevant paras are reproduced. "1............M/s. Electronic Instrumentation (proprietor: Shri Vinod Kumar Agarwal) and M/s. Videomax Electronics (proprietress: Smt. SnehLata, w/o. Shri Vinod Kumar Agarwal) have imported components/parts required for electronic goods, namely, rechargeable lights and radio cassette recorders, during the period from April, 1997 to February 1998. These imports were made in several consignments during the said period. A set of Bills of Entry were filed by Electronics Instrumentation and another set by Videomax Electronics. These Bills of Entry were accompanied by the respective invoi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is squarely covered by the ratio of the Apex Court's decision in Phoenix case, the facts of which are similar to the facts of the present case." This order was upheld by Supreme Court vide order dated 7-1-2011 in Electronic Instrumentation v. Commissioner [2011 (270) E.L.T. A90 (S.C.)]. 22. We note that from the parts of E Rickshaw imported as listed in Table 4 supra, it can be concluded that axles imported in these 10 consignments (Bills of Entry) are to supplement the other parts imported in the 8 each consignments ( Bills of Entry) meant for assembly of e-Rickshaws. We note that the impugned order has relied on the case law of Commissioner Of Customs (Import), Mumbai Versus Videomax Electronics [2011 (264) E.L.T. 466 (Tri.-Bom) [27-08-2010] which was upheld by Supreme Court in Electronic Instrumentation v. Commissioner [2011 (270) E.L.T. A90 (S.C.)] while addressing the submissions made by the appellant. 23. Ld. Counsel for the Appellant submitted that the Rule 2(a)of general Interpretative Rules is not applicable because the unfinished and incomplete goods does not have the essential character of the finished or complete goods. However, as discussed i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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