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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 ..... character of the latter. As per the HSN Explanatory Notes, even though parts of E-Rickshaw falling under CTH 8708 9900 were imported, on assembly, the said e-rickshaw is liable to be classified as complete or finished vehicle under CTH 8703 9000 provided it has the essential character of the latter - the appellant and has imported connection box for the e-rickshaw. The Connection box in an E rickshaw also known as junction box, is an electrical enclosure that protects wiring connections. It is an important safety feature that protects people from electric shock and the connections from environmental conditions. It is noted that the Tribunal in Commissioner Of Customs (Import), Mumbai Versus Videomax Electronics [ 2010 (8) TMI 422 - CESTAT, MUMBAI ] , 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. From the parts of E Rickshaw imported, it can be concluded that axles imported in these 10 consignments (Bills of Entry) are to supplement the other p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 Lakhs Twenty eight thousand Eighty three only), (including Basic Customs Duty, Social Welfare Surcharges and IGST), on the impugned goods imported vide Bills of Entry mentioned in Annexure A' under Section 28(1) of the Customs Act, 1962 along with Interest at appropriate rate under Section 28AA of the Customs Act, 1962 (d) I impose a penalty of Rs. 1,00,00,000/- (Rupees One Crore only) upon M/s. Y. C. Electric Vehicle under Section 112(a)(ii) of the Customs Act, 1962. (e) I refr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or 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 include vehicles without batteries or tyres. The ICD TKD Office Order dt 12-03-2014 classifies imports of key components-motor, axle, chassis, transmission, and controller-as complete vehicles under CTH 8703, provided they collectively form a functional vehicle. Here, all essential components are imported, enabling complete E-Rickshaw assembly. Thus, the goods fall under CTH 87039000. 7. Having heard both sides, the issues before us is classification issue with consequent rate of duty as shown bel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 1000 2 Charging Socket 1000 Charging Socket 1000 Charging Socket 1000 Charging Socket 1000 Charging Socket 1000 Charging Socket 1000 3 Connection Box 1000 Connection Box 1000 Connection Box 1000 Connection Box 1000 Connection Box 1000 Connection Box 1000 4 Digital Speedo meter 1000 Digital Speedo meter 1300 On/Off Switch 1000 Digital Speedo meter 1000 Digital Speedo meter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 that the appellant have imported certain components of the E-Rickshaw i.e.converter. charging socket, connection box, On-off switch, digital speedometer, alarm system, throttle with left grip, controller, left right switch, hand brake with wire, handle T, lamp ear, shocker, arm rest and motor. We also note that each of these items are in imported equal numbers, as is evident from the Table 2 above. Thus, it is seen from the above components, an E-Rickshaw can be assembled, even though it might be in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Commissioner of Customs, SUR (2) Shri Gauri Shankar Sinha, Deputy Commissioner of Customs, AG (3) Shri Vikash, Deputy Commissioner of Customs Import Seed (4) Shri Nalin Kumar, Deputy Commissioner of Customs Group V (5) Shri Prashant Kumar Jha, Deputy Commissioner of Customs SUB, and (6) Shri AbhinavYadav, Assistant Commissioner of Customs Import Shed. 2. A meeting of the Committee was held on 6.0-.2014 and after deliberation the matter the Committee has decided that as per Rule 2(a) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al 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 learned Authorized Representative submitted the Hon'ble High Court of Delhi in the case of Rama Krishna Sales Pvt. Ltd. Versus Union of India reported as 2019 (366) E.L.T. 273 (Del.) [31-01-2019] has relied on the aforesaid order. The relevant paras in this regard is reproduced hereinafter:- "16. It is apparent that the scope of Rule 2(a) of the Interpretative Rules is only to interpret Customs duties as applicable to an articleimported by any importer. Import of the said Rule is that even a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 determined as representing the essential character of the complete E-Rickshaw. The Committee had identified five major components/assemblies, namely, (i) transmission, (ii) Motor, (iii) axel, (iv) Chassis and (v) Controller which would essentially constitute an E-rickshaw in CKD/SKD (Complete Knock Down/Semi- Knock Down) condition. The Committee had further opined that if any two of the essential components along with the motor are missing then the remaining components could be considered as parts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld 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 that is to be assigned to General Interpretative Rule (GIR) 2(a), which reads as under :- "Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article 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 ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 them as 'set of engine'. The assembly of the components would give engine essential characteristic of engine, though some local components would be required to complete the engine. It was held that the import was of complete engine. - - It was also held that complexity of the assembly method is not required to be taken into account for purpose of application of rule 2(a). We note that the underlying principle in all case is that even if the impugned article is incomplete, as long as it h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 invoices and packing list 8...............On many occasions, the components imported by Shri Vinod Kumar Agarwal in the name of 'Electronic Instrumentation' on a particular date perfectly matched those imported by his wife in the name of 'Videomax Electronics' on the same date. (In one of these cases, the consignments covered by the Bills of Entry filed by the husband and the wife came in the same container.) There are also numerous instances of matching imports having been made by the couple on suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 in the preceding paras, the consignments imported in different B/Es put together does lead to the conclusion that Rule 2(a) of General Rules of Interpretation for classification under HSN is indeed applicable in the instant appeal. Ld. Counsel also submitted that the ICD TKD Office Order dt 12-03-2014 can not override the Exim Policy. However, we are of the opinion that the issue before us is whether the classification of impugned goods is CTH 8703 9000 as Electric Motor vehicles ..... X X X X Extracts X X X X X X X X Extracts X X X X
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