LECTRIX MOTORS LTD. Versus COMMR. OF CUS. (IMPORT & GENERAL), NEW DELHI>2016(06)LCX0115

2016(06)LCX0115

IN THE CESTAT, PRINCIPAL BENCH, NEW DELHI

S/Shri S.K. Mohanty, Member (J) and R.K. Singh, Member (T)

LECTRIX MOTORS LTD.

Versus

COMMR. OF CUS. (IMPORT & GENERAL), NEW DELHI

Final Order No. C/A/52516/2016-CU(DB), dated 22-6-2016 in Appeal No. C/531/2010-CU(DB)

Cases Quoted -

Collector v. Maestro Motors Ltd. - 2004(12)LCX0006 Eq 2004 (174) ELT 0289 (S.C.) - Relied on [Paras 3,5]

Departmental Clarification Quoted-

C.B.E. & C. Circular No. 1/2005-Cus., dated 11-1-2005 [Paras 3, 5]

Advocated By -

Ms. Noopur Maheshwari, Advocate, for the Appellant.
Ms. Suchitra Sharma, DR,for the Respondent.

[Order per : R.K. Singh, Member (T)]. -

Appeal has been filed against Order-in-Appeal dated 23-8-2010, which upheld the Order-in-Original dated 17-2-2010 in terms of which the benefit of concessional rate of duty @ 4% ad valorem under Notification No. 6/2006-C.E., dated 1-3-2006 inter alia available to electrically operated vehicles falling under Chapter 87 of Central Excise Tariff Act was not allowed.

2. The brief facts of the case are as under :-

The appellant imported electrically operated motor Cycles (e-bikes) in CKD condition. It was classified by Revenue under 8711 90 91. However, when it came to charging CVD benefit of concessional rate of duty (4% ad valorem) under Notification No. 6/2006-C.E, was disallowed on the ground that the Notification provided concessional rate of 4% ad valorem only on electrically operated vehicles while the impugned goods were in CKD condition which required to be assembled to make e-bike.

3. Ld. Advocate for the appellant pleaded that the interpretation of the wording of the Notification has to be the same as adopted for the purpose of classification of the goods. She argued that classification CTH 8711 90 91 is not in dispute and CTH 8711 90 91 covers electrically operated motor Cycles. As the said Notification (No. 6/2006-C.E.) allows the concessional rate of 4% ad valorem for electrically operated vehicles falling under Chapter 87, there is no ambiguity regarding the applicability of the Notification to the impugned goods. She cited the Supreme Court judgment in the case of CC, Bangalore v. Maestro Motors Ltd. [2004(12)LCX0006 Eq 2004 (174) ELT 0289 (S.C.)]. She also referred to C.B.E. & C. Circular No. 1/2005-Cus., dated 11-1-2005 which states that when cell phones are in CKD condition, they are not treated as parts, but as complete cell phone by virtue of Rule 2(a) of the General Interpretative Rules.

4. Ld. Departmental Representative, on the other hand, argued that the Notification has to be interpreted strictly as per the wordings thereof. As the said Notification grants exemption to electrically operated vehicles, it should be available to electrically operated vehicles only and not to their CKD kits which need to be assembled to make vehicles. Ld. Departmental Representative also stated that the CKD kits did not contain batteries as may be seen from the invoice dated 10-11-2009 at Page 29 of the appeal paper book (although the Id. advocate for the appellant interjected to assert that the said invoice clearly mentions chargers and therefore batteries cannot be missing from the kits).

5. We have considered the contentions of both sides. At the outset, it is to be mentioned that classification of the impugned goods as e-bikes under Heading CTH 8711 90 91 is not in dispute. Notification No. 6/2006-C.E., at SI. No. 35 of the table appended thereto allows concessional rate of duty of 4% ad valorem to electrically operated vehicles including two and three wheeled electric motor vehicles. In this scenario, once the goods have been classified to be electrically operated bikes, they clearly get covered under the scope of entry at SI. No. 35 of the table appended to the said Notification. It is so because there is no basis to treat the impugned goods as e-bikes for the purpose of classification and as parts (and not as e-bikes) for the purpose of exemption Notification. This view is supported by Supreme Court in the case of CC, Bangalore v. Maestro Motors Ltd. (supra), wherein it was held as under :-
"Thus, under this Notification what is exempted are components and parts falling within Chapter 87 of the First Schedule to the Customs Tariff Act, 1975 and goods specified in Column 3 of the Table. Thus in this Notification, unlike as in Notification No. 29/83, components in CKD packs are not exempted. Under this Notification it is only components and parts which fall within Chapter 87 are exempted. The wording is very clear. For a component and part to be exempted it must be a component or part within Chapter 87 of the First Schedule to the Customs Tariff Act, 1975. If, by virtue of Interpretative Rules, for purposes of the First Schedule to the Customs Tariff Act, 1975 the imported goods are not considered to be components and parts, then for purposes of this Notification also they cannot be said to be components and parts. In our view, CEGAT has erred in holding that the Interpretative Rule 2(a) does not apply to a Notification. When a Notification exempts goods falling within the First Schedule to the Customs Tariff Act, 1975, then the goods must be classified in the same manner both for purposes of payment of Customs duty as well as for purposes of exemption/benefit under that Notification. However if the wording of the Notification show that an item is specifically exempted then the exemption will apply to that item even though for purposes of classification it may be considered to be something else. To take this very case as an illustration, where like in Notification No. 29/83 components including components in CKD packs, were given benefit of exemption those components would get exemption even though ) or purposes of payment of duty they are classified as cars. But where, as in this case, components and parts falling within Chapter 87 are exempted, then the components and parts must be considered to be components and parts for purposes, not just for exemption but also for payment of Customs duty. If for purposes of payment of Customs duty they are not deemed to be components and parts, then they are also not components and parts for purposes of the Notification."
Similarly, C.B.E. & C, vide Circular No. 1/2005-Cus., dated 11-1-2005 (supra) also opined as under :-

"A doubt has been expressed in many Commissionerates that when all the parts required for manufacture of the Cellular phone handset are imported by the manufacturer either in the same consignment or spread out over different consignment(s), whether such imports of parts can be denied the benefits of serial No. 320 of the notification ibid., by treated them as complete handsets (in disassambled form) by virtue of Rule 2(a) of the General Interpretative Rules.

Decision : ....In case, all the parts /components of the mobile phone handset are imported in a single consignment, it would be classified as 'complete mobile handset' under CTH 852520.17 and hence it would be ineligible for benefit under SI. No. 319 or 320 of Notification No. 21/2002-Cus., dated 1-3-2002."

6. In the light of the foregoing analysis, we hold that the impugned order is not sustainable and hence is set aside. We further hold that the impugned goods are entitled to the benefit of Notification No. 6/2006-C.E. The appeal is disposed of in terms of this paragraph.

Equivalent 2016 (340) ELT 0213 (Tri. - Del.)