1998(07)LCX0248

IN THE CEGAT, COURT NO. II, NEW DELHI

S/Shri P.C. Jain, Member (T) and S.S. Kang, Member (J)

L.M.L. LIMITED

Versus

COMMISSIONER OF CUSTOMS, BOMBAY

Final Order No. 603/98-B2, dated 29-7-1998 in Appeal No. C/213/97-B2

CASE CITED

Collector v. Wood Craft Products Ltd. — 1995(03)LCX0070 Eq 1995 (077) ELT 0023 (S.C.) — Relied on                      [Para 5]

Advocated By : Shri R. Santhanam, Advocate, for the Appellant.

Shri A.K. Agarwal, SDR, for the Respondent.

[Order per : P.C. Jain, Member (T)]. - The appellants herein imported certain goods described in the Bill of Entry as “Spare parts” complete body unit with all fittings for Scooters - and have claimed classification under Tariff sub-heading 8714.19. However, the authorities below on the basis of Explanatory Notes to HSN in Chapter 87 of the Customs Tariff Act, 1975 have held that it is a complete Scooter in an incomplete and unfinished form. They have relied on the following General Explanatory Note on page 1543 of the Explanatory Notes to HSN which are given below :-

“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.

(C) A bicycle without saddle and tyres.

This Chapter also covers parts and accessories which are identifiable as being suitable for use solely or principally with the vehicles included therein, subject to the provisions of the Notes to Section XVII (see the General Explanatory Note to the Section)." (Emphasis supplied by Ld. S.D.R.)

2. The goods were accordingly classified under Tariff Heading 8711 90. These were also taken for the purpose of ITC policy as complete Scooters. It is in the negative list of the policy and hence licence was required. Since the licence was not available the goods have been confiscated under Section 111(d) and a penalty has also been imposed under Section 112. The appellants have been given an option to redeem the goods on payment of Rs. 15,000/-.

2.1 Hence this appeal before the Tribunal.

3. Ld. Advocate Shri R. Santhanam, has submitted that there is no Engine imported with the body Unit and therefore, it cannot be considered as complete Scooters. The goods cannot be treated as Scooters since engine is an essential part of a complete scooter and consequently it is submitted by the ld. Advocate that the authorities misdirected themselves by classifying the goods as “complete scooter” under sub-heading (sic) 8711.90.

4. On the other hand ld. SDR Shri A.K. Agarwal has submitted that the Customs Tariff of the Chapter 87 is fully aligned on the HSN. He, therefore, submits that the Explanatory Notes to HSN have a great persuasive value. He, therefore, urges that as per the Explanatory Note mentioned above the authorities below has correctly classified the goods taking them as character of complete scooter.

5. On the question of classification we are inclined to agree with the ld. SDR. Although on the basis of common parlance, ld. Advocate Shri R. Santhanam, rightly points out that a “body unit without an engine” cannot be termed “scooter”. But in view of the Explanatory Notes to HSN we are left with no doubt that the goods would be classifiable under Tariff Heading 8711.90. In arriving at the decision we have taken into account the submissions of the ld. SDR that Explanatory Note to HSN have great persuasive value in view of the judgment of the Apex Court in the case of Collector of Central Excise, Shillong v. Wood Craft Products Ltd. reported in 1995(03)LCX0070 Eq 1995 (077) ELT 0023 (S.C.).

6. Next point raised by the ld. Advocate relates to the ITC classification. The finding of the authorities below are the goods are liable to confiscation because the complete scooters are in the negative list of ITC policy April to March, 1992-97. ld. Advocate submits that parts have been specifically defined. In view of the definition of parts in Para 7 (29) and in terms of Para 7 (34) the goods will have to be classified as parts only in terms of the ITC Policy. Therefore, this will not be taken into negative list. Consequently the goods can be imported under OGL. Hence confiscation under Section 111(d) and imposition of penalty under Section 112 are not warranted. He further submitted that it is a well settled proposition that Explanatory Notes to HSN and interpretative rules of the Tariff are not applicable for interpreting the ITC Policy.

7. In opposition ld. SDR has reiterated the findings of the Adjudicating Authority.

8. We have carefully considered the facts and circumstances advanced from both sides. On this plea we agree with Shri R. Santhanam. Rules of Interpretation of Tariff and Explanatory Notes to HSN cannot be applied for the purpose interpreting the ITC Policy. When the policy states in the negative list that consumer goods are required to be imported on licence, it means only the complete motor vehicles which are understood to be in the list and not on the basis of the understanding in terms of Customs Tariff Act. Accordingly we are of the view that confiscation of the goods and imposition of penalty are not warranted. We set aside the same. Appeal disposed of in the above terms with consequential relief, if any to the appellants.

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Equivalent 1999 (105) ELT 718 (Tribunal)

Equivalent 1998 (028) RLT 0121