Commissioner of Customs (Port-Import) Vs Authority of Advance Rulings (Madras High Court)
Conclusion: Until all the components of the complete article were presented together for assessment at the same point of time, Rule 2(a) of General Interpretative Rules could not be invoked to classify the parts as complete article. It was also a settled position in law that the goods would have to be assessed in the form in which they were imported and presented on import and not on the basis of the finished goods manufactured after subjecting them to some process after the import was made.
Held: In the instant case, Revenue challenged the order dated 20.11.2015 passed by the first respondent – Authority for Advance Rulings (AAR) with respect to Application filed by second respondent – M/s BMW India Pvt Ltd (BMW India). It was held that six essential components viz., Engine along – with Transmission Unit, Door Panel, HVAC and Cooling Module, Exhaust System and Axle were being procured from vendors in India. Now, applying the 1997 circular, it would be clear that in view of the fact that these six parts were being procured locally the import could not be stated to have the essential character of a motor vehicle inasmuch as it was clarified that the following parts could be construed as most essential to bring into effect, a finished motor vehicle viz., Engine, Gear Box, Chassis, Transmission Assembly System, Body/Cab, Suspension System, Axel Front and Rear. It was clarified that if all these components or parts or sub assemblies were imported, Rule 2(a) of the General Interpretative Rules would come into play since it was possible to take a view that when all these parts, components or sub assemblies when put together would have the essential character of a complete or finished motor vehicle. Importantly, it was also clarified that if a few of these components or parts of sub assemblies were not imported but were manufactured or purchased locally it would then be difficult to take a view that the import of the other components or parts or sub assemblies had the essential character of a complete or finished motor vehicle. The facts considered by the Advance ruling would show that at least 3 out of the six components viz., Engine, Transmission, Axle found as essential for a motor vehicle in terms of the circular was procured locally. It might be relevant to note that it was found by the Advance Ruling Authority that the total number of parts proposed to be imported by the applicant would be 1940 and 1436 (depending on the model of the motor vehicle). The above parts were imported from different entities in different consignments at different points of time, thus applying the decision in Sony India and L.G. Electronics to the facts recorded by the 1st Respondent, Rule 2 A of G.I.R. would not apply. The order of the 1st Respondent that the import of components/parts/sub-assemblies by the applicant would be classified under their respective headings / sub-headings of the Customs Tariff Act, 1975. Thus, writ petition was quashed.
