Case Law Details
In re Volvo Auto India Private Limited (CAAR Delhi)
vehicle kits being imported by the applicant would be covered under sub-category 1 as Completely Knocked Down kit or under sub-category 2 as motors cars in any other form; and if under sub-category 1, whether under 1(a) or 1(b), attracting effective rate of BCD of 15% or 30% respectively.
The applicant has submitted that the cars are being imported as CKD kit, which has also been accepted by the concerned Commissioners of Customs. This contention is based on the description of the goods being imported, the procedure of putting in place the semi-assembled cars at site, disassembling thereof before import into India. The alternative form in which the cars can be imported would be as Completely Built Unit (CBU). It is evident that these kits being imported are not in the said form, being in a state which is not marketable and roadworthy, besides not including certain parts and final operating software. Therefore, I hold that the cars being imported are in CKD condition, falling under sub-category 1, without belabouring the same.
9.3 Moving forward, I find that the further sub-categorisation under the aforesaid notification and eligibility for the lowest rate of 15% duty is based on the state of assembly of three critical parts/components of car, namely engine, gearbox and transmission mechanism. I find that the applicant has clearly stated that the CKD kits include pre-assembled engine and gear-box, which has also been accepted by the concerned Commissioners of Customs. I note that the applicant has clearly mentioned in para 9 of Annexure 1 that the parts comprising the CKD include “pre-assembled engine” and “pre-assembled gearbox”. Further, they are not mounted on a chassis or a body assembly. Therefore, I find that the CKD kits will fall under sub-category 1(b) and attract effective rate of BCD of 30%, being ineligible of the lower rate of 15% since the engine and gear-box are being imported in pre-assembled condition.
9.4 In coming to my aforesaid findings, besides relying on the General Rules for Interpretation of Import Tariff, Harmonized Commodity Description and Coding System of the World Customs Organization, to which India is a signatory, I have also taken note of the decisions of erstwhile Authority for Advance Rulings in Re: Oracle India Pvt. Ltd., 2012 (277)E.L.T. 128 (A.A.R.) and Re: BMW India Pvt. Ltd., 2016(332)E.L.T.537(A.A.R.).
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