Important Point
In considering which Tariff Item is to apply, as per Rule 2(a) of the general rules of Interpretation of the Harmonized System, even though an article is incomplete or unfinished when it is presented for clearance, if that article has the essential character of the complete article and/or even though the complete or finished article is presented in an unassembled or dissembled form the classification must be as a complete article.

Headnote:Customs Act, 1962—Section 25(1) —Customs Tariff Act, 1975—Section 3—Tariff Items 87.02 and 87.04—Notification Nos. 29/83 and 29A/83—Import of CKD packs—Claim of benefit of Notification No. 29/83—M/s Maruti Udyog Ltd., manufacturer of motor cars imported from M/s Suzuki Motors Company Ltd. two shipments i.e. 24 CKD packs (completely knocked down condition) and 48 CKD packs respectively of passenger car components—They filed two Bills of Entry for clearing the goods which were claimed to be components of motor vehicles under Tariff Heading 8704 of the Customs Tariff—Adjudicating Authority held that consignments were to be treated as motor cars and not components—M/s Maruti Udyog Ltd. was held not entitled to the benefit of Notifications—Whether order of the Adjudicating Authority is sustainable—(Yes).
       Held : In considering which Tariff Item is to apply one has to take note of the general rules of Interpretation of the Harmonized System, Rule 2(a). (Para 7)
       Thus, as per this interpretative Rule, even though an article is incomplete or unfinished when it is presented for clearance, if that article has the essential character of the complete article and/or even though the complete or finished article is presented in an unassembled or dissembled form the classification must be as a complete article. In this case, it is fairly not being denied that the components were imported in a CKD packs. Thus what was imported was completely knocked down cars. The components imported had the essential character of a complete car even though presented in unassembled form. As per interpretative Rule 2(a) even though presented unassembled they have to be classified as a complete article. Thus, for purposes of clearance the components had to be classified as a car under Tariff Item 87.02. The finding of the Commissioner (Appeals) to the contrary is clearly erroneous and requires to be and is hereby set aside. (Para 7)
       It is settled law that to avail the benefit of a notification a party must comply with all the conditions of the Notification. Further, a Notification has to be interpreted in terms of its language. If in the Notification exemption is granted with reference to tariff items in the First Schedule to the Customs Tariff Act, 1975, then the same rules of interpretation must apply. In that case the goods will be classified, even for the purposes of the Notification, as they are classified for purposes of payment of customs duty. But where the language is plain and clear effect must be given to it. In this Notification what is exempted is components, including components of fuel efficient motor cars in semi-knocked down packs and completely knocked down packs. Undoubtedly, for purposes of levy of custom duty, by virtue of Interpretative Rule 2(a), the components in a completely knocked down pack would be considered to be cars. But in view of the clear language of the Notification the components including components in completely knocked down packs are exempted. Effect must be given to the wording of the Notification. Thus components in completely knocked down packs would get the exemption under this Notification, even though for purposes of classification they may be considered to be cars. (Para 8)
       It was submitted that for the subsequent imports the Department has granted the benefit of the Notification and allowed clearance of the components in CKD packs by granting benefit of the Notification. It was submitted that this also showed that M/s. Maruti Udyog Ltd. is entitled to the benefit of the Notification. We cannot accept such a submission. Those clearances may be because the conditions of the Notification were fulfilled in respect of those imports. Thus, merely because in those cases clearances have been allowed by itself cannot be a ground for allowing benefit of the Notification in this case. (Para 13)

JUDGMENT

S.N. Variava, J.—These Appeals are against the Judgment of the Customs Excise and Gold (Control) Appellate Tribunal (for short Cegat) dated 10th September, 1996. This Judgment is in respect of two companies, namely, M/s. Maruti Udyog Ltd. and M/s. Maestro Motors Ltd. (earlier known as M/s. Sipani Automobiles Limited). Both these Companies are manufacturers of motor cars. Apart from this common fact, the other facts are not identical. Even though Cegat has disposed of the Appeals by a common Order, the cases of these two parties would have to be dealt with separately by this Court.

2. First, the case of M/s. Maruti Udyog Ltd. is being considered.

On 23rd, April, 1982 M/s. Maruti Udyog Ltd. applied for grant of an Industrial Licence for manufacturing passenger cars and light duty utility vehicles. They also entered into a joint venture agreement and collaboration with M/s. Suzuki Motors Company Ltd. M/s. Maruti Udyog Ltd. imported from M/s. Suzuki Motors Company Ltd. two shipments i.e. 24 CKD packs (completely knocked down condition) and 48 CKD packs respectively of passenger car components. They filed two Bills of Entry bearing Nos. 118/345 and 1412/261 for clearing the goods which were claimed to be components of motor vehicles under Tariff Heading 8704 of the Customs Tariff. They also claimed benefit of Notification Nos. 29/83 and 29A/83.

3. By two Orders dated 9th September, 1983 and 30th September, 1983, the Adjudicating Authority held that the imported components being complete cars in CKD packs had the essential character of the finished product and as such the consignments were to be treated as motor cars and not components. It was held that M/s. Maruti Udyog Ltd. was not entitled to the benefit of the Notifications as the Notifications were only for components. It was further held that in any case M/s. Maruti Udyog Ltd. had not complied with the conditions of the Notifications.

4. In the Appeal filed by M/s. Maruti Udyog Ltd., the Commissioner (Appeals) by an order dated 30th April, 1985 held that the goods were component parts and not motor cars. It was also held that the Company was entitled to the benefit of Notification No. 29/83.

5. CEGAT has, by a 2 to 1 Judgment, held that both the Companies are entitled to benefit of the Notifications.

6. The questions for consideration by this Court are whether the CKD packs imported into the country could be considered to be motor cars and not components and secondly, whether M/s. Maruti Udyog Ltd. are entitled to the benefit of Notification No. 29/83.

7. The relevant Tariff Items are 87.02 and 87.04, which read as follows :

Heading Sub-heading No. and description Standard Rate of Central Excise No. of article duty Tariff Item

(1) (2) (3) (4)

87.02 Motor vehicles for the transport of 34 persons, goods or materials (including sports motor vehicles, other than those of Heading No. 87.09/120 :

(1) Not elsewhere specified 60

87.04/06 Chasis fitted with engines, bodies 34, (including cabs) and parts and

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