P.C. Jain, Member (T)

1. Since the issue involved in all the subject appeals is the same, a common order is being issued.

2. Question involved in these appeals is whether the goods described as non-ferrous forgings for synchro cone imported by M/s. TELCO Ltd. are classifiable under Tariff Heading 74.03(1) or as automobile parts under Tariff Heading 87.04/06(1) while TELCO claims the assessment as shapes and sections of copper not elsewhere specified under Tariff Heading 74.03(1). The department has assessed the goods under 87.04/06(1) as parts of motor vehicles not elsewhere specified.

2.1 The classification of the imported goods turns upon the Interpretation Rule 2(a) which is reproduced as below :-

"2(a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as imported, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished by virtue of this rule, imported unassembled or disassembled."

3. There appears to be a substantial conflict of opinion at the lower appellate levels on this issue as is apparent from the appeals filed by TELCO and filed by the department. Some Appellate Collectors/Collectors (Appeals) have held that the product is classifiable as automobile parts under Tariff Heading 87.04/06(1) whereas some others have held that the said product is classifiable under Tariff Heading 74.03(1).

3.1 Sole question to be resolved in these cases is whether the product as imported by TELCO has acquired the essential character of an automobile part. If it has acquired the character of automobile part it would be classifiable under Tariff Heading 87.04/06 (1). If it has not then undoubtedly the product would be classifiable under Tariff Heading 74.03 (1) CTA 1975.

3.2 The original adjudicating authorities of the department have held that if a forging has a definite shape and has been manufactured in a form which could be easily identified with a finished article and only certain processing or machining operations are required to complete the same into a finish article this would be treated as a finished article. The learned adjudicating authority, Collector of Customs, Bombay in one of the impugned orders dated 6-7-1982 has laid down a test as to what is meant by the expression 'essential character'. He states as follows :-

"An important aspect is whether the semi-finished stage has reached a point of no return in the sense that it could be finished only into a particular complete article. In my view the number of operations to be carried out for converting into the finished article and the cost involved is of no consideration in determining whether it has the essential character of the finished article. It is purely a question of physical identification". Applying the above test, the led. Collector held the imported goods as having acquired the essential character of the automobile part which is converted into by the appellants after some operations at their works in India.

On the other hand, we have an opinion of one of the Appellate Collectors late Shri M.G. Vaidya and quoted in one of the impugned orders dated 15-1-1982 (subject matter of A. No. 1555/82) as follows :-

"Customs have classified by taking recourse to Rule 2(a). It is mandatory. It is not a permissive rule offering an option to an importer or to the Customs. The principle of this rule has to be applied to every single article. Now the question is what exactly is meant by the essential character of the complete or finished article. One has to identify from the incomplete or unfinished article certain processes or machining impart essential operational features of a finished article? Any educated citizen who has an inquiring mind and observant eyes will easily be able to identify almost every rough forging as the starting point of a finished article. If such abi