Cus - Revenue alleged respondent imported Modems in CKD form - from evidence it cannot be said that parts imported are not further worked upon - there is also no suppression since respondent has not misdeclared goods: CESTAT
By TIOL News Service
MUMBAI, APR 30, 2014: THIS is a Revenue appeal.
The Respondents made import of electronics parts/components namely, Resistors, Inductors, Chips, Codecs, Driver CDs, Labels, Heat Sinks, Regulators, Capacitors etc. of Motherboards, Modems, Fast Ethernet Adapters, Ethernet Cards, Switches, Hubs etc.
Show Cause Notices were issued to the Respondents on the ground that the items imported are appropriately classifiable as Motherboards, Modems, Fast Ethernet Adapters, etc. in unassembled forms by applying Rule 2(a) of the General Rules for Interpretation.
The CCE, Goa dropped the proceedings and the Revenue is before the CESTAT.
It is submitted by the Consultant for the Revenue that there is no dispute that the imported parts and components were not subject to further processing but were assembled using screw driver technology to make the finished products namely PCBs, Modems etc. And hence, the finding of the Commissioner that the goods in question are parts is not sustainable as the Respondents has imported the complete finished articles, namely motherboards, Modems, Fast Ethernet Adapters, Ethernet Cards etc. in CKD condition. Reliance is placed on Rule 2 of the General Rules for Interpretation to classify the goods as complete Motherboard, Modem, Fast Ethernet Adapters, Ethernet Cards etc. Revenue has also challenged the finding of the Commissioner regarding suppression of facts on the part of the Respondent. It is contended that the Respondent had mislead the Revenue to believe that the goods were imported for the purpose of manufacturing finished goods whereas in reality they were meant for mere assembling to make the finished article.
The respondent submitted that they were having manufacturing facilities where they employ about 700 skilled, semi-skilled and other workers and that after manufacturing the finished goods out of the imported parts they are paying excise duty. They have further explained the manufacturing process which included baking, screen printing of solder paste, gluing process, Mounting of individual components on the PCB, Re-flow oven, visual inspection, Plated through hole (PTH) process, wave soldering and inspection & testing process. The reliance placed by revenue on rule 2(a) was also negated by submitting that components in question are imported for the manufacture of Motherboards & could not be categorised as import of Motherboards in complete or unfinished form (CKD); they also rely on Explanatory Notes (v) and (vii) of rule 2 (a). In the matter of limitation, it is submitted that the respondents gave the actual description of the imported goods in the BE and there is no requirement to declare the processes to be carried out on the parts imported.
The Bench observed -
++ We find that HSN Explanatory Notes, Rule 2 (a) covers the complete or finished articles presented in unassembled or disassembled condition and the same is to be classified in the same heading as the assembled article. It is usually for reasons such as requirements or convenience for handling, transportation and packing. The rule further provides that articles presented in unassembled or disassembled condition means articles, the components of which are to be assembled either by means of simple fixing devices or by riveting or welding or only simple assembly operations are involved. The Notes further provides that components shall not be subject to any further working to form complete into finished article.
++ In the present case, the processes undertaken by the Respondent as explained above are not in dispute.
++ The manufacturing process undertaken by the respondent such as screen printing of solder paste, mounting of individual components on the PCB etc. cannot be held to be that the parts imported by the Respondent are not further worked upon.
Holding that there is no merit in the contention of the Revenue on the above ground and also in the matter of time bar inasmuch as there is no evidence on record to show that the appellant had misdeclared the description of the imported goods, the Bench upheld the order of the adjudicating authority and dismissed the Revenue appeal.
(See 2014-TIOL-669-CESTAT-MUM)
