2024-VIL-759-MAD-CU
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CUSTOMS High Court Cases

Customs - Revenue challenge to Advance Ruling order passed by the Authority for Advance Rulings (AAR) in favor of assessee-Respondent had sought a ruling on the classification of its imports of components/parts/sub-assemblies for manufacturing motor vehicles under its new business model - Whether the Respondent’s import of parts and sub-assemblies should be classified as motor vehicles or CKD kits under the Customs Tariff Act, 1975 – HELD - the Respondent’s change in business model constitutes a new "activity" under the Customs Act, making the Advance Ruling application maintainable - Applying the principles laid down by the Supreme Court in Sony India and L.G. Electronics cases, it is held that Rule 2(a) of the General Interpretative Rules cannot be invoked as the assessee is not importing all the essential components of a motor vehicle, with six parts being locally sourced - until all the components of the complete article are presented together for assessment at the same point of time, Rule 2(a) cannot be invoked to classify the parts as complete article - the import of components / parts / sub-assemblies by the Respondent will be classified under their respective headings / sub-headings of the Customs Tariff Act, 1975 - the Revenue writ petition is dismissed upholding the Advance Ruling - Relevance of the decision in Westinghouse Saxby - The Revenue placed reliance on the above decision of the Apex Court in Westinghouse Saxby to submit that the order of the Advance Ruling is erroneous – HELD – The Westinghouse Saxby was a case of relays manufactured under the Excise Act and the question was whether it would fall under Tariff Item 8608 or 8536.90, premised on the question as to which of the two Entries is more specific and Rule 3 (a) of the General Interpretative Rules were considered. However, what falls for consideration in the present case is Rule 2 (a) of the General Interpretative Rules and thus reliance on the above judgment which deals with Rule 3(a) of GIR is misplaced.
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