2026-VIL-856-CESTAT-DEL-CU
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CUSTOMS CESTAT Cases

Customs - Classification - Rule 2(a) of General Rules for Interpretation - Appellant, engaged in manufacturing and assembling mobile phones, imported certain goods declaring them as 'parts of mobile phones' – Dept reclassified the imported goods as complete mobile phones in CKD/SKD condition under the tariff item applicable to mobile phones attracting a higher rate of basic customs duty, by invoking rule 2(a) of the General Rules for Interpretation of the Customs Tariff Act, 1975, confirmed differential duty with interest, confiscated the goods with an option to redeem on payment of redemption fine, and imposed penalty for improper importation - Whether the imported goods, being parts of mobile phones accompanied by locally procured components, could be treated as complete or finished mobile phones by invoking rule 2(a) of the General Rules for Interpretation so as to attract reclassification and consequent differential duty liability – HELD – The Rule 2(a) of the General Rules for Interpretation stipulates that incomplete or unfinished goods must possess the essential character of the complete or finished goods for them to be classified as such. The burden to establish reclassification lies squarely upon the department and not upon the assessee - Further, the Chartered Engineer engaged by the Department himself categorically opined that the unassembled parts imported by the appellant form an incomplete mobile phone and the goods were without battery essential for power backup and without camera, they required fitment of additional parts along with some basic manufacturing process - Since the expert report of the Chartered Engineer did not conclusively establish that the imported parts possessed the essential character of a complete or finished mobile phone, it is the department that bears the burden of proving reclassification by adducing proper evidence - The impugned order erred in placing the burden upon the appellant to demonstrate that the goods were not complete mobile phones. The view taken by the Principal Commissioner that the goods were complete mobile sets by virtue of rule 2(a) of the General Rules for Interpretation cannot be sustained – The impugned order is set aside and the appeal is allowed
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GSTAT Appeal filed wrongly...
By CA Vivek Jalan

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