CC Vs. HINDUSTAN MOTORS LTD.

JUDGEMENT

(1.) IN these three appelas, filed by Revenue, the issue involved is whether the Respondents, M/s. Hindustan Motors Ltd., have imported complete Diesel/Petrol Engines in unassembled condition as claimed by the Revenue or as parts/components of such engines as confirmed by the Commissioner (Appeals) under the impugned common Order No. 6 -8/2001 dated 28.12.2001.

(2.) MS . Neeta Lal Butalia, learned SDR, mentioned that M/s. Hindustan Motors Ltd. manufactures diesel and petrol engines for automobile car, etc.; that they imported the impugned goods from their collaborator M/s. Mitsubishi Motors Co. and classified the same under specific Tariff headings of the Customs Tariff applicable to individual parts; that the Bill of Entry and related Purchase Order, however, revealed that they had placed orders for specific numbers/sets of Engines/Transmission components and addons. she, further, mentioned that the Respondents have filed 104 Bills of entry; that components covered under each Bill of Entry were specific numbers/sets of engines in unassembled/CKD condition; that they used to place orders for specific numbers/sets of engine which their Collaborators used to supply them in unassembled/CKD condition under the cover of one single invoice which were subsequently cleared by filing Bill of Entry; that each bill of entry covered specific number of Petrol/diesel engine in unassembled/CKD condition. She emphasized that what was proposed to be imported by them under each Bill of Entry were not individual parts/components of engines but in fact complete Diesel/Petrol Engines of a particular Model Number in unassembled/CKD condition; that all the parts/components cleared against each Bill of Entry when assembled would have the essential characteristics of specific numbers of complete I.C. Engine; that the quantity of indigenous parts, used by them was insignificant and these parts were used to make the engine functional; that essential character cannot be subtituted for functional character of an article/machine; that all functional components cannot be said to be essential; that what imparts the essential character to a machine are only the essential components without which the machine would loose its very identity or its continued existence. She mentioned that as per Rule 2(a) of the Interpretative Rules, and article which is incomplete or unfinished but which has the essential character of the complete or finished article should also be classified as the complete article and the complete or finished articles presented unassembled or disassembled would also be classifiable as the complete article; that applying the said Rule, a complete engine has been imported in unassembled condition; that as per Explanatory Notes of H.S.N., a machine laking only a fly wheel, a bed plate, calender rolls, tool holders, etc., is classified in the same Heading as the machine and not in any separate heading provided for parts. She contended that in view of thus, it is apparent that cylinder, piston, connecting rod, crank shaft, inlet and exhaust valves when taken together give an engine its essential character/feature of conversion of heat energy into mechanical energy; that if these elements are presented together would render them classifiable as engine. She pointed out that the imported goods contain cylinder, piston, connecting rod, crank shaft and inlet and exhaust valve and, therefore, the imported goods have the essential character of an engine.

(3.) THELARNED SDR further emphasized that the Respondents imported all the components required to give essential character to specific number of engines under one Bill of Entry; that it is totally incorrect that when components imported under all the Bills of Entry are assembled they would bring into existence complete engine; that this inference drawn by the Commissione (Appeals) in the impugned Order is not based on facts of the case. In support of her contention she referred to Invoice No. P7300 dated 22.12.1998 of M/s. Mitsubishi which is for "480 Sets of components of Diesel Engine and T/Mission Against Opener' Purchase Order No. F -865 dated 03.12.98. MODEL F5 M 41 W12 F7 A6 4D 68251Z2B" She also mentioned that Purchase Order No. F -865 dated 26.11.98 of Hindustan Motors Ltd. also specifically mention as under: