ORDER
K.K. Agarwal, Member (T)
1. The appellants in this case have imported parts and accessories of mobile phones which were classified by them under Chapter Heading 852990.90 and claimed benefit of exemption under Notification No 21/2002-Cus dated 1.3.2002 which exempts parts, components and accessories of mobile handsets including cellular phones falling under Ch. Heading 852990.90 or any other chapter from duty if the importer follows the procedure set out in the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996. These parts were imported under two different bill of entries but on examination it was found that when items covered under both bill of entries are combined together they form 12000 pcs. complete mobile phones in semi knocked down condition. It further came to notice that the purchase order placed by the appellants with the supplier was for mobile phones in SKD condition and not individual parts. In terms of Rule 2(a) of the General Rules of Interpretation in the First Schedule of the Customs Tariff “Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character or the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished virtue of this rule), presented unassembled or disassembled.” By applying this interpretative Rule 2(a) they were issued a show cause notice stating that the goods were complete mobile phones in SKD condition and were therefore required to be classified as mobile phones under Ch. Heading 852520.17 and the benefit of exemption under Sl. No. 320 was not available and accordingly duty was required to be paid and goods were liable to confiscation under Section 111(m) of the Customs Act, 1962 and importer liable for penalty under Section 112(a) and / or (b) of the Customs Act, 1962.
2. It was further found that earlier appellants have imported similar parts of mobile phones under seven bill of entries which when combined together established that what was imported was a complete mobile phone in SKD condition and the benefit claimed earlier also was sought to be denied and differential duty amounting to Rs. 64,38,714/-was required to be paid besides goods being liable for confiscation and penalty imposable under Section 112(a) and /or (b) for which another show cause notice was issued.
3. These show cause notices were adjudicated by the Commissioner who confirmed the duty demanded, held goods liable for confiscation and imposed a penalty of Rs. 10,000/-
4. The learned advocate for the appellants submits that in this case what was imported was parts and components of mobile phones and rules on interpretation do not apply for the purpose of extending the benefit of exemption notification and in this regard they cited Tribunal decision in the case of Wipro GE Medical Systems Ltd v. Commr. Of customs, Bangalore in the context of CAT scan system imported in CKD/SKD condition wherein the import has been held to be treatable as of a CAT scan system by applying the legal fiction of the interpretative Rule 2(a) but extending the benefit of Exemption Notification No. 66/88-Cus to parts by treating it as importation of components and parts for the purpose of Notification. The Tribunal’s order has been upheld by the Supreme Court by dismissal of Revenue’s appeal against Wipro order as seen from 2000 (117) E.L.T. A54 (S.C.). Reference was also invited to Larger Bench decision in the case of Sony India Ltd v. Commissioner of Customs, IDC, New Delhi 2002 (243) E.L.T. 411 (Tri. – LB) wherein similar condition it was held that components of colour T.V. brought in unassembled condition for convenience of handling and transportation cannot be regarded as complete colour T.V. either before or after amendment of Rule 2(a) of the interpretative rules as assembly of components of colour T.V. involves complex manufacturing process and that parts brought under different bill of entries cannot be clubbed so as to consider them complete T.V. set. Reference was also invited to the Board Circular No. 39/2005-Cus dated 3.10.2005 issued from F.No. 528/117/2003 (TU) wherein it was clarified that goods have to be classified in the form as presented and Rule 2(a) of the GIR cannot be applied for the sake of allowing/disallowing the benefit of a notification, unless the exemption notification is based on classification of the item under a particular heading of the Customs Tariff.
5. The learned JDR Shri Pramod Kumar however submits that the tribunal decision in the case of Sony India Ltd. and Wipro GE Medical Systems Ltd. were distinguishable as in those case one or two parts were not imported and the process of assembly was of a complex nature whereas in the present case what was imported was a complete set of mobile phones and the process of manufacture was simple assembly. It was submitted that benefit of Notification S.No. 320 and Notification No. 21/2002 is available to only those parts which are classifiable under chapter heading 852990.90 and since in this case parts were classifiable under chapter heading 852520.17 the benefit of Notification cannot be extended.
6. We have considered the submissions. We find that what has been imported by the appellant were parts and accessories of mobile phones and even though they may be classifiable as a whole under chapter heading 852520.17, the benefit of exemption Notification No. 320 cannot be denied as the benefit is available to parts and components of mobile hand sets falling under chapter heading 832990.90 or any other chapter. Thus it is available to parts and components irrespective of the fact under which chapter heading they fall. In view of this they are squarely covered by the circular issued by the Board referred to in the earlier para and the CEGAT decision in the case of Wipro GE Medical Systems Ltd. cited supra. We note that the assembly of parts is also not simple and involves down loading of software which can be handled by only skilled technicians and it is not denied by the department that the appellants have a factory to manufacture cellular phones which are ultimately cleared after assembly. In view of the same we set aside the order of the Commissioner and allow the appeal.