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Assessment of goods imported in CKD/ SKD condition
Circular No. 55 dated 30th
May 1995
The Board has had
the occasion to examine the question of assessment of goods imported in
unassembled form, particularly in the context of certain recent imports of cars
in SKD kits form with the omission of a few parts like the batteries and tyres.
The question is
not a new one, having been examined earlier at various levels, including the
Supreme Court in the case of Sharp Business Machines v. Collector of Customs.
The said judgement was also taken not of by the Tariff Conference of 1991. A
reading of rule 2 (a) of the Interpretative Rules to the First Schedule to the
Customs Tariff Act, 1975, along with the Explanatory Not to this rule and the
illustrations cited in the HSN Explanatory. Notes makes it amply clear that even
incomplete, unassembled articles should be assessed as complete articles,
provided that when assembled the incomplete article has the essential character
of a complete article. In the context of automobiles, the HSN Notes at page 1423
cites the cases of cars without batteries and tyres, or even the engines, as
examples of such articles having the essential character of complete articles.
In his
background, the Board once again desires the field formations to take due note
of the provisions or rule 2(a) of the above said Interpretative Rules, while
dealing with such cases.
Regarding import
licence, the EXIM Policy restricts the imports of not only complete consumer
articles but also these articles in SKD/ CKD condition or ready to assemble
sets. Accordingly such imports require a specific import licence. However, in
some cases it has been noticed that the various bodies of the Government like
the Secretariat of Industrial Approvals, FIPB etc., have approved the projects
for the manufacture of such articles, with permission to import SKD kits in the
initial period. Though the import licence is a must in these cases also, still
if by mistake the importers have not obtained the licence prior to the imports,
they may be advised to obtain the same and the cases need not be adjudicated
without giving this opportunity. In genuine cases, like in the cases of reputed
manufacturers with a proper infrastructure for manufacturing activities in
respect of the goods being imported and having industrial approvals for SKD
imports, clearance of goods under ITC bonds may also be considered pending
production of licences.
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