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Regarding import of components of colour television sets assessment
Circular No.
44dated 30th September 1997
It has come to the
notice of the Board that doubts are being expressed in the matter of
classification of components of Colour Television Sets in the context of
provisions contained in Rule 2 (a) of the General Rule for the interpretation of
the First Schedule to the Customs Tariff Act, 1975.
2.
A company engaged in the manufacture of colour television (CTV) sets had
imported about 100 different types of components for the manufacture of CTV. The
manufacturing operation undertaken includes Eyelet Punching, Axial hand mount,
Jumper wire auto insert, Performing, Missing check, Radial hand mount, Solder
dip, solder addition, ICT, Channel pre set, CBA, White balance and Tuner AGC
adjustment, Geometry and landing adjustment, Convergence adjustment, Rough
adjustment, CRT and Chassis Docking, Colour Balance, insulation check, Audio
checks and internal checks.
3.
A doubt has arisen as to whether the goods imported, in this case, are
classifiable as components only or as a complete TV set in terms of provisions
contained in interpretative Rule 2 (a) of the General Rules for the
Interpretation of the First Schedule of the Customs Tariff Act, 1975.
4.
The question relating to assessment of goods imported in disassembled or
unassembled form is not a new one, having been examined earlier at various
levels including the Hon'ble Supreme court, High Courts and CEGAT. Board has
also examined this matter and vide letter of even no. dated 30th May, 95
it has advised the field formations to take due note of the provisions of Rule 2
(a) of the General Rules for the Interpretation of the first Schedule to the
Customs Tariff Act, 1975 while dealing with such cases.
5.
Rule 2 (a) of the Interpretative Rules of the First Schedule to the
Customs Tariff Act, 1975, inter alia, provides for assessment of articles
presented in unassembled or disassembled condition as complete article. It also
provides for assessment of incomplete articles presented unassembled or
disassembled, as complete article, provided the incomplete article has the
essential characteristic of the complete article. The HSN Explanatory Note to
this rule after its recent amendments, with reference to articles presented
unassembled and disassembled explains these terms by stating, inter alia, that
the components in such cases are to be assembled either by means of simple
fixing devices (by screws, nuts, bolts, etc.) or by riveting or by welding
provided only assembly operations are involved. It also states that no account
is to be taken to the complexity of the assembly method. However, the
components shall not be subjected to any further working operations to bring it
to completion into finished state. Thus, this rule is applicable in cases
where,-
(i) Only assembly operations are evolved
irrespective of the complexities of the assembly methods; and
(ii) Components themselves
should not be subjected to any further working operations for completion into
finished state.
6.
The factory premises of the said manufacturing company was visited by
officers of the Department and also by the officers of Department of Electronics
separately to study the process of manufacture undertaken. On the basis of the
studies made by these Officers, it would seem that the manufacturer had a large
well established factory, the processes involved were elaborate and require
highly skilled as well as well as semi-skilled workforce and technical know how
of high degree to complete the finished article from the components/ parts. It
also appears that the process of populating the PCB, a critical component of the
TV, amounts to working on the bare (Unmounted) PCB, thus, satisfying the
criterion brought in as a sequel to the amendment of the Explanatory notes.
7.
There is merit in these arguments and if accepted it would, from the
beginning, take the imports of components/ parts meant for bringing in to effect
a colour TV by this company or similarly placed other companies out of the ambit
or Rule 2 (a). Board desires that these facts may be taken into consideration
while finalising the classification of this king of imports.
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