Import in CKD/SKD condition — Assessment
Circular No. 55/95-Cus., dated 30-5-1995
[From F. No. 528/42/95-Cus. (TU)]
Government of India
Ministry of Finance (Department of Revenue)
New Delhi
Subject : Assessment of goods imported in CKD/SKD
condition.
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 judgment was also taken
note 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 Note 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 this background, the Board once again desires the field
formations to take due note of the provisions of 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.