2022 (1) TMI 1377 - AAR - Customs

Classification of goods - E-cycle - applicable rate of customs duty on import of the said goods from China - classifiable under sub-heading 8712 00 10 of the Central Excise Tariff or under 8711? - HELD THAT - Heading 8712 covers Bicycles and other cycles (including delivery tricycles), not motorized. Given that the good in question is admittedly e-cycle, albeit with power less than 250W, it does not prima facie meet the requirement of not motorized prescribed in the heading. The alternative heading 8711 covers Motorcycles (including mopeds) and cycles fitted with auxiliary motor, with or without side cars appears more appropriate, given that the e-cycle has a motor, albeit of power less than 250W - the application is more in the nature of a prayer for fiscal indulgence for an innovative and environment friendly mode of individual transport and not for a ruling on classification of the said mode of transport under the Customs Act, guided as it would be as per the laid down provisions of law and jurisprudence. The specific prayer for classification of e-cycle as a non-motorised cycle under heading 8712 and not 8711 is an effort to lend technical wherewithal to the said substantive prayer. The prayer made in the application is not essentially covered by section 28-H 2 (a) of the Customs Act, 1962 and beyond the scope of powers vested with this Authority. Further, the application, including the revised application, are not in conformity with the procedure laid down in CAAR Regulations, 2021.

Summary

Issues:
Classification of E-cycle and applicable rate of customs duty on import from China.

Analysis:
1. The applicant filed an application seeking an advance ruling on the classification of E-cycle and the applicable customs duty rate on imports from China. The application was initially received by the Authority for Advance Rulings (AAR) in New Delhi on 16.08.2017.

2. The applicant was informed about deficiencies in the application and was requested to specify the concerned Commissioner of Customs. After several communications and amendments, the case was eventually admitted by the AAR on 09.02.2018. However, no further hearings on the merits of the case were conducted by the AAR.

3. Subsequently, due to amendments in the Customs Act and the establishment of the Customs Authority for Advance Rulings (CAAR) in New Delhi, the case was transferred to CAAR in accordance with the relevant regulations.

4. The CAAR noted that the application had become time-barred for their authority but allowed the applicant to resubmit the application in the prescribed form or affirm the validity of the earlier application. The applicant failed to respond to this communication until a personal hearing was scheduled.

5. During the personal hearing, the applicant appeared unprepared and unfamiliar with the advance ruling process. The Authority advised the applicant to submit a revised application with more precise questions based on the discussions during the hearing.

6. The applicant resubmitted the application in the old form instead of the current prescribed form, which did not meet the legal requirements under the CAAR Regulations, 2021. The Authority emphasized the importance of following the prescribed procedures.

7. Despite the procedural non-compliance, the Authority proceeded to examine the merits of the application. The applicant sought an advance ruling on whether E-cycles should be exempt from customs duty or classified under a specific category due to their eco-friendly nature and technical specifications.

8. The Authority analyzed the applicable sections under the Customs Act for seeking an advance ruling, which included classification of goods, applicability of notifications, determination of value, origin of goods, and other matters specified by the Central Government.

9. Upon reviewing the application and relevant facts, the Authority found that the request for an advance ruling was essentially a plea for exemption from customs duty, which was beyond the Authority's scope. The application did not comply with prescribed procedures and technical requirements.

10. Consequently, the Authority concluded that the application did not fall within the powers vested with them under the Customs Act and was not in line with the CAAR Regulations, 2021. Therefore, the application was rejected without pronouncing any ruling on the classification of E-cycles or the applicable customs duty rate.

This detailed analysis outlines the procedural history, applicant's submissions, Authority's assessment, and the final decision regarding the classification of E-cycles and the applicable customs duty rate on imports from China.