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2023 (2) TMI 676 - AAR - CustomsClassification of imported goods - Electric Vehicle Kits - classifiable under Tariff Entry No. 8703 of the First Schedule to Customs Tariff Act, 1975 or not - eligibility of the import for S. No. 526A(1)(a) of the mega exemption notification, qualifying for 15% BCD rate for the kits or not. Classification of the Electric Vehicle Kits of Volvo brand passenger vehicles - HELD THAT - For determining the appropriate classification of goods being imported as kit comprising the items mentioned in the packing list referred to above, reliance needs to be placed on Rule 2(a) of the General Rules for Interpretation of Import Tariff (GIR in short), which provides that, 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 articles has the essential character of 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 by virtue of this rule), presented unassembled or disassembled. In the instant case, the applicant has stated that they will be importing kits of passenger cars and it is also settled, if all the parts are presented in knocked down condition and they have the essential character of a complete article, they have to be assessed as complete article, in terms of said Rule 2(a) of GIR. In the present case, the motor vehicles are initially assembled at site to a substantive extent for thorough verification and testing, then disassembled and imported in form of a kit. Therefore, notwithstanding the fact that at the initial assembling stage, they have not acquired the completeness of a car to be roadworthy, these kits have acquired the essential characteristics of motor vehicle to merit classification under Heading 8703, noting that they are principally designed for the transport of persons, numbering less than ten persons. Reliance placed in the case of M/S VOLVO AUTO INDIA PRIVATE LIMITED VERSUS PRINCIPAL COMMISSIONER OF CUSTOMS, BANGALURU AND COMMISSIONER OF CUSTOMS, CHENNAI 2022 (3) TMI 560 - CUSTOMS AUTHORITY FOR ADVANCE RULINGS- NEW DELHI . In this regard, it is also noted that the question relating to classification of the EV vehicle kits posed for advance ruling is sufficiently answered holding that they are classifiable under Heading 8703 at four-digit level. The additional submission made by the applicant is referred wherein it has been mentioned that in exceptional cases, due to logistics and business considerations, one or more parts of the kit may have to be imported in a separate consignment through the same port, while majority of the parts of the said electric vehicle kit would still be imported in one consignment, and even in such case, all imports pertaining to one vehicle would be made in close proximity to each other and the relevant electric vehicle kit, to which it pertains would be clearly identified - the submission of the applicant that even in such exceptional cases, the classification of the electric vehicle kit would not be impacted and would Heading 8703, agreed upon. Effective rate of duty applicable on the EV vehicle kits under Notification No. 12/2012-Customs, dated 17-3-2012, which has since been replaced by the Notification No. 50/2017-Customs, dated 30-6-2017, as amended - HELD THAT - The applicant has clearly stated that the Electric Vehicle CKD kits to be imported by the applicant consist of approximately 105 parts/sub-assemblies, which are standalone and not attached to each other or any other parts, components or assembly. They have also added that going forward, the number of parts in which the vehicle is broken down could increase. Further, these components and parts are not mounted on a chassis or a body assembly - these CKD kits, as described in the application submitted before this Authority will fall under sub-category 1(a) and attract effective rate of BCD of 15%.
Issues Involved:
1. Classification of imported electric vehicle kits. 2. Eligibility for exemption under sub-category (a) of Serial No. 526A(1) of the Mega Exemption Notification and qualification for 15% BCD rate. Detailed Analysis: Issue 1: Classification of Imported Electric Vehicle Kits Facts and Background: The applicant, M/s. Volvo Auto India Private Limited, intends to import electric vehicle kits in a knocked-down condition from Volvo's overseas manufacturing plants. These kits consist of various parts, components, and sub-assemblies, which are semi-assembled abroad for quality checks and then disassembled before being shipped to India. The imported kits will be reassembled into complete vehicles in India. Legal Framework: The classification of goods under the Customs Tariff Act, 1975, follows the General Rules for Interpretation (GRI). Rule 2(a) of GRI states that an incomplete or unfinished article that has the essential character of the complete or finished article should be classified as the finished article, even if presented unassembled or disassembled. Ruling: The electric vehicle kits, as presented, exhibit the essential characteristics of a complete electric vehicle. The kits include all necessary parts and sub-assemblies, though certain one-time usage parts like bolts and nuts are imported separately. The kits are therefore classifiable under Heading 8703 of the Customs Tariff Act, 1975, which covers motor cars and other motor vehicles designed for the transport of persons. Conclusion: The electric vehicle kits imported by the applicant are classified under Tariff Entry No. 8703 of the First Schedule to the Customs Tariff Act, 1975. Issue 2: Eligibility for Exemption and Qualification for 15% BCD Rate Facts and Background: The applicant seeks to determine whether the imported electric vehicle kits qualify for the concessional Basic Customs Duty (BCD) rate of 15% under sub-category (a) of Serial No. 526A(1) of the Mega Exemption Notification. Legal Framework: The Mega Exemption Notification No. 50/2017-Customs, as amended, provides concessional BCD rates for electric vehicles based on their state of assembly at the time of import. Specifically, Serial No. 526A(1)(a) allows for a 15% BCD rate if the vehicle is imported as a knocked-down kit with necessary components, parts, or sub-assemblies, none of which are inter-connected and not mounted on a chassis. Ruling: The applicant's electric vehicle kits, consisting of approximately 105 parts/sub-assemblies, are standalone and not attached to each other or any other parts, components, or assembly. These components are not mounted on a chassis. Therefore, the kits qualify for the 15% BCD rate under sub-category (a) of Serial No. 526A(1) of the Mega Exemption Notification. Conclusion: The imported electric vehicle kits are eligible for the concessional BCD rate of 15% under sub-category (a) of Serial No. 526A(1) of the Mega Exemption Notification. Final Ruling: 1. The Electric Vehicle kits, as described by the applicant in the disassembled state and presented together as a kit, merit classification under Heading 8703. 2. The aforesaid Electric Vehicle kits are covered under S. No. 526A(1)(a) of Notification No. 50/2017-Cus., dated 30-6-2017, and are therefore presently eligible for a 15% rate of BCD applicable thereon.
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