2025 (2) TMI 1119 - AT - Customs

Classification of imported goods - converter charging socket connection box - to be classified under CTH 8703 9000 as electric motor vehicles or under CTH 8708 9900 as parts and accessories of automobiles? - recovery of differential duty with interest and penalty - HELD THAT - In the instant case it is noted that the appellant have imported certain components of the E-Rickshaw i.e.converter. charging socket connection box On-off switch digital speedometer alarm system throttle with left grip controller left right switch hand brake with wire handle T lamp ear shocker arm rest and motor. Thus it is seen from the components an E-Rickshaw can be assembled even though it might be in an incomplete E-Rickshaw. HSN Explanatory Notes is noted which categorically states that an incomplete or unfinished vehicle is classified as the corresponding complete or finished vehicle provided it has the essential character of the latter. As per the HSN Explanatory Notes even though parts of E-Rickshaw falling under CTH 8708 9900 were imported on assembly the said e-rickshaw is liable to be classified as complete or finished vehicle under CTH 8703 9000 provided it has the essential character of the latter - the appellant and has imported connection box for the e-rickshaw. The Connection box in an E rickshaw also known as junction box is an electrical enclosure that protects wiring connections. It is an important safety feature that protects people from electric shock and the connections from environmental conditions. It is noted that the Tribunal in Commissioner Of Customs (Import) Mumbai Versus Videomax Electronics 2010 (8) TMI 422 - CESTAT MUMBAI the CESTAT clubbed the consignments of two different importers namely M/s. Electronic Instrumentation and M/s. Videomax Electronics to come to conclusion that the parts imported by these two importers can be clubbed together and Law is made applicable to the assembled resultant product. From the parts of E Rickshaw imported it can be concluded that axles imported in these 10 consignments (Bills of Entry) are to supplement the other parts imported in the 8 each consignments ( Bills of Entry) meant for assembly of e-Rickshaws. It is noted that the impugned order has relied on the case law of Commissioner Of Customs (Import) Mumbai Versus Videomax Electronics which was upheld by Supreme Court in Electronic Instrumentation v. Commissioner 2011 (1) TMI 1517 - SC ORDER while addressing the submissions made by the appellant. The benefit of Sl. No. 526A of Notification No. 55/2017 dt. 30.06.2017 was not claimed by the Appellant at the time of filing of Bill of Entry. It is also noted that the impugned order has denied the benefit of the said Notification relying CESTAT Order in the case of Abhedya Industries Ltd. Versus Commr. Of C. Ex. S.T. Hyderabad-III 2016 (7) TMI 1113 - CESTAT HYDERABAD . Conclusion - The impugned components imported are essential components of the E-Rickshaw. Consequently the correct classification of the impugned goods is CTH 87039000. The appeal is dismissed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The primary issue considered in this judgment is the correct classification of imported goods, specifically whether the imported components should be classified under CTH 8703 9000 as electric motor vehicles or under CTH 8708 9900 as parts and accessories of automobiles. This classification affects the applicable rate of duty.

2. ISSUE-WISE DETAILED ANALYSIS

Classification of Imported Goods:

- Relevant Legal Framework and Precedents: The classification dispute revolves around the interpretation of Rule 2(a) of the General Interpretative Rules (GIR) for classification under the Harmonized System of Nomenclature (HSN). Rule 2(a) allows incomplete or unfinished articles to be classified as complete if they possess the essential character of the finished article. The HSN Explanatory Notes and various judicial precedents, including decisions from the Supreme Court and CESTAT, guide this interpretation.

- Court's Interpretation and Reasoning: The Tribunal examined whether the imported components, when assembled, constitute a complete E-Rickshaw. The Tribunal referenced the HSN Explanatory Notes, which state that incomplete vehicles can be classified as complete if they have the essential character of the finished vehicle. The Tribunal also considered the Office Order from ICD TKD, which outlines the major components necessary to classify an import as a complete E-Rickshaw.

- Key Evidence and Findings: The Tribunal reviewed the Bills of Entry and noted that the appellant imported components such as converters, charging sockets, controllers, motors, and more, in equal numbers. This pattern suggested the intent to assemble complete E-Rickshaws. The Tribunal also considered the proximity of imports and the identical numbers of components imported.

- Application of Law to Facts: The Tribunal applied Rule 2(a) of the GIR, concluding that the imported components, when assembled, have the essential character of a complete E-Rickshaw. The Tribunal found that the appellant imported most of the essential components required to assemble an E-Rickshaw.

- Treatment of Competing Arguments: The appellant argued that the components should be classified as parts and accessories, citing domestic procurement of some components. The Tribunal rejected this, noting that the imported components were sufficient to assemble a complete E-Rickshaw. The Tribunal also addressed the appellant's reliance on the "as presented" argument, distinguishing the cited case law.

- Conclusions: The Tribunal concluded that the imported components should be classified under CTH 8703 9000 as electric motor vehicles, as they possess the essential character of a complete E-Rickshaw.

3. SIGNIFICANT HOLDINGS

- Preserve Verbatim Quotes of Crucial Legal Reasoning: "An incomplete or unfinished vehicle is classified as the corresponding complete or finished vehicle provided it has the essential character of the latter [see Interpretative Rule 2 (a)], as for example: (A) A motor vehicle, not yet fitted with the wheels or tyres and battery, (B) A motor vehicle not equipped with its engine or with its interior fittings, and (C) A bicycle without saddle and tyres."

- Core Principles Established: The judgment reinforces the principle that incomplete or unassembled articles can be classified as complete if they possess the essential character of the finished article. The Tribunal emphasized the importance of the essential character in determining classification.

- Final Determinations on Each Issue: The Tribunal upheld the classification of the imported components under CTH 8703 9000, confirming the demand for differential duty and penalty. The appeal was dismissed, and the impugned order was upheld.