In a recent decision by the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) of the Eastern Zonal Bench, Kolkata, the tribunal upheld the ruling of the Commissioner of Customs (Appeals), classifying motor controllers as “parts of electric motors” for the purposes of import valuation. This ruling effectively reaffirmed that the imported motor controllers, used in electric vehicles such as e-rickshaws, are to be classified under the Customs Tariff Heading (CTH) 8503 0090, rather than CTH 8708 9900, which pertains to parts of motor vehicles.
The backdrop of the case arose from the import of motor controllers by the appellant/ assessee, M/s Aahana Commerce Pvt. Ltd. The customs authority had initially reassessed the import, enhancing the cost, insurance, and freight (CIF) value, while also rejecting the declared value of the goods. Additionally, the classification of the motor controllers was changed from CTH 8503 0090 to CTH 8708 9900. However, the assessee, in order to avoid delays and demurrage charges, paid the enhanced duty under protest and appealed the decision to the Commissioner (Appeals).
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Upon appeal, the Commissioner of Customs (Appeals) ruled in favor of Aahana Commerce, reverting the classification of motor controllers to CTH 8503 0090, which applies to parts of electric motors, and accepting the company’s declared import values. Dissatisfied with this ruling, the customs authority brought the case before CESTAT.
During the tribunal hearings, the customs department argued that the motor controllers were not strictly part of electric motors but instead functioned as independent devices controlling multiple aspects of e-rickshaws, such as acceleration and overall vehicle operation. According to the customs authorities, this placed the controllers under CTH 8708 9900, which classifies parts used in motor vehicles, rather than as components of electric motors under CTH 8503 0090.
The Bench of Mr Ashok Jindal and Mr K Anpazhakan, after reviewing the case, observed that the motor controllers were primarily used to control motor functions, such as starting, stopping, and regulating speed. Given their integral role in the functioning of electric motors, the tribunal ruled that the controllers were correctly classified under CTH 8503 0090, aligning with the previous decision by the Commissioner (Appeals). Furthermore, the tribunal dismissed the customs department’s arguments, noting that the assessing officer had failed to provide sufficient evidence to substantiate the claim that the declared import values were inaccurate.
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In their decision, the tribunal referenced a previous ruling in the case of the same assessee from August 2024, where the same classification issue was raised. The earlier judgment had concluded that motor controllers should indeed be classified under CTH 8503 0090 as parts of electric motors. In result, following this precedent, CESTAT dismissed the appeal filed by the customs authority and upheld the order of the Commissioner (Appeals).
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