Actuator and Tube Connector in iMT Systems Not “Parts of Clutch”, Classifiable Under Residual Entry: CESTAT in Hyundai Case [Read Order]

The Chennai Bench of the Customs, Excise andService Tax Appellate Tribunal (CESTAT) has held that actuator assemblies and tube connector assemblies used in intelligent manual transmission (iMT) systems of motor vehicles cannot be classified as “parts of clutch” and are instead classifiable under the residual tariff entry covering other parts and accessories of motor vehicles.

The Tribunal was dealing with cross appeals filed by the Revenue and Hyundai Transys India Private Limited against separate orders passed by the Principal Commissioner of Customs and the Commissioner (Appeals), Chennai, in relation to classification of imported automotive components.

The dispute arose over the correct classification of goods described as “Actuator Assy. - Clutch” and “Tube Connector Assy. - Clutch”. The Department sought to classify the goods under Customs Tariff Item (CTI) 8708 9300, covering “clutches and parts thereof”, contending that the components were integral to the clutch system in vehicles equipped with intelligent manual transmission. The importer, Hyundai Transys India Private Limited, on the other hand, argued that the goods were accessories that facilitated clutch operation and hence, classifiable under CTI 8708 9900.

The Tribunal, comprising P. Dinesha (Judicial Member) and Vasa Seshagiri Rao (Technical Member), examined the technical functioning of the iMT system and noted that such systems comprise multiple components including the transmission gear shaft lever, intent sensor, transmission control unit, hydraulic actuator and clutch. It was observed that the actuator operates on signals received from the transmission control unit and assists in engaging or disengaging the clutch. On the other hand, the tube connector assembly supplies clutch oil between components.

Referring to the explanatory notes to Heading 8708, the Bench held that the items listed as “clutches and parts thereof” did not include actuator assemblies or tube connector assemblies. It emphasised that an item can be treated as a “part” only if it is an integral and indispensable component without which the article cannot function.

Relying on Supreme Court rulings distinguishing between “parts” and “accessories”, the Tribunal concluded that the subject goods merely enhanced or facilitated clutch operation and could not be treated as parts of the clutch itself.

Holding that accessories of a clutch could not be brought under the tariff entry meant exclusively for clutches and their parts, the Tribunal ruled that the goods were correctly classifiable under CTI 8708 9900 as “other parts and accessories” of motor vehicles. Consequently, it set aside the proposals for confiscation, redemption fine and penalties.

Accordingly, the Revenue’s appeal was rejected, while the appeal filed by Hyundai Transys India Private Limited was allowed.

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