E-Scooter Parts Imported in CKD Condition does not have “Essential Character” of Complete Electric Vehicle: CESTAT grants Relief to Greaves [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai Bench, held that imported “parts” of e-scooters in a completely knocked down (CKD) condition do no constitute as “essential character” of complete electric vehicle under Rule 2(a) as the principle of ‘as presented’ is not applicable.

One of the four appellants, M/s. Greaves Electric Mobility Pvt. Ltd., was engaged in the manufacture of electric two-wheelers in India and imports various components required. After intelligence was gathered by the Directorate of Revenue Intelligence (DRI) that M/s Ampere Vehicles Pvt. Ltd. (AVPL) was importing e-scooters in completely knocked down (CKD) condition, the DRI believed the goods should fall under Heading 8711 (complete e-scooters/e-bikes) in terms of Rule 2(a) of the General Rules of Interpretation, thereby attracting higher rate of duty.

In 2018, AVPL transferred ownership and management control to M/s Greaves Cotton which was later renamed M/s Greaves Electric Mobility Pvt. Ltd. (GEMPL). The company was importing all major components from China but declaring them as “parts” to pay lower import duties.

The main issue was whether GEMPL evaded customs duty on CKD kits of e-scooters/e-bikes by wrongly declaring them as mere “components/parts” and whether such imports having total assessable value of INR 166,01,86,795/- are liable for confiscation under Section 111(d) and 111(m) of the Customs Act, 1962. It is to be noted that batteries and chargers were separately imported from foreign suppliers.

The department alleged that the imported goods, when taken together, could impart the essential character of an e-scooter/e-bike. The appellant disputed this on the ground that critical components were not imported together in the same consignments.

The tribunal observed that the imported goods do not possess the “essential character” of a complete electric vehicle. It was noted that the “essential character” under Rule 2(a) presupposes that the goods, as presented, must have the identity of the complete article, even if incomplete, this was relied upon from the decision in Commissioner of Customs vs. Sony India Ltd. (2008).

Further, CESTAT noted that the appellant has furnished sample invoices evidencing local procurement of batteries. Therefore, it cannot be said that essential components, including batteries, were imported.

The bench of Vasa Seshagiri Rao (Technical Member) and P. Dinesha (Judicial Member) reiterated that classification must be determined on the basis of goods as presented and not by artificial aggregation of multiple consignments. The appeals were accordingly allowed.

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