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Dated: 07.02.2025

CESTAT Kolkata ruling reaffirms the proper classification of CKD imports

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Kolkata, reviewed two appeals concerning the import classification of E-Rickshaw components. The Revenue contended that the imported goods should be classified as a Completely Knocked Down (CKD) E-Rickshaw, subjecting them to higher duties. However, the importer claimed they were merely spare parts, eligible for a lower duty rate under Notification No. 50/2017-Cus.

Key Findings:

1. Customs Classification Dispute:

• The importer declared the goods under CTH 87089900 (spare parts), but customs authorities reclassified essential components (motor, controller, chassis, differential, axle) under CTH 87038040 (CKD condition), leading to value enhancement and duty denial.

2. Initial Decision by Customs Authorities:

• The Additional Commissioner of Customs, Kolkata, rejected the declared classification, imposed a redemption fine, penalty, and reclassified the goods, treating them as a CKD E-Rickshaw.

3. CESTAT Ruling in Favor of the Importer:

• The Commissioner of Customs (Appeals), Kolkata, overturned the earlier ruling, restoring the importer’s classification and duty benefits.
• The Tribunal cited a previous case (Twinkle Tradecom Pvt. Ltd.), stating that essential CKD characteristics must be proven, including propulsion capabilities.
• Since the imported goods lacked a battery, they did not constitute a fully assembled E-Rickshaw in CKD form.
• The enhancement of value was dismissed, as the Revenue failed to follow valuation rules properly.

4. Final Judgment:

• The Tribunal dismissed the Revenue’s appeal, upholding the importer’s classification and exemption claim.
• The redemption fine and penalty were revoked, confirming that the import was in compliance with customs regulations.

Conclusion: The CESTAT Kolkata ruling reaffirms the proper classification of CKD imports, ensuring that customs assessments must align with legal definitions. This decision sets a precedent for importers facing similar classification disputes, reinforcing the importance of accurate tariff interpretation and compliance with customs valuation rules.

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Source: CESTAT Kolkata

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