CKD import treatment for dump trucks: essential components and pre-assembled drive parts qualified for concessional customs duty.

Dump trucks imported in CKD form were examined for concessional basic customs duty under Notification No. 50/2017-Customs. The ruling held that a kit containing the essential components and sub-assemblies needed to assemble a complete vehicle, with the engine, alternator, control cabinet and wheel motor pre-assembled but not mounted on a chassis, could qualify as a CKD kit under Sl. No. 524(1)(b). The goods were classified under heading 8704 as motor vehicles for transport of goods, and the fact that they used an alternate electrical drive arrangement did not deny the benefit, since the technology functionally replaced the gearbox and transmission mechanism and satisfied the notification conditions.

---

---

Issues: Whether dump trucks imported in CKD form, with engine and alternator, control cabinet and wheel motor pre-assembled but not mounted on a chassis, were eligible for concessional basic customs duty under Sl. No. 524(1)(b) of Notification No. 50/2017-Customs dated 30.06.2017.

Analysis: The goods were held to fall under heading 8704 as motor vehicles for transport of goods, and were not electrically operated vehicles within the meaning of the notification because they did not run solely on electrical energy from an external source or batteries. The notification requires a CKD kit containing all necessary components, parts or sub-assemblies for assembling a complete vehicle, with at least one of the listed drive components in pre-assembled form but not mounted on a chassis or body assembly. Rule 2(a) of the General Rules for the Interpretation of the First Schedule to the Customs Tariff Act, 1975 and the CBEC circular on essential parts of a motor vehicle supported the view that a kit having the essential components and the essential character of a finished vehicle could be treated as a CKD kit. The alternate electrical drive arrangement was treated as functionally replacing the gearbox and transmission mechanism, and the use of different technology did not defeat the notification benefit.

Conclusion: The applicant was eligible for concessional basic customs duty at 25% under Sl. No. 524(1)(b) of Notification No. 50/2017-Customs dated 30.06.2017.

---