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of <h1>Supply of CKD e-rickshaw components: classification depends on included major components; vehicle attracts lower GST, incomplete sets attract higher GST.</h1> Classification of a complete set of e-rickshaw components in CKD form hinges on the essential character test under tariff interpretation: if the set ... Applicable rate of GST - Supply of a complete set of components of an electric three-wheeler vehicle (e-rickshaw) in Completely Knocked Down (CKD) - Essential character - classification of goods under the Customs Tariff / HSN - Advance Ruling under Section 97 - Rule 2(a) of the General Rules for the Interpretation of the Harmonised System (GIRs) - HELD THAT:- CKD is a concept that is widely used now in automobiles, electronics and furniture industries. Conceptually it refers to collection of parts requires to be assembled to bring into existence the finished product. In automobiles industry CKD vehicle is a vehicle with all its components in a separated condition. The components, if assembled, bring into existence a finished vehicle. Usually this assembly work is carried out at the workshop of the car dealers. On the other hand, CBU refers to the complete vehicle with all the components fitted. It is shipped in one complete unit and does not need to be assembled. Usually vehicles are consigned in CKD condition to save space in cargo and convenience in transportation. Sometimes it has tax or duty implications also in a system of taxation where the finished vehicle and its components are differently taxed. Whether the supply of a complete set of components of an electric three-wheeler vehicle (e-rickshaw) in a Completely Knocked Down (CKD) form, necessary and sufficient for the assembly of the finished vehicle, should be classified as the finished vehicle itself and what is the applicable rate of GST? - HELD THAT:- The answer is in the affirmative if a complete set of components of an electric three-wheeler vehicle (e-rickshaw) in a Completely Knocked Down (CKD) form includes motor and any three of the other four major components (other than motor) viz. transmissions, axles, chassis and controller in proportionate number for the assembly of the finished vehicle. As such, GST is applicable @ 2.5% CGST + 2.5% SGST vide HSN code 87038040 and serial no. 441 of Schedule I of Notification No. 11/2017 – Central Tax (Rate) Dated 28.06.2017 as amended by Central Notification No. 09/2025-Central Tax (Rate) Dated 17.09.2025. Whether the supply of a complete set of components of an electric three-wheeler vehicle (e-rickshaw) in a Completely Knocked Down (CKD) form, necessary and sufficient for the assembly of the finished vehicle, should be classified as a set of parts and what is the applicable rate of GST? - HELD THAT:- The answer is in the affirmative if the supply does not include either motor or any two of the other four major components (other than motor) viz. transmissions, axles, chassis and controller in proportionate number for the assembly of the finished vehicle. In that case, the supply will be regarded as that of components of e-rickshaw and is taxed @ 9% CGST + 9% SGST under different serial numbers. Issues: (i) Whether supply of a complete set of components of an electric three-wheeler vehicle (e-rickshaw) in Completely Knocked Down (CKD) form, necessary and sufficient for assembly of the finished vehicle, should be classified as the finished vehicle itself and what is the applicable rate of GST; (ii) Whether such supply should be classified as a set of parts and what is the applicable rate of GST.Issue (i): Whether a CKD consignment of e-rickshaw that includes motor and any three of the four major components (transmissions, axles, chassis, controller) in proportionate numbers qualifies as supply of the finished vehicle and the GST rate applicable.Analysis: The classification is governed by HSN classification under the Customs Tariff Act and the interpretative Rule 2(a) of the GIRs which permits incomplete or unassembled articles to be classified as complete articles where they possess the essential character of the finished article. The Office Order C.No. VIII/ICD/TKD/6AG/104/2013/pt Dated 12.03.2014 identifies five components that confer essential character to an e-rickshaw; judicial authorities have applied the essential character test to CKD consignments. The Authority applies the essential character test to the facts, requiring motor plus any three of the listed other components in proportionate numbers for assembly.Conclusion: A CKD consignment that includes motor and any three of the four major components (transmissions, axles, chassis, controller) in proportionate numbers is to be classified as the finished e-rickshaw and is taxable at 2.5% CGST + 2.5% SGST under HSN 87038040.Issue (ii): Whether a CKD consignment that does not include the motor or is missing any two of the other four major components should be classified as parts and the GST rate applicable.Analysis: Applying the same essential character test under Rule 2(a) and the Office Order, absence of the motor or absence of any two of the other essential components means the consignment lacks the essential character of the finished vehicle. Such consignments are classifiable as parts/accessories under the relevant tariff entries and carry the rates applicable to those parts as enumerated.Conclusion: Where the CKD supply lacks the motor or is missing any two of the other four major components in proportionate numbers, the supply is to be classified as components/parts of e-rickshaw and is taxable at 9% CGST + 9% SGST under the relevant entries.Final Conclusion: The classification and GST rate for CKD consignments of e-rickshaws depends on whether the consignment satisfies the essential character test under Rule 2(a) GIRs read with the referenced Office Order; consignments meeting the specified component threshold are treated as finished vehicles at the lower rate while others are treated as parts at higher rates.Ratio Decidendi: For HSN and GST classification, an unassembled CKD consignment must be treated as the finished vehicle where, as presented, it possesses the essential character of the finished article under Rule 2(a) GIRs; for e-rickshaws this requires motor plus any three of transmissions, axles, chassis and controller in proportionate numbers.
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