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of <h1>Classification of imported electrical controllers under chapter 8503 affirmed using exclusion and principle-use tests; revenue appeals dismissed.</h1> Classification of imported electrical controllers was tested under the principle of exclusion and the principle use test in Notes to Section XVII and ... Transaction value - classification of goods - principle of exclusion and 'pull in' construction - assessment under protest and orders u/s 17(5) - Validity of enhancement of assessable value and acceptance of declared transaction value - HELD THAT:- We find that in respect of both the issues, with regard to valuation as well as classification, the Tribunal in the appellant’s own case, has considered and passed the following Final Order [2024 (9) TMI 1428 - CESTAT KOLKATA], held that- ' As per the terminology of CTH 8708, the goods covered should be the parts and accessories of motor vehicles under CTH 8701 to 8705 and as per the point 3 of the Notes to Chapter XVII, the said goods having the description in two or more of the headings of those chapters is to be classified under that heading which corresponds to the principle use of that part of accessory. As per the reading of point 3 of Notes to Section XVII and the explanatory notes covering both CTH i.e. 8503 & 8708, the said goods are imported under the description of 'controller' and there is no declaration by the respondent that the said goods are the spare parts of e-rickshaw. We also find that the controllers are not covered under the CTH 8708 as per the explanatory notes to Section XVII. It is also pertinent to note that the Notes to CTH 8503 covers the parts to be used with motor and as such merits the classification of the goods under CTH 8503. Thus, we hold that the goods imported by the Respondent are rightly classifiable under Chapter heading 8503 0090 as claimed by them in the respective Bills of Entry. The correct classification of the goods in question is CTH 8503 0090. Therefore, hold that the Ld. Commissioner (Appeals) has rightly held the classification of the impugned goods under CTH 8503 0090. ' We find the above decision squarely covers the issue on hand and hence following ratio laid down in the cited decision, we uphold the impugned order. We also find force with the appellant’s argument that Note No. 2(f) to Section XVII specifically excludes electrical machinery or equipment falling under Chapter 85, from being included within the Chapter 87 goods. Identical issue was decided by this Tribunal in the appellants own case vide Final Order [2025 (11) TMI 1216 - CESTAT KOLKATA]. As a result, the appeals filed by the Revenue stand dismissed. Issues: (i) Whether the transaction value declared by the importer is liable to be rejected and the assessable value enhanced under the Customs Valuation Rules, 2007; (ii) Whether the imported Motor Controller is classifiable under Customs Tariff Heading 8503 0090 or under Heading 8708.Issue (i): Whether the transaction value declared by the Respondent can be accepted as the assessable value under the Customs Valuation Rules, 2007.Analysis: The Tribunal examined whether the assessing authority recorded valid reasons and followed the procedure under Section 14 and the Valuation Rules before rejecting the declared transaction value. The Tribunal found absence of evidence showing that buyer and seller were related, or that any payment beyond invoice value was made, and noted lack of substantive contrary documents from the Department. The Tribunal also relied on its earlier final order in the appellants own case where the assessing officers enhancement of value was struck down for lack of valid basis and procedural compliance.Conclusion: The declared transaction value is accepted and the enhancement of assessable value by the adjudicating authority is not sustainable; conclusion is in favour of the assessee.Issue (ii): Whether the imported Motor Controller is a part principally used with electric motors and hence classifiable under CTH 8503 0090, or whether it is to be classified as parts/accessories of vehicles under CTH 8708.Analysis: The Tribunal analysed the functions and definition of a controller and the chapter/section notes and explanatory notes to Chapters 85 and 87. It found that the controller performs functions connected to electric motors (start/stop, speed regulation) and can be used with various motors and machines, not exclusively with e-rickshaws. The Tribunal observed absence of any declaration or evidence that the goods were solely/principally for e-rickshaw use, noted that electronic controllers are excluded from CTH 8708 explanatory notes, and applied the principle that goods falling under parts suitable for use with motors fit CTH 8503 when the principal use aligns with that heading. The Tribunal followed its prior final orders and relevant authority construing exclusionary notes narrowly.Conclusion: The Motor Controller is correctly classifiable under Customs Tariff Heading 8503 0090; conclusion is in favour of the assessee.Final Conclusion: The impugned orders of the Commissioner (Appeals) upholding the transaction value and classifying the goods under CTH 8503 0090 are upheld; the Revenue appeals are dismissed, resulting in acceptance of the assessees declared valuation and classification.Ratio Decidendi: Where the assessing authority rejects declared transaction value without valid procedural reasons or supporting evidence, the transaction value must be accepted; and classification must follow the principal use test and exclusionary notes construed narrowly so that parts principally usable with motors are classified under CTH 8503 0090 rather than Chapter 87 when no evidence shows sole/principal use in motor vehicles.
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