AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (2) TMI 676
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....7-4-2022. 2. The applicant, vide the aforesaid application, has sought ruling by CAAR, New Delhi on the question of classification of 'IMPORTED ELECTRIC VEHICLE KITS' and eligibility of the import for S. No. 526A(1)(a) of the mega exemption notification, thereby qualifying for 15% BCD rate for the kits". 3. The details of the proposed business model of the applicant is as below : 3.1 The applicant plans to import Volvo passenger Electric Vehicle (EV) in knocked down condition from overseas manufacturing plant of Volvo Group. Different models of electric vehicle kits may be imported by them, from time to time, which include front-wheel drive as well as all-wheel drive variants, along with rear-wheel drive variants that may be imported in due course of time. All major parts/sub-assemblies constituting one electric vehicle kit would be imported from a single plant. 3.2 Prior to import into India, the vehicles would be semi-assembled at Volvo plants located outside India for quality check purpose. However, the assembly is not completed at the said plant as certain parts and final operating software are not installed in the vehicle. Therefore, the vehicle remains....
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....omponents or assembly. Going forward, the number of parts in which the vehicle is broken could increase. The details of these sub-assemblies are captured below : S. No. Description of goods Category A : Sub-assemblies or parts specified in serial no. 526A of Mega Exemption Notification, which extends concessional rate of BCD on import of electric vehicles * HV battery [Battery pack] * Electric Front Axle Drive (EFAD) [motor, front] * Electric Rear Axle Drive (ERAD) [motor, rear] * Engine Control Module (ECM) [motor controller] * On-board Charger (OBC) [charger] * Inverter high voltage front axle (IHFA) [Power control unit, front motor] * Inverter Electrical rear axle drive Module (IEM) [Power control unit, rear motor] * Battery Energy Control Module (BECM) [Energy Monitor] * Battery Disconnect Unit [Contactor] * Brake system broken down into several parts, such as, brake pipes and cooling hoses, brake disc cover, ABS unit (brake booster) etc. * Electric AC compressor (ELAC) [electric compressor] Category B : Other important sub-assemblies or parts * Head lamps * Under body panels * Front and rear bumper * Wheels * Cooling pack * Rear seats ....
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....ance of the electric vehicle kit, comprising of all sub-assemblies/parts, at the customs port. The applicant would be the importer on record for such vehicles and would discharge the customs duty on such imports. 4.10 The assembly of electric vehicles would be undertaken at the manufacturing plant of Volvo Group India Private Limited on contract manufacturing basis. 4.11 The assembly line will consist of approximately 9 assembly stations, 1 media filling station and 6 inspection and verification stations. The imported electric vehicle kits would be moved through the stations in a sequential order and each of these assembly and verification stations comprise of trained manpower as well as capital machineries for undertaking the process. A high-level overview of the various stations and manufacturing process is enclosed : (i) Power pack station 1 and 2 : At first, various sub-assemblies such as traction motor package pre-assembly, on-board charger, inverted power control unit, AC compressor are assembled at this station. (ii) Pallet 1 and 2 : Here, the chassis is dressed/assembled using the various parts/sub-assemblies s....
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....er cars is produced below. Relevant entry (4-digit level) for classification of passenger cars is produced below : Tariff item Description Rate of duty 8703 Motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 8702), including station wagons and racing cars 125% 5.2 Since imports by the applicant are in the form of electric vehicle kits comprising of unassembled/disassembled sub-assemblies or parts, it is important to refer to Rule 2(a) of the General Rules for Interpretation ('GRI') to First Schedule, which outlines principles for determining classification. The said rule provides that if an unassembled or disassembled article exhibits essential character of the finished article at the time of presentation to customs, the said article shall be classifiable as finished article. Therefore, based on this rule, disassembled or unassembled vehicle kits may be classifiable under Tariff Entry 8703, provided they exhibit essential characteristics of complete vehicle at the time of import. Relevant extract of Rule 2(a) of GRI reads as under : "Rule 2(a) Any reference in a heading to an article shall be taken to i....
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....te of BCD on import of electric vehicle is dependent upon the level of breakdown/disassembly at the time of import as under : (i) Incomplete or unfinished electric vehicle, imported as knocked down kit containing necessary sub-assemblies, including 'battery pack, motor, motor controller, charger, power control unit, energy monitor, contactor, brake system, electric compressor' (hereinafter referred to as '9 specified sub-assemblies'), with none of these inter-connected with each other and not mounted on a chassis, attracting 15% BCD. (ii) Incomplete or unfinished electric vehicle, imported as knocked down kit containing necessary sub-assemblies, including 9 specified sub-assemblies, with any of the sub-assemblies inter-connected with each other, but not mounted on chassis, attracting 30% BCD. (iii) Import in any other form attracting 100%/60% rate of BCD depending upon the CIF value. 5.7 Further, based on the reading of the explanation introduced in the relevant entry for electric vehicle (Chapter 8703), it is clear that even if some of the components required for assembling an electric vehicle are not imported....
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.... imported separately cannot be clubbed together because they are not presented as one CKD pack at the time of import. If all the parts are presented in CKD condition and they have essential character of a complete article, they have to be assessed as complete article [as held in case of Procal Electronics India Pvt. Ltd. v. Commissioner - 2005 (185) E.L.T. A58 (S.C.)]. It is seen from the packing list (Exhibit-A) that the CKD list consisting of listed parts are giving essential characteristics of motor vehicles. If these items are brought together, they can be classified under Heading 8703. In view of the above the electric vehicle kits proposed to be imported are classifiable under CTH 8703 of the first schedule to the Customs Tariff Act, 1975. 6.2 In respect of question of eligibility of Notification No. 50/2017, Sr. No. 526A, the concerned Commissionerate has submitted that the electric vehicle proposed to be imported should constitute necessary components, parts or sub-assemblies, for assembling a complete vehicle, including the above mentioned 9 specified sub-assemblies, whether or not individually pre-assembled. It would be eligible for BCD at the rate of 15% if none of....
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....cognizing the importance of timely pronouncement of rulings, I proceed to examine the question posed for advance rulings on merits. 10. The applicant has approached this Authority seeking ruling on the following questions : (i) Whether the electric vehicle kits proposed to be imported are classifiable under Tariff Entry No. 8703 of the First Schedule to Customs Tariff Act, 1975? (ii) Whether the electric vehicle kits proposed to be imported by the applicant would be eligible for exemption under sub-category (a) of Serial No. 526A(1) of the Mega Exemption Notification and qualify for 15% BCD rate? 11. The first question relates to the classification of the "Electric Vehicle Kits' of Volvo brand passenger vehicles. The salient features of the said kits have been detailed above and in the interest of brevity not being reproduced here again. It is however, noted that the kits as presented to be customs in India will consist of various separately identifiable parts, components and sub-assemblies, which would have been assembled in the foreign plant before export and subsequently disassembled for the purposes of transport. T....
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....f a complete article, they have to be assessed as complete article, in terms of said Rule 2(a) of GIR. I find that in the present case, the motor vehicles are initially assembled at site to a substantive extent for thorough verification and testing, then disassembled and imported in form of a kit. Therefore, notwithstanding the fact that at the initial assembling stage, they have not acquired the completeness of a car to be roadworthy, these kits have acquired the essential characteristics of motor vehicle to merit classification under Heading 8703, noting that they are principally designed for the transport of persons, numbering less than ten persons. In coming to this conclusion, I have relied inter alia on my Ruling No. CAAR/Del/Volvo/19/2021, dated 10-9-2021 in the case of M/s. Volvo Auto India Private Ltd. [2022 (379) E.L.T. 513 (A.A.R. - Cus. - Del.)]. In this regard, I also note that the question relating to classification of the EV vehicle kits posed for advance ruling is sufficiently answered holding that they are classifiable under Heading 8703 at four-digit level. Before proceeding further to discuss the second question, I wish to refer to the additional submission made ....
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....the Customs Tariff Act, 1975 as per the general rules of interpretation." 15. I find that the above entry covers all electric vehicles falling under Heading 8703. Further, given the form in which the vehicle kits in disassembled form will be presented before the customs, the question before me narrows down to whether the said vehicle kits being imported by the applicant would be covered under the sub-category (a) or (b) of the S. No. 1, which covers 'Electrically operated vehicles, if imported, - incomplete or unfinished, as a knocked down kit containing necessary components, parts or sub-assemblies for assembling a complete vehicle, including battery pack, motor, motor controller, charger, power control unit, energy monitor, contactor, brake system, electric compressor, whether or not individually pre-assembled'. Since S. No. 2 categorises complete (i.e. other than incomplete or unfinished electric vehicles) on the basis of price, the same is not relevant to answer the question posed for advance ruling. 16. Moving forward, I find that the further sub-categorization under (a) or (b) of S. No. 1 of the aforesaid notification and eligibility for the lowest rate of....