TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 1739
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....rts of two/three/four wheeled electric vehicle, of the First Schedule of the Customs Tariff Act, 1975. 2. Submission by the Applicant: 2.1 M/s. Valeo India Private limited ("the Applicant"), a Private Limited company is a leader in passenger car segment, engaged in the manufacture of automobile components. The applicant is a preferred supplier to automotive majors in the country. 2.2 The applicant is proposing to import Powertrain Control Unit (PCU), also referred as Vehicle Control Unit (VCU), (hereinafter referred to as "VCU/PCU in question/the subject good"). 2.3 The VCU/ PCU in question is the control unit which is used in two wheeled, three wheeled electric vehicles and four wheeled light electric vehicles. Main purpose of the VCU/PCU in an Electric vehicle are: ⮚ To control/monitor the iBSG (Integrated Belt Starter Generator)/SMMG (Small Mobility Motor generator); ⮚ To control / monitor the BMS (Battery Management System) and On-board/Off-board charger; ⮚ To control/monitor BCM (Body Control Module), ABS (Anti-braking system); ⮚ Manage or send diagnostics to HMI (Human Machine Interface) or other devi....
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....ive status. d. Sending battery information, vehicle speed, gear drive status, and other error information to the cluster. 3. Applicants interpretation of Law/Facts: 3.1 The Applicant submit that according to Rule 1 of GRI, titles of Section and Chapters in the Schedules are provided for ease of reference only. For legal purposes, classification shall be determined according to the terms of the headings and any relevant section or Chapter Notes. The other rules for interpretation shall be required only when the relevant Heading or Section Notes are not sufficient to lead to a definitive classification. Classification under Heading 8537 3.2 Chapter 85 of the First Schedule to the Customs Tariff Act, 1975 covers goods described as "Electrical machinery and equipment and parts thereof; sound recorders and reproducers, parts and accessories of such articles". Chapter Heading 8537 covers "Boards, panels, consoles desks, cabinets and other bases, equipped with two or more apparatus of heading 8535 or 8536, for electric control or the distribution of electricity, including those incorporating instruments or apparatus of Chapter 90, and numerical control apparatus, othe....
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....heelers / Electric 3 Wheelers / Light Electric 4 Wheelers but it will function same as the Electronic Control Unit (ECU). 3.6 Therefore, classification of the VCU/PCU under heading 8537 can be justified. Classification under Heading 8543 3.7 Chapter 85 of the First Schedule to the Customs Tariff Act, 1975, falling under Section XVI, covers goods described as "Electrical machinery and equipment and parts thereof, sound recorders and reproducers, parts and accessories of such articles". Furthermore, Chapter Heading 8543 covers "Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this Chapter." 3.8 The HSN ENs under the heading 85 explain the scope of the coverage of the machines/apparatus of this heading. It is thus apparent that for purposes of classification under the heading 8543, the machines/ apparatus must have 'individual functions', as explained in the HSN ENs under the heading 8479. 3.9 Applying the requirements for being regarded as an instrument/ apparatus having an individual function, it could be seen that: a) VCU/PCU is an electronic instrument b) VCU/ PCU in question is not excl....
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.... Medical or Surgical Instruments and Apparatus; Parts and Accessories Thereof". Furthermore, Chapter Heading 9032 covers "Automatic regulating or controlling instruments and apparatus" 3.13 The scope of coverage of the instruments and apparatus of the heading 9032 are defined by Note 7 to Chapter-90. It is important to note that Note 7 to Chapter 90, states that the heading 9032 applies only to the type of instruments and apparatus of the types described in Note 7 (a) and 7 (b). Therefore, unless the instrument or apparatus in question meets the requirements of Note 7 (a) or 7 (b) ibid, such instruments or apparatus cannot be classified under CTH 9032. 3.14 Note 7 (a) ibid, deals with instrument or apparatus for automatically controlling the flow, level, pressure or other variables of liquids or gases or for automatically controlling temperature. The VCU/ PCU in question does no control any of these features inside the vehicle, though it monitors the temperature of the batteries. However, this monitoring function cannot be regarded as an automatic regulation/controlling function. Therefore, classification in terms of Note 7 (a) ibid can be ruled out. 3.15 Note 7 (b) covers....
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....from the driver. 3.18 This aspect of the VCU/PCU to maintain the torque and hence the speed at the desired level is on an aspect that falls squarely within the confines of Note 7 (b) to Chapter 90 and therefore, classification of the VCU/PCU under CTH 9032 can be justified in regard to this aspect. This function is an essential feature of the VCU/PCU. 3.19 Therefore, the VCU/PCU could be regarded as carrying out a controlling or regulatory function in regard to the function of maintenance of the torque at the desired level. Therefore, this aspect of the VCU/PCU will fall within the Note 7 (b) and therefore can be classified under CTH 9032. 3.20 The applicant submitted that classification of the VCU/PCU can be justified under CTH 8537 and 8543 based on a few features of the VCU/PCU. They have also noted that the VCU/PCU has an essential feature of maintaining the torque at the desired level and hence CTH 9032 can also be justified. 3.21 Under such circumstances, GIR 3 could be replied to resolve the question: As-the headings 8537, 8543 and 9032 are equally specific, by application of GIR 3 (c) of the VCU/PCU-under CTH 9032 can be justified. Under CTH 9032 the applicable ....
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....itions cumulatively is a must. The first condition is that the part/ accessory in question should not be excluded by Note 2 of Section XVII. In this regard Note 2 (f) and (g) ibid, which is relevant is extracted below: "2. The expressions "parts" and "parts and accessories" do not apply to the following articles, whether or not they are identifiable as for the goods of this Section: (a)-(e) .... (f) Electrical machinery or equipment (Chapter 85); (g) articles of Chapter 90:" 3.27 It is thus apparent that Electrical machinery or equipment (Chapter 85) and all articles of Chapter 90 are excluded from being classified as parts/accessories of motor vehicles under CTH 8708 by Note 2(f) and (g) ibid even when such parts/ accessories are identifiable for use with the motor vehicles of Chapter 87. Since the VCU/PCU in question falls under Chapter 90, first condition is not satisfied. 3.28 In the light of the discussions supra the VCU/ PCU in question is more appropriately covered under CTH 90328910. Therefore, the third condition is also not satisfied. 3.29 Therefore, notwithstanding the fact that the VCU/PCU in question is identifiable for use ....
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....riate classification for the goods. ⮚ For classification under 8543, it is noticed that chapter 8543 covers machines and apparatus having individual functions. Further, in the explanatory notes of 8543, the machines and apparatus enumerated therein all had individual functions, and they did not appear to be the part of any other machine, and were all capable of functioning independently. Since the VCU is not capable of functioning independently, and its functioning was fully dependent on it being incorporated into a motor vehicle as a motor vehicle part, it can be said that 8543 may not be the appropriate classification for the goods. ⮚ For classification under 8708, it is found that the headings under Chapters 84, 85 and 90 had been ruled out, and the goods are without doubt a part of a motor vehicle without which a motor vehicle will not function. Each of these Control Units had a specific part number and would function with only a particular model/models of a particular manufacturer. In commercial or common market parlance also these goods are purchased and sold as a part of a particular motor vehicle, and are not known or sold as any other item o....
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.... No 1/2022 Customs dated 5-1-2022 and 25/2022 Customs dated 3-10-22 and reiterated that end use cannot be decisive for classification. Nobody appeared on behalf of the department for the hearing. DISCUSSION AND FINDINGS 6.1 I have considered all the materials placed before me in respect of the subject goods. I have gone through the submissions made by the applicant during the hearing. Therefore, I proceed to pronounce a ruling on the basis of information available on record as well as existing legal framework. 6.2 The Applicant has sought advance ruling in respect of the following question: a. Whether the products i.e. Vehicle Control Unit (VCU) or Powertrain Control Unit (PCU) is classifiable under CTH 8537 as a control equipment, or under CTH 8543 as an electrical equipment having individual function, or under CTH 9032 as an automatic regulating or controlling equipment, or under CTH 8708/8714 as parts of two/three/four wheeled electric vehicle, of the First Schedule of the Customs Tariff Act, 1975. 6.3 At the outset, I find that the issue raised in the question in the Form CAAR-1 is squarely covered under Section 28H(2) of the Customs Act, 1962 bein....
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....Cabinets and other bases, equipped with two or more apparatus of heading 8535 or 8536, for electric control or the distribution of electricity, including those incorporating instruments or apparatus of chapter 90, and numerical control apparatus, other than switching apparatus of heading 8517". The relevant Explanatory Note to CTH 8537 provides that, "8537.10 -For a voltage not exceeding 1,000 V 8537.20 -For a voltage exceeding 1,000 V These consists of an assembly of apparatus of the kind referred to in the two preceding headings (e.g., switches and fuses) on a board, panel, console, etc., or mounted in a cabinet, desk, etc. They usually also incorporate meters, and sometimes also subsidiary apparatus such as transformers, valves, voltage regulators, rheostats or luminous circuit diagrams. The goods of this heading vary from small switchboards with only a few switches, fuses, etc. (e.g., for lighting installations) to complex control panels for machine-tools, rolling mills, power stations, radio stations, etc., including assemblies of several of the articles cited in the text of this heading. The heading also covers: (1) Numeri....
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....ectricity. 6.6.2 In light of the above, it is evident that the VCU/PCU is not a stand-alone item or apparatus but rather a component designed specifically for use as a part of the main equipment, i.e., an electric vehicle. Therefore, the VCU/PCU would merit classification as a part rather than as an independent apparatus falling under its own heading. The Explanatory Notes to CTH 8537 clearly state that parts of the goods classified under this heading are to be classified under heading 85.38. This confirms that heading 85.37 applies only to complete apparatus or equipment used for the control or distribution of electricity, not to individual parts. Since the VCU/PCU functions within an electric vehicle to process inputs from various sensors and manage vehicle operations rather than to control or distribute electricity directly, it cannot be classified under CTH 8537 as these heading covers only apparatus/equipment for control or distribution of electricity. 6.6.3 The applicant cited US Customs Ruling No. N244506 (dated 28.08.2013) and European Customs Ruling No. ATBT12024000041-DEC (dated 10.04.2024), which classified Electronic Control Units (ECU) under CTH 8537 as progra....
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....ovided that such features are subsidiary to the electrical function of the machine or appliance. (emphasis supplied)" 6.7.3 It is thus apparent that for purposes of classification under the heading 8543, the machines/ apparatus must have 'individual functions', as explained in the HSN Explanatory Notes to heading 8479. The relevant Explanatory Notes under Heading 84.79 is extracted below: "This heading is restricted to machinery having individual functions, which: (a) Is not excluded from this Chapter by the operation of any Section or Chapter Note, and. (b) Is not covered more specifically by a heading in any other Chapter of the Nomenclature, and, (c) Cannot be classified in any other particular heading of this Chapter since: (i) No other heading covers it by reference to its method of functioning, description or type. and (ii) No other heading covers it by reference to its use or to the industry in which it is employed. Or (iii) It could fall equally well into two (or more) other such headings (general purpose machines)." The machinery of this heading is distinguished from the parts of machiner....
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....t at, a desired value, stabilised against disturbances, by constantly or periodically measuring its actual value. (I) INSTRUMENTS AND APPARATUS FOR AUTOMATICALLY CONTROLLING THE FLOW, LEVEL, PRESSURE OR OTHER VARIABLES OF LIQUIDS OR GASES, OR FOR AUTOMATICALLY CONTROLLING TEMPERATURE Automatic control apparatus for liquids or gases and apparatus for automatically controlling temperature form part of complete automatic control systems and consist essentially of the following devices: (A) A device for measuring the variable to be controlled (pressure or level in a tank, temperature in a room, etc.); in some cases, a simple device which is sensitive to changes in the variable (metal or bi-metal rod, chamber or bellows containing an expanding liquid, float, etc.) may be used instead of a measuring device. (B) A control device which compares the measured value with the desired value and actuates the device described in (C) below accordingly. (C) A starting, stopping or operating device. Apparatus for automatically controlling liquids or gases or temperature, within the meaning of Note 7 (a) to this Chapter, consists of these three devices ....
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....s according to the factor or phenomenon being controlled. The entire process should be designed to maintain the non-electrical phenomenon or factor at the desired level, stabilized against disturbances. 6.8.3 The applicant has stated that the VCU/PCU does not control the flow, level, pressure, or other variables of liquids or gases within the vehicle. Although it monitors the battery temperature, such monitoring cannot be regarded as automatic regulation or control. Therefore, classification under Note 7(a) can be ruled out. In view of this, I find that no further discussion on this point is necessary. 6.8.4 The applicant has stated that the non-electrical parameter in the case of the VCU/PCU is the motor torque, which is constantly monitored based on the throttle input and state of charge (SoC). The VCU/PCU adjusts the torque request according to the available battery charge, even if the driver provides a higher throttle input, to maintain the torque at the desired level. The throttle input and SoC are transmitted to the VCU/PCU as electrical signals, based on which the VCU/PCU calculates and adjusts the torque to maintain the vehicle's speed. This function represents an....
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....icant has submitted that headings 8537, 8543, and 9032 are equally specific, and therefore, by the application of General Interpretative Rule (GIR) 3(c), the VCU/PCU should be classified under CTI 90328910 as Electronic Automatic Regulators. However, the principle under GIR 3(c) applies only when there are two equally plausible competing entries. Since it has been established that the VCU/PCU clearly does not fall under headings 8537, 8543, or 9032, this submission does not support the applicant's claim. 6.9 Let me examine the issue of classification of the product i.e. VCU/PCU under CTH 8708/8714 as parts of two-wheeled, three-wheeled, and four-wheeled electric vehicles. 6.9.1 The applicant has stated that the VCU/PCU is used in two-wheeled, three-wheeled, and four-wheeled electric vehicles. Its primary function is to analyse data received from various sources, such as the throttle position sensor, brake pedal sensor, Battery Management System (BMS), motor controller, wheel speed sensors, and temperature sensors, and to send control signals to different vehicle systems to adjust their operation. This shows that the VCU/PCU functions as an integral part of the vehicle'....
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....e classification of the product under Chapter 85. Moreover, as discussed earlier, the VCU/PCU is not classifiable under CTH 8543. Additionally, the applicant has argued that the subject goods (VCU/PCU) are excluded from classification under Chapter 87 as per Clause (g) of Note 2 to Section XVII, which excludes "articles of Chapter 90" as the VCU/PCU falls under Chapter 90. However, as discussed earlier, the VCU/PCU does not meet the definition of an automatic regulating or controlling instrument under CTH 9032 as defined in HSN Explanatory Notes 7(a) and 7(b). Therefore, the VCU/PCU cannot be classified under Chapter 90. Since the VCU/PCU is not an article of Chapter 90, the exclusion under Section Note 2(g) does not apply. Consequently, the VCU/PCU is not excluded from classification under Chapter 87. Furthermore, the VCU/PCU does not fall under any of the other exclusion categories listed under Section Note 2 of Section XVII. Therefore, the VCU/PCU qualifies for classification under Chapter 87. 6.9.4 The HSN Explanatory Notes to Section XVII further amplifies the scope and ambit of the Section Notes. Part III deals with Parts and accessories. The same is reproduced be....
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....designed for the transport of persons (other than those of heading 8702), including station wagons and racing cars 8704 Motor vehicles for transport of goods 8705 Special purpose motor vehicles The above CTH i.e. 8701 to 8705 covers Motor Vehicles such as Tractors, Motor cars, etc. and not two wheelers. It is important to note that three-wheeled and four-wheeled electric vehicles designed for the transport of persons are classified under heading 8703, which covers "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". Since the Vehicle Control Unit (VCU) or Power Control Unit (PCU) are designed for use in such three-wheeled and four-wheeled electric vehicles, they are considered as parts of these vehicles. Therefore, VCU/PCU would appropriately fall under CTH 8708 as parts and accessories of motor vehicles classified under Heading 8703. The relevant entries under CTH 8708 are reproduced hereunder: 8708 Parts and Accessories of the Motor vehicles of Heading 8701 to 8705 8708 10 -Bumpers and parts thereof : 8708 10 10 - Other ....
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....708, since no specific sub-heading is provided for it under heading 8708. 6.9.8 It is noted that Chapter Heading 8714 pertains to "Parts and accessories of vehicles of headings 8711 to 8713". The heading 8711 to 8713, are described as under: Chapter/Heading/Tariff Item Description of Goods 8711 Motorcycles (including mopeds) and cycles fitted with an auxiliary motor, with or without side-cars; 8712 Bicycles and other cycles (including delivery tricycles), not motorized; 8713 Carriages for disabled persons, whether or not motorised or otherwise, which is reproduced as under: Thus, I find that two-wheeled electric vehicle (Motorcycle) is classified under heading 8711, which covers "Motorcycles (including mopeds) and cycles fitted with an auxiliary motor, with or without side-cars;" and the VCU/PCU will be used in such two-wheeled electric vehicle. Hence, these VCU/PCU are nothing but part of two-wheeled electric vehicle and fall under CTH 8714. The relevant entries for parts and accessories of two-wheeled electric vehicle under CTH 8714 are reproduced hereunder: Chapter/ Heading/Tariff Item Description of Goods 8714 Parts and accessories of v....
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....on'ble Supreme Court in the case of Commissioner of Central Excise Vs. Wockhardt Life Sciences Ltd reported in 2012 (277) ELT 299 (SC) had held that the functional utility and predominant usage of the commodity must be taken into account apart from the understanding in common parlance to determine the correct classification of the product. The Hon'ble Supreme Court in the case of Collector of Customs Vs. Kumudam Publications [1997 (96) ELT 226 (SC)] has held that "it is not entirely correct to say that the end use or function of the goods is irrelevant to decide the question of classification". A three Judge Bench of the Hon'ble Supreme Court had also relied upon the function and end use in determining the classification in the case of Indian Tool Manufactures Vs. Asst. Collector of Central Excise, Nasik & Others reported in 1994 (74) ELT 12 (SC). Therefore, while end use alone may not be decisive for classification, it remains a relevant factor that should be considered along with other statutory criteria when determining the appropriate classification of goods. 7. The jurisdictional Commissionerate has argued that the VCU/PCU is undoubtedly a part of a motor vehicl....