TaxTMI 
TaxTMI 
2026 (1) TMI 118
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.... under CTH 8708/8714 as parts 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 ....
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.... battery and gear drive 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 con....
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....ned for Electric 2 Wheelers / 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 individual function, it could be seen that: a) VCU/PCU is an electronic instrument b) VCU/ PCU in que....
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....king, Precision, 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 N....
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.... throttle input 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/POU 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....
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....he three conditions 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 identifi....
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....us of the headings 8535 or 8536 and it is a populated Printed Circuit Board loaded with an appropriate software for interpreting the signals received from various sensors such as throttle position, brake switch and gear mode switch etc .; (ii) VCU/PCU receives data or inputs from multiple sensors and modules and electrically controls various functions of the engine based upon the programmed instructions contained in the VCU/PCU memory; (iii) After receiving data, VCU/PCU processes the information and controls the operation of other devices. However, based on two rulings of United States and European Customs on Electronic Control Unit (ECU), the applicant justified the classification of VCU/PCU under heading 8537 as VCU/PCU is designed for Electronic 2/3 Wheelers/Light Electric 4 Wheelers will function as the Electronic Control Unit (ECU). As the VCU/PCU is designed specifically for automotive applications, classifying it under HS code 8537 might not be the most accurate or appropriate. ⮚ As regards classification under Heading 8543, which covers electrical machines and apparatus having individual functions, not specified or included elsewh....
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....systems and therefore it appears that these can be correctly classifiable under HS code 8708. 5. Details of Hearing 5.1 A hearing was held on 22.01.2025 at 01.00 PM. Sh. P. Sridharan, Advocate appeared online for the hearing on behalf of the applicant and reiterated the contention submitted with the application. He submitted that the subject goods i.e., VCU/PCU is used to manage the powertrain, BMS and cluster, including vehicle input for traction and regeneration; that the subject device is multifunctional viz. it sends a torque request to the motor based on driver input, monitor the state of charge (SoC), discharge request to Battery Management System(BMS) keeping in mind the charge level. It also monitors the battery, vehicle speed or gear drive status and other error information to the cluster. He stated that the subject goods can be used in electric vehicle including 2 wheelers, 3 wheelers and 4 wheelers. He argued that the goods are most appropriately classifiable under CTH 9032 in terms of Note 7(b) of Chapter 90. He also contended that, to some extent, the goods could fall under CTH 8537; however, this may not be the most suitable classification. He ruled out class....
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....o-wheeled, three-wheeled, and light four-wheeled electric vehicles. Its main functions include controlling and monitoring the iBSG (Integrated Belt Starter Generator) and SMMG (Small Mobility Motor Generator), as well as the BMS (Battery Management System) and the on-board/off-board charger. It also manages the BCM (Body Control Module) and ABS (Anti-lock Braking System) to ensure proper vehicle operation. Additionally, the VCU/PCU is responsible for sending diagnostics and managing communication with the HMI (Human Machine Interface) and other devices through the CAN (Controller Area Network). In the context of electric vehicles, a Vehicle Control Unit (VCU) or Powertrain Control Unit (PCU) acts as the central brain, managing and coordinating various subsystems like motor drive, battery management, and energy regeneration, ensuring efficient and harmonious operation of the vehicle's electrical system. Inside a VCU/PCU, a microcontroller that acts as the central nervous system, processing data from various vehicle sensors and executing control algorithms, managing powertrain components and other vehicle functions. 6.6 Now, I take up the matter requiring the ruling on t....
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....thmetic, to control, through digital or analog input/output modules, various types of machines. The heading does not cover automatic controlling apparatus of heading 90.32. PARTS Subject to the general provisions regarding the classification of parts (see the General Explanatory Note to Section XVI), parts of the goods of this heading are classified in heading 85.38". On plain reading of the above Explanatory Note, it is apparent that the heading 8537 covers individual apparatus/instrument when it is used solely or on standalone basis for control and/or distribution of electricity. The VCU/PCU, however, functions primarily as a control unit within an electric vehicle, managing and coordinating various subsystems such as motor drive, battery management, and energy regeneration based on driver inputs and vehicle status. Its purpose is not to distribute electricity but to process signals and execute programmed logic to optimize vehicle performance. Unlike an apparatus for electric control or the distribution of electricity, which primarily functions to regulate, distribute, and control electrical power in various systems, the VCU/PCU in electric vehicle is s....
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....plicant. 6.7.1 The applicant submitted that the VCU/PCU qualifies as an electronic instrument with an individual function. It is recognized as an electronic instrument and is not excluded by any Section or Chapter Note. Additionally, it is not more specifically covered by any other heading in the Nomenclature. Furthermore, no other heading covers the VCU/PCU based on its function, description, or type, nor by its use or the industry in which it is employed. Therefore, the VCU/PCU meets the requirements for classification under heading 8543. 6.7.2 In this regard, I note that the Chapter Heading 8543 covers "Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this Chapter". The relevant Explanatory Note to CTH 8543 provides that: "This heading covers all electrical appliances and apparatus, not falling in any other heading of this Chapter, nor covered more specifically by a heading of any other Chapter of the Nomenclature, nor excluded by the operation of a Legal Note to Section XVI or to this Chapter. The principal electrical goods covered more specifically by other Chapters are electrical machinery of Chapter 84 and ....
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....by a heading in any other Chapter, nor should it be classifiable under any other heading based on its method of functioning, description, type, or use in a particular industry. However, in the present case, the VCU/PCU is not a standalone apparatus or machine; rather, it forms a part of an electric vehicle. The Explanatory Notes to Heading 8543 specifically exclude parts of machinery that are classified according to the general provisions concerning parts. Since the VCU/PCU functions as a part of the electric vehicle and not as an independent machine or apparatus with an individual function, it cannot be classified under Heading 8543. 6.8 Now, I proceed to examine the classification of the goods i.e. VCU/PCU under CTH 9032 as proposed by the applicant. 6.8.1 The Chapter Heading 9032 covers "Automatic regulating or controlling instruments and apparatus". The relevant Explanatory Notes to CTH 9032 is reproduced below for ease of reference: "In accordance with Note 7 to this Chapter, this heading covers: (A) Instruments and apparatus for automatically controlling the flow, level, pressure or other variables of liquids or gases, or for automatically controlli....
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.... The automatic regulators of this heading are intended for use in complete automatic control systems which are designed to bring a quantity, electrical or non-electrical, to, and maintain it at, a desired value, stabilised against any disturbances, by constantly or periodically measuring its actual value. They consist essentially of the following devices: (A) A measuring device (sensing device, converter, resistance probe, thermocouple, etc.) which determines the actual value of the variable to be controlled and converts it into a proportional electrical signal. (B) An electrical control device which compares the measured value with the desired value and gives a signal (generally in the form of a modulated current). (C) A starting, stopping or operating device (generally contacts, switches or circuit breakers, reversing switches or, sometimes, relay switches) which supplies current to an actuator in accordance with the signal received from the control device. An automatic regulator within the meaning of Note 7 (b) to this Chapter consists of the devices described in (A), (B) and (C) above, whether assembled together as a single entity or i....
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.... desired value, stabilized against disturbances, by constantly or periodically measuring its actual value. Such regulators typically consist of a measuring device, a control device that compares the measured value with the desired value, and a starting or stopping or operating device that supplies current to an actuator based on the signal from the control device. 6.8.6 In the present case, the VCU/PCU is neither an instrument nor an apparatus in itself but rather a component designed specifically for use in an electric vehicle. Based on the records of the case and the detailed technical submissions made by the applicant, it is evident that the VCU/PCU neither measures any parameter nor independently regulates any function. Its role is limited to analyzing data received from sources such as the throttle position sensor, brake pedal sensor, Battery Management System (BMS), motor controller, wheel speed sensors, and temperature sensors, and sending control signals to different vehicle systems to adjust their operation. Therefore, the VCU/PCU functions as part of the vehicle's drive system rather than as an independent automatic regulator. 6.8.7 Automatic regulators, as defi....
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....s and accessories of motor vehicle is governed by Section Note 2 of Section XVII and same as mentioned 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) joints, washers or the like of any material (classified according to their constituent material or in heading 8484) or other articles of vulcanised rubber other than hard rubber (heading 4016); (b) parts of general use, as defined in Note 2 to Section XV, of base metal (Section XV), or similar goods of plastics (Chapter 39); (c) articles of Chapter 82 (tools); (d) articles of heading 8306; (e) machines and apparatus of headings 8401 to 8479, or parts thereof, other than the radiators for the articles of this Section, articles of heading 8481 or 8482 or, provided they constitute integral parts of engines and motors, articles of heading 8483; (f) electrical machinery or equipment (Chapter 85); (g) articles of Chapter 90; (h) articles of Chapter 91; (ij) arms (Chapter 93); (k) luminaries and lighting fittings an....
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.... (c) They must not be specifically included elsewhere in the Nomenclature. The above provisions show that for any item to be classified as a part and accessories in Chapter 87, all the three conditions as at (a), (b) and (c) above have to be fulfilled cumulatively. 6.9.5 I have gone through the list of 'parts and accessories' excluded as per the provisions of the Explanatory Notes 2 to Section XVII and found that 'VCU/PCU' is not listed among the excluded items, thereby satisfying the first condition. Furthermore, based on the applicant's submission, it is clear that the VCU/PCU, by its configuration, specific functions, and intended use, is designed for exclusive or principal use in two-wheeled, three-wheeled, and four-wheeled electric motor vehicles. These vehicles are classified under headings 87.03 and 87.11 of Chapter 87 of the First Schedule to the Customs Tariff Act, 1975, thereby meeting the second condition. Additionally, the product is not specifically classified under any other heading in the Tariff, thereby satisfying the third condition. Since all the three conditions have been satisfied, it can be concluded that the 'VCU/PCU....
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....08 70 00 - Road wheels and parts and accessories thereof 8708 80 00 - Suspension systems and parts thereof -Other parts and accessories: 8708 91 00 -- Radiators and parts thereof 8708 92 00 -- Silencers and exhaust pipes; parts thereof 8708 93 00 -- Clutches and parts thereof 8708 94 00 -- Steering wheels, steering columns and steering boxes; parts thereof 8708 95 00 -- Safety airbags with inflaters system; parts thereof 8708 99 00 -- Other 6.9.7 Based on the above entries and the explanatory notes to heading 8708, which provide only an illustrative list of the parts and accessories covered under that heading and not an exhaustive one, the absence of a specific parts or accessories in the illustrative list does not imply that such parts or accessories cannot or should not be classified under the said heading. A plain reading of Chapter Heading 8708 indicates that it covers parts and accessories of motor vehicles falling under heading 8701 to 8705, and the scope of this heading is broad enough to include all parts and accessories of motor vehicles, subject to the relevant conditions. Therefore, I am of the o....
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....t case, the product, VCU/PCU intended for use in two- wheeled electric vehicle, is more specifically classifiable under CTI 87141090 (Parts and Accessories of the vehicles of Heading 8711 to 8713-Other) of the Customs Tariff Act, 1975 by application of GIR 1, Section XVII and Explanatory Notes to heading 8714. 6.10 At paragraph 3.18 of Annexure-B of their application, the applicant has submitted that the VCU/PCU is designed for use in Electric Two-Wheelers, Electric Three-Wheelers, and Light Electric Four-Wheelers but it will function same as the Electronic Control Unit (ECU). In this regard, reliance is placed on the decision in Continental Automotive Brake Systems India Pvt. Ltd. vs. Commissioner of Customs, Delhi [2024 (389) E.L.T. 93 (Tri .- Del)], wherein the Hon'ble CESTAT, Delhi held that the Electronic Control Unit (ECU), although not a regulator of electrical quantity nor an instrument or apparatus for regulating non-electrical quantities, does not fall under Section Note 7(b) of heading 9032 and is thus excluded from Heading 9032. Consequently, it was held to be classifiable under Tariff Item 8708 99 00 as a part of automobiles. 6.11 The Applicant has argued tha....