E-Rickshaw Parts Without Motors, Batteries Not Complete Vehicles In CKD Form: CESTAT Kolkata

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on 2 July held that imported e-rickshaw parts without essential components such as motors and batteries cannot be treated as complete e-rickshaws in a completely knocked down (CKD) condition.

A Bench comprising Judicial Member Ashok Jindal and Technical Member K. Anpazhakan allowed cross-appeals filed by Zeniak Innovation India Ltd and the Revenue in a dispute over customs classification of imported e-rickshaw components. It observed:

“...the appellant has imported only 'parts' of e-rickshaw viz., chassis frames, body shells, structural assemblies, wiring harnesses, and other ancillary parts of e rickshaw, which cannot be termed as a "complete e rickshaw.”

Customs authorities had alleged that consignments imported by the company were in fact complete electric tricycles split into components to evade higher customs duty. Acting on this view, the Department reclassified eight intercepted consignments, raised a differential customs duty demand of over Rs 24.12 lakh, ordered confiscation of goods, imposed a redemption fine of Rs 60 lakh and imposed penalties. It also sought to revive proceedings relating to 306 earlier Bills of Entry.

Rejecting the Department's approach, the Tribunal held that the imported consignments did not include electric motors and batteries, which are the essential propulsion components of an e-rickshaw. It observed that without these components, the goods could neither move nor function as a vehicle and therefore could not be treated as complete e-rickshaws.

It further held that mere import of structural and ancillary components did not justify reclassification as complete vehicles and found the customs action unsustainable. The Bench observed:

“in view of the fact that the said parts imported by the appellant-company do not constitute a fully finished electronic equipment / e-rickshaw, we hold that the impugned demand of duty in respect of the said live Bills of Entry by rejecting the classification declared by the importer cannot be sustained.”

Accordingly, the CESTAT set aside the duty demand arising from the eight intercepted Bills of Entry, quashed the confiscation order, redemption fine and penalties, dismissed the Revenue's appeals, and directed release of Rs 1 crore deposited during investigation along with applicable interest.

For Appellant: S.K. Mohapatra, Advocate, Subhrabrata Chattaraj, Consultant and Arijit Goswami, Advocate

For Respondent: Subrata Debnath, Authorized Representative and Faiz Ahmed, Authorized Representative