E-Scooter Imports In CKD Condition Can’t Be Artificially Treated as Complete E-Scooters: CESTAT Quashes Rs. 56.45 Crore Customs Demand

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside a customs duty demand of ₹56.45 crore in a dispute concerning import of electric scooter components allegedly brought in Completely Knocked Down (CKD) form. The bench of P. Dinesha (Judicial Member) and Vasa Seshagiri Rao (Technical Member) has observed that the Department could not artificially aggregate multiple consignments and different Bills of Entry to classify the imported goods as complete electric scooters under Rule 2(a) of the General Rules for Interpretation (GRI). The Bench emphasized that classification must be determined on the basis of goods “as presented” at the time of import. The appeals were filed by M/s Greaves Electric Mobility Pvt. Ltd., its officials, and logistics service provider Seven Seas Global Express Logistics Ltd. against an Order-in-Original passed by the Commissioner of Customs, Chennai-II. The impugned order had confirmed a demand of ₹56.45 crore under Section 28(4) of the Customs Act along with interest, imposed redemption fine of ₹16 crore, and levied penalty exceeding ₹56.43 crore under Section 114A of the Customs Act. According to the Directorate of Revenue Intelligence (DRI), the company had imported electric scooters/e-bikes in CKD condition by splitting consignments into multiple Bills of Entry and classifying them as “parts” under Chapter Heading 8714 instead of complete electric scooters under Heading 8711. The Department alleged that the imports included all major components such as frames, motors, controllers, converters, wiring harnesses and body assemblies, thereby imparting the “essential character” of complete electric scooters. The Department further alleged that the company deliberately adopted a modus operandi to evade higher customs duty applicable to complete CKD electric scooters and to continue availing benefits available to manufacturers under the FAME scheme. Buy Now: Customs Duty Judgements E-Compilation – April 2026 However, the Tribunal found serious flaws in the Department’s case. It observed that the entire allegation rested on the assumption that all essential components of electric vehicles were imported together, but the documentary evidence did not support such a conclusion. The Bench specifically noted that battery packs — considered a critical component for propulsion in electric vehicles — were never imported together with the alleged CKD kits and were procured separately. The Tribunal held that in the absence of batteries and other essential components in the same consignment, the imported goods could not be said to possess the “essential character” of complete electric scooters. CESTAT further observed that the Department failed to carry out any proper quantification exercise correlating the imported components with the number of complete vehicles allegedly assembled. There was no analysis showing the number of vehicles that could be assembled vis-à-vis the number of batteries available. The Tribunal described this as a “fundamental evidentiary gap” striking at the root of the Department’s case. Relying upon the Supreme Court judgment in Commissioner of Customs vs Sony India Ltd., the Tribunal reiterated that Rule 2(a) can be invoked only when the imported goods, “as presented”, possess the essential character of the complete article. It held that Customs authorities cannot aggregate multiple consignments imported at different times to artificially reconstruct a complete product for classification purposes. The Bench also distinguished the Department’s reliance on earlier Tribunal decisions concerning split consignments. It held that unlike those cases, the present imports lacked consignment-wise correlation and did not contain all critical components required to constitute complete electric vehicles. The Tribunal rejected the Department’s reliance on CBIC circulars as well, observing that administrative circulars cannot override statutory provisions or binding judicial precedents. Referring to the Supreme Court ruling in Ratan Melting & Wire Industries, the Bench held that circulars contrary to judicial pronouncements have no binding force. Importantly, the Tribunal emphasized that classification disputes under Rule 2(a) are highly fact-dependent and cannot be decided mechanically. It held that the Department’s approach of selectively aggregating components spread across multiple consignments and time periods was legally unsustainable. The Tribunal concluded that the imported goods were correctly classifiable as parts/components under their respective tariff headings and not as complete electric scooters under Heading 8711. Since the core basis for reclassification failed, the associated demand of differential duty, confiscation proceedings, redemption fine, and penalties imposed on the company, its officials, and logistics intermediary also became unsustainable. Case Details Case Title: Mr. Subash Iyappan Versus Commissioner of Customs Citation: JURISHOUR-1142-CES-2026(CHE) Case No.: T. Viswanathan, Advocate Date: 04.05.2026 Counsel For Appellant: T. Viswanathan, Advocate Counsel For Respondent: Anoop Singh, Authorised Representative Click Here To Read Order Read More: ITAT Deletes Rs. 38.20 Crore Transfer Pricing Adjustment Against Boeing India Defence Unit

E-Scooter Imports In CKD Condition Can’t Be Artificially Treated as Complete E-Scooters: CESTAT Quashes Rs. 56.45 Crore Customs Demand

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