Customs, Excise and Service Tax Appellate Tribunal, New Delhi: In the present case related to e-rickshaw import classification dispute , the penalty was imposed on Soni E Vehicle (P) Ltd., (‘appellant’), the e-rickshaw manufacturer, who was alleged to have wilfully classified the imported goods as spare parts of e-rickshaw resulting in evasion payment of duty. The two-member bench comprising Dilip Gupta, J. (President) and Hemambika R. Priya (Member — Technical) stated that the the office order dated 12-3-2014 makes it clear that the motor is an essential component for classifying imported goods as a complete e-rickshaw under Custom Tariff Heading (‘CTH’) 8703. If the motor is not imported, then regardless of the presence of other parts, the goods must be treated only as parts of an e-rickshaw under CTH 8708.
The Tribunal stated that in the present case, the Principal Commissioner failed to appreciate this important aspect and concluded that the consignment should be classified as a full e-rickshaw even though the motor was missing. Therefore, the Tribunal stated that the Principal Commissioner misread the office order, and the correct classification should have been under CTH 8708 as parts, not under CTH 8703 as a complete e-rickshaw. Accordingly, the Tribunal set aside the entire impugned order dated 20-8-2020.
Background
The appellant is engaged in manufacturing e-rickshaws in India since 2013 and claims that for this purpose it has imported various parts/spare parts of e-rikshaw for its manufacturing. Upon examining two consignments dated 12-2-2019, it was alleged that the appellant had imported 142 incomplete e-rikshaws but had classified the imported items as parts of e-rickshaw.
A show cause notice was issued to the appellant as importer. The main allegation in the show cause notice was that the appellant had imported incomplete e-rickshaws in unassembled or disassembled condition but had classified the imported goods as parts of e-rickshaw which attracted lesser duty. The appellant filed a detailed reply to the show cause notice stating that the allegations against it were based on conjecture and surmises without any proof. The appellant stated that it had imported various parts of e-rikshaw through the 6 live Bills of Entry and had not imported the essential parts required for manufacture of e-rikshaw, including the motor. The Principal Commissioner, however, did not accept the contentions advanced on behalf of the appellant.
The Principal Commissioner noticed that the main allegation against the appellant in the show cause notice was that it had wilfully classified the imported goods as spare parts of e-rickshaw resulting in evasion payment of duty.
Analysis, Law and Decision
The Tribunal referred to the office order dated 12-3-2014 issued by the Joint Commissioner of Customs and noted that a committee of officers had been constituted to decide what percentage of components/assemblies combined would make a e-rikshaw in Completely Knocked Down and Semi-Knocked Down (‘CKD/SKD’) condition. The committee decided that there are five major components/assemblies that provide the essential characteristics to a complete e-rikshaw in CKD/SKD Condition classifiable under Custom Tariff Heading (‘CTH’) 8703 , and if any two essential components are missing, then the goods may be considered as parts of e-rickshaw classifiable under CTH 8708 and would not attract the provisions of Motor Vehicles Act, 1988.
The Tribunal noted that in the present case, the case set up by the appellant was that the three of the essential components namely motor, transmission and controller were not imported. The Tribunal stated that the the office order dated 12-3-2014 makes it clear that the motor is an essential component for classifying imported goods as a complete e-rickshaw under Custom Tariff Heading (‘CTH’) 8703. If the motor is not imported, then regardless of the presence of other parts, the goods must be treated only as parts of an e-rickshaw under CTH 8708. In the present case, the Principal Commissioner failed to appreciate this important aspect and concluded that the consignment should be classified as a full e-rickshaw even though the motor was missing. Therefore, the Tribunal stated that the Principal Commissioner misread the office order, and the correct classification should have been under CTH 8708 as parts, not under CTH 8703 as a complete e-rickshaw.
The appellant also claimed that it had imported only two of the said five essential elements namely “differential axle” and chassis and, therefore, it cannot be said that it had imported unfinished electric e-rikshaws. Therefore, the issue that arose for consideration was whether “differential axle” imported by the appellant should be considered as “axle” only or both “transmission” and “axle”.The Tribunal noted that the Principal Commissioner’s conclusion that it represented both components was founded entirely on the statement of the Managing Director and a Chartered Engineer’s report. The Tribunal stated that neither statement could be relied upon, as the statement was inadmissible without compliance of the procedure contemplated under Section 138-B of the Customs Act, 1962 (‘Customs Act’). The Tribunal stated that the Chartered Engineer was not examined or offered for cross-examination despite a specific request. Thus, it cannot be urged that the appellant had imported incomplete e-rikshaws as three of the essential components mentioned in the office order were not imported by the appellant.
With reference to the extended period of limitation, the Tribunal noted that the impugned order held that the appellant had suppressed facts with respect to the actual nature of the import. The Tribunal stated that mere suppression of fact is not enough and there has to be a deliberate attempt to evade payment of excise duty. In the absence of any finding that suppression was with an intent to evade payment of duty, the extended period of limitation could not have been invoked. Thus, suppression of facts should be deliberate and in taxation laws it can have only one meaning, namely that the correct information was not disclosed deliberately to escape payment of duty.
Regarding the penalty imposed of the appellant under Section 112(a)(ii) of the Customs Act, the Tribunal stated that there was no mis-declaration by the appellant and so goods were not liable to confiscation. Therefore, such penalty could not have been imposed upon the appellant. Similarly, penalty under Section 114-A of the Customs Act could also not have been imposed upon the appellant, as there was no misstatement or suppression of facts. There was no misclassification of the imported goods and even otherwise the Bills of Entry, the Tribunal opined that the penalty could not been imposed on the Managing Director and the Customs House Agent.
Accordingly, the Tribunal set aside the entire impugned order dated 20-8-2020.
[Soni E Vehicle (P) Ltd. v. Commr. of Customs, Customs appeal No. 51367 of 2025, decided on 17-11-2025]
Advocates who appeared in this case:
For the Appellants: Arhum Sayeed, Rahil Ahmed, Deepriya Snehi, Ms. Yashika Kaushik, and Priyanka Goel, Advocates and Sanjeev Kumar, Consultant
For the Respondent: Nikhil Mohan Goyal and Rajesh Singh