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2023 (6) TMI 796 - AUTHORITY FOR ADVANCE RULINGS CUSTOMS, MUMBAIClassification of goods proposed to be imported - Fuel Cell System to be used in manufacturing of Hydrogen Fuel Cells Vehicles - to be classified under 8708 or under CTH 8501 33 20? - HELD THAT:- In terms of Note 3 to Section XVI, the Fuel Cell system is to be classified as per its principal function which is generation of electricity. Therefore, for this reason also, the Fuel Cell System are classifiable under CTH 85.01 only. Reliance is placed on the judgement of Hon'ble CESTAT, Chandigarh in case of M/S. HERO ELECTRIC VEHICLES PVT. LIMITED VERSUS COMMISSIONER OF CUSTOMS, LUDHIANA [2018 (6) TMI 141 - CESTAT CHANDIGARH], wherein it was held that the product having essential character and performing principal function of a motor is to be classified as electric motor only. The contention of the applicant as well as the ratio laid down by the honourable Tribunal, are agreed upon. As the Fuel Cell System is an electrical power generating equipment as detailed above, it automatically gets excluded by the provisions of Note 2(f) to Section XVII of the Customs Tariff and therefore merits classification under Heading 85.01 as Electric Generators as they are excluded from the provisions of Notes to Section XVII of the Customs Tariff. Therefore, in terms of aforesaid Section Note 2(f) read with the HSN Explanatory Note to Heading 87.08, the fuel cell system cannot be regarded as 'parts' of motor vehicle in terms of Heading 87.08. Section Note 2(a) above categorically states that parts which are goods included in any of the headings of Chapter 85 are in all cases to be classified in their respective headings. Although certain exclusions have been made by way of the Note 2(a) to Section XVI of the Customs Tariff, the CTH 8501 is not excluded by virtue of this note. The Fuel Cell System is specifically covered under CTH 8501 by virtue of section note of the section XVI of schedule I of the Customs Tariff Act, 1975, therefore it cannot be covered under the CTH 87.08. As per the data disclosed in the CAAR-1 Application the output of the Fuel Cell System will be 80 kW (net) and 90 kW (gross). Based on these disclosures the corresponding entry in the Tariff is 8501 33 20. Thus, the Fuel Cell System which is made up of seven components viz. Fuel Processing System, Fuel cell stack module, Air Processing System, Thermal Management System, Electric module, FCS monitoring control and module and DC-DC Converter proposed to be imported by the applicant merits classification under CTH 85.01 and more specifically under CTH 8501 33 20.
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