Quick answer: In Rissala Electric Motors (P) Ltd. v. Principal Commissioner of Customs, ICD Tughlakabad, New Delhi, Final Order No. 51605/2026 in Customs Appeal No. 52227 of 2022, decided on 13 October 2026, the Principal Bench of the Customs, Excise and Service Tax Appellate Tribunal (Dr. Rachna Gupta, Officiating President, and Hemambika R. Priya, Member (Technical)) dismissed an importer’s appeal against a duty demand of ₹54,82,066 on electric two-wheeler kits. Under Rule 2(a) of the General Rules for the Interpretation of the First Schedule to the Customs Tariff Act, 1975, a kit without its battery pack, charger and electric compressor was still classifiable as a complete electric motorcycle under Customs Tariff Heading 87116020. But Serial No. 531A(1) of Notification No. 50/2017-Customs dated 30 June 2017, as amended by Notification No. 03/2019-Customs dated 29 January 2019, covers only kits containing all the necessary components, so the concessional rate was refused.
Key Takeaways
- Classification and exemption are different questions. Rule 2(a) asks whether an incomplete article has the essential character of the complete one; an exemption notification asks whether its own conditions are met. A kit can satisfy the first and fail the second (¶¶8.2, 9).
- Missing batteries and chargers did not defeat the “complete vehicle” classification. The Tribunal relied on the HSN Explanatory Note to Chapter 87, which mentions a vehicle “not yet fitted with” a battery, and on the importer’s own declaration of the goods as an e-bike in CKD condition and not as parts (¶8.2).
- Section 28 does not wait for a challenge to self-assessment. The Tribunal adopted a coordinate Bench’s reasoning in Famous Steel that differential duty can be demanded under Section 28 without first setting aside the assessment (¶¶7, 7.1).
- “Proper officer” is function-specific, not officer-specific. A corrigendum making the notice answerable to the Principal Commissioner related back to the notice and caused no prejudice (¶¶6, 6.1, 6.2).
- An alternative exemption entry not claimed at the time of import will not be considered later. The Tribunal followed Y.C. Electric Vehicle and Abhedya Industries (¶9).
- Weight. This is a two-Member Tribunal order. It binds the parties and is persuasive elsewhere, and it rests heavily on one earlier Bench decision.
1. Introduction
Electric two-wheelers are often imported as knocked-down kits and assembled in India. Customs law gives the importer two separate tools. The first is classification: under the General Rules for the Interpretation of the First Schedule to the Customs Tariff Act, 1975 (the Interpretative Rules), an incomplete or disassembled article can be classified as the finished article. The second is exemption: Notification No. 50/2017-Customs dated 30 June 2017 grants concessional rates to specified kits, and the importer must bring itself within its terms. The stakes lay in the gap between the full basic customs duty of 100 per cent that the adjudicating authority applied and the concessional rate of 15 per cent the appellant claimed.
Rissala Electric Motors shows how the two tools interact when a kit is incomplete. The importer wanted both: classification as an electric motorcycle, the heading under which it had itself assessed the goods, and the lower rate reserved for kits. The Tribunal gave it the first and refused it the second. The order also decides three questions that arise in almost every customs demand: who may issue a notice under Section 28 of the Customs Act, 1962, whether a corrigendum can repair a defect in it, and whether a self-assessed Bill of Entry shields the importer from a demand.
This article sets out the facts and reasoning, tests them against the statutory scheme, and identifies what compliance and litigation teams should take from it. It also notes what the order leaves unresolved. It is a customs case under the Customs Act, 1962 and the Customs Tariff Act, 1975, and has no bearing on goods and services tax except by analogy on the “proper officer” point.
2. Case Summary and Background
The imports. The appellant, Rissala Electric Motors (P) Ltd. of Gurugram, imported electric two-wheeler components in completely knocked down (CKD) condition. Its Bills of Entry declared classification under Customs Tariff Heading 87116020 and claimed the concessional rate under Notification No. 50/2017-Customs as amended by Notification No. 03/2019-Customs dated 29 January 2019 (¶2). The appellant described the goods as an e-bike in CKD condition with all pre-assembled essential parts and components, not mounted on a chassis or body assembly (¶3.1). The order does not give the dates of the Bills of Entry.
The notice and adjudication. A show cause notice alleged that the goods did not satisfy the conditions of the notification and were liable to a higher rate (¶2). An Assistant Commissioner issued it; a corrigendum later made it answerable to the Principal Commissioner (¶3). The Principal Commissioner of Customs (Imports), ICD Tughlakabad, New Delhi, passed Order-in-Original No. 24/2022/SG/Pr. Commr./ICD-Import/TKD dated 5 August 2022. It denied the exemption under Serial No. 531(1)(a) and Serial No. 531A(1)(b), confirmed duty of ₹54,82,066 “along with applicable duties”, held the goods liable to confiscation under Section 111(m), and imposed a penalty under Section 112. The appellant records that no redemption fine was imposed (¶¶2, 10). The adjudicating authority had invoked Rule 2(a), reasoning that the goods had the essential character of an electric two-wheeler, and then denied the kit exemption because components such as batteries and controllers had not been imported (¶3.1).
The appellant’s case. Counsel argued that the notice was void because the demand exceeded an Assistant Commissioner’s monetary limit and a corrigendum could not cure it; that the consultative letter dated 28 June 2021 had never been received; that the CKD conditions should be read purposively; that all facts had been disclosed, so suppression and penalty could not stand; and that the jump from 15 to 100 per cent duty was unreasoned and Section 111(m) required a mismatch between goods and declaration (¶¶3 to 3.3).
The Revenue’s case. The Authorised Representative argued that the Interpretative Rules apply sequentially; that the appellant had self-assessed under heading 87116020 and could not recast the goods as parts under heading 8714 after an audit objection; that the appellant’s own packing list showed the battery pack, power control unit, energy monitor contractor, charger and electric compressor were absent; and that Sections 17(1) and 46 place the duty of correct self-assessment on the importer. The Revenue relied on Y.C. Electric Vehicle v. Principal Commissioner, Customs (Import), ICD TKD, Final Order No. 50298/2025 dated 10 February 2025, and read the Supreme Court’s ITC Limited decision as holding only that self-assessment is an appealable order (¶4).
Issues and holding. The Tribunal framed the question as whether the goods were eligible for the notification’s benefit (¶5) but decided six matters. The notice was not vitiated by being issued by an Assistant Commissioner and corrected by corrigendum; the consultation plea failed on the record; the demand was maintainable without a challenge to the self-assessment; the kit was classifiable under 87116020 by Rule 2(a); Serial No. 531A(1) did not apply because the battery pack, charger and electric compressor were not imported, and Serial No. 531A(2) could not be raised for the first time; and the confiscation and penalty stood because confiscation and redemption fine are distinct. The appeal was dismissed on 13 October 2026 after a hearing on 9 September 2026 (¶11).
3. Legal Analysis
3.1 The proper officer and the corrigendum
Section 28 empowers the “proper officer” to issue a notice for duty not levied or short-levied. The Tribunal treated two propositions as settled: a corrigendum is valid where it “corrects, clarifies or supplements the SCN, with no prejudice to the noticee, before adjudication”, and “[t]he expression ‘proper officer’ is function specific and not officer specific” (¶6). An Assistant Commissioner designated as an officer of customs under Section 2(34) is a proper officer, the Tribunal said, citing “the Apex Court” without naming a decision. It relied on State of Rajasthan v. J.K. Udaipur Udyog Ltd., 2004 (7) SCC 673, and Jubilant Organosys Ltd. v. Assistant Commissioner of Central Excise, Mysore-III, 2012 (276) ELT 335 (Kar.), for the view that a corrigendum corrects and relates back (¶6.1).
The result is defensible: the Principal Commissioner, the officer whose limit the appellant invoked, did the adjudicating. The reasoning is thinner on a monetary limit. Such a limit is usually framed as a limit on who may adjudicate, not who may issue a notice; the order does not identify the instrument or ask which it is. Canon India Pvt. Ltd. v. Commissioner of Customs, which turned on whether an officer had been assigned Section 28 functions, is background here; the order does not cite it.
3.2 Pre-notice consultation
The Tribunal’s finding is brief and fact-bound. The impugned order noted the appellant’s reference to the letter dated 28 June 2021, and the appellant “cannot now take up the plea of non-receipt or the nature of the letter” (¶6.2). The Revenue had pointed to paragraph 36.2 of the appellant’s reply to the notice (¶4). The order does not identify the instrument requiring consultation, so it does not say whether non-compliance would invalidate a notice. It is a ruling on admission and nothing wider.
3.3 Self-assessment and Section 28
The Tribunal answered the finality argument by reproducing Famous Steel v. Commissioner of Customs, Mundra, Final Order No. 10752 dated 23 September 2026 (¶7). That decision separated the refund setting of the Supreme Court’s ITC Limited ruling, where Section 27 could not disturb an unmodified self-assessment, from a Section 28 demand, which is “entirely different” from the refund provisions. It drew on Jain Shudh Vanaspati Ltd., 1996 (86) ELT 460 (SC), and Asia Motors Works, 2020 (371) ELT 729 (T). The Tribunal concluded there is “no bar in issuance of show cause notice by the department under Section 28 of the Customs Act for demanding differential customs duty without challenging self-assessment of goods” (¶7.1).
The distinction is principled: ITC Limited, as quoted, protects the assessment against a claimant seeking money back. One caution follows. Jain Shudh Vanaspati concerned fraud (“Fraud, if established, unravels all”), yet nobody here alleged fraud as the basis of the demand. The stronger support lies in the text of Section 28 and the importer’s duty of self-assessment under Section 17(1).
3.4 Classification by essential character
Rule 2(a), the Tribunal held, “is an expansion rule”, and “[t]he decisive inquiry is the identity and character of the goods as presented for assessment” (¶8.1). It leaned on Y.C. Electric Vehicle, where e-rickshaw components in CKD or SKD condition were treated as a complete vehicle, and on the HSN Explanatory Note to Chapter 87, under which an incomplete vehicle takes the heading of the complete one if it has the latter’s essential character, for example a vehicle “not yet fitted with the wheels or tyres and battery” (¶8.1). The battery pack and charger “are precisely the components which are cited in the HSN note which do not affect the essential character of the imported goods”, and the appellant had declared the goods as an e-bike in CKD condition “not as parts” (¶8.2).
The reasoning is orthodox, and the appellant’s position was weak because it had itself chosen heading 87116020. But an electric motorcycle’s battery pack is its power source, and the order does not explain why its absence leaves the essential character intact beyond the Note. Y.C. Electric Vehicle, as quoted, examined the major assemblies imported and a 2014 Office Order; this order does not repeat that exercise.
3.5 The exemption: all necessary components
Serial No. 531A(1), the Tribunal said, is “available to electrically operated motor cycles imported in knocked down condition containing all the necessary components”, and the battery pack, charger and electric compressor were admittedly not imported (¶9). That answers the charge of self-contradiction: classification asks what the goods are, while the exemption asks whether a drafted condition is met. This also accords with the principle, not mentioned in the order, that exemption notifications are construed strictly; Commissioner of Customs v. Dilip Kumar & Co. is background only.
The alternative plea under Serial No. 531A(2) failed because, as in Y.C. Electric Vehicle, the benefit “was not claimed by the Appellant at the time of filing of Bill of Entry”, following Abhedya Industries Ltd. v. Commissioner of C. Ex. & S.T., Hyderabad-III, 2016 (340) E.L.T. 398 (Tri.-Hyd.) (¶9.1). That rule has force where the entry has conditions the Bill of Entry would have had to address. But the final order does not respond to the appellant’s separate complaint that the authority moved from 15 to 100 per cent without reasons (¶3.3).
3.6 Confiscation, penalty and what is left open
The Tribunal held that confiscation and redemption fine “are indeed separate action”, following Y.C. Electric Vehicle (¶10). That is correct as far as it goes: Section 125 offers a fine in lieu of confiscation, and its omission does not undo the confiscation. But the order has no separate finding on suppression, wilful misstatement or the absence of a mismatch under Section 111(m), though these were pressed at length (¶¶3.2, 3.3). The goods were declared as an e-bike in CKD condition under the heading the Tribunal upheld, so a reasoned finding on Section 111(m) would have been valuable.
Survival after amendment. The exemption holding is tied to Notification No. 50/2017-Customs as amended by Notification No. 03/2019-Customs and to Serial Nos. 531A(1) and 531A(2) as they stood for the Bills of Entry in question. It should not be carried to a later period without checking the entry then in force. The classification reasoning rests on Rule 2(a) and the HSN Notes and is less time-bound.
4. Practical Significance
Classification and exemption claims must be aligned. An importer who classifies CKD goods as a complete vehicle under Rule 2(a) accepts that the goods are treated as that vehicle in every other respect. The exemption claim then has to be tested against the notification’s conditions component by component. Importers should prepare, before filing, a matrix showing each component named in the relevant serial number against the commercial invoice and packing list, because the Revenue’s case in this matter rested on the importer’s own packing list (¶4.2).
Claim every plausible entry at the time of import. The refusal to hear Serial No. 531A(2) shows how little room the Tribunal leaves for alternative exemption entries raised later. Where two entries are arguable, the Bill of Entry should claim the one that is primary and the file should record why the alternative is not claimed. Where goods may fall under more than one entry, a claim made in the alternative at the time of assessment is far easier to defend than an appellate plea.
Do not rely on self-assessment finality. The order confirms, as a matter of Tribunal authority, that the Revenue need not first challenge a self-assessed Bill of Entry before issuing a Section 28 notice. Importers who assumed that a cleared consignment was closed should review past imports under exemption notifications, especially CKD and SKD kits, where the exemption turns on the content of the consignment.
Corrigenda are curable, so test prejudice. The jurisdictional plea failed largely because the Tribunal found no prejudice. A challenge to a notice’s issuing officer is therefore more likely to succeed where the importer can show a concrete consequence of the defect: for example, that it was denied a hearing before the proper officer or that the notice rested on a different officer’s view of the assessment. A bare plea of “void ab initio” will not carry the day.
Preserve the record on consultation. If a pre-notice consultation letter was sent, check whether it was ever received and respond to it in writing. The Tribunal treated the importer’s own earlier reference to the letter as decisive.
Penalty strategy. Because the order separates confiscation from redemption fine, an importer who succeeds in resisting a redemption fine should not assume the penalty is gone. Penalty arguments should be built on the absence of mens rea and a bona fide interpretation, supported by evidence of disclosure at the time of import, and framed as independent of the confiscation question. The final order does not rule on the appellant’s bona fide arguments, which leaves the point open for argument in later cases.
Precedent value. This is an order of a two-Member Bench of the Principal Bench that adopts Y.C. Electric Vehicle and Famous Steel, both coordinate Bench decisions. It will be cited by the Revenue in every CKD kit dispute at ICD Tughlakabad and elsewhere. Importers should distinguish it by composition of the consignment, since the Tribunal’s reasoning on classification depends on which components arrived.
5. Conclusion
Rissala Electric Motors is a consolidating order. It does not announce a new principle; it applies three settled ideas to a common commercial pattern. The first is that classification under Rule 2(a) follows the goods as presented, and that a missing battery pack or charger does not take a vehicle kit out of the heading for the complete vehicle. The second is that an exemption notification is a separate gate: an entry for kits “containing all the necessary components” is not satisfied by a kit missing some of them, and an importer cannot fall back on a different entry it did not claim at import. The third is procedural: a corrigendum can repair a notice’s answerable-to clause, and a self-assessed Bill of Entry is no bar to a Section 28 demand.
The reasoning is strongest where it is doctrinal, on the separation of classification from exemption, and weakest where it is silent. The order does not engage with the quantum argument that the adjudicating authority moved from 15 per cent to 100 per cent without reasons, with the monetary-limit instrument that the appellant invoked, or with the penalty submissions on suppression. A higher forum asked to review the order will find those gaps the natural point of attack. For those advising importers and manufacturers of electric two-wheelers, the practical message is to treat the notification’s component list as a checklist to be satisfied in the import documents themselves, to claim alternative entries at the time of assessment, and to keep records that show full disclosure. The forward question is whether the Revenue’s confidence in Y.C. Electric Vehicle will hold when a kit’s incompleteness goes to the power train and not merely to accessories; the answer will lie in how much of the vehicle’s functional core has arrived.
Authorities and Legislation
Applied or relied on by the Tribunal
- Y.C. Electric Vehicle v. Principal Commissioner, Customs (Import), ICD TKD, Final Order No. 50298/2025 dated 10 February 2025 (CESTAT, Principal Bench) (referred to in the order also as Y.C. Electricals)
- Famous Steel v. Commissioner of Customs, Mundra, Final Order No. 10752 dated 23 September 2026 (CESTAT), including the passages it reproduces from ITC Limited (Supreme Court), Jain Shudh Vanaspati Ltd., 1996 (86) ELT 460 (SC), and Asia Motors Works, 2020 (371) ELT 729 (T)
- State of Rajasthan v. J.K. Udaipur Udyog Ltd., 2004 (7) SCC 673
- Jubilant Organosys Ltd. v. Assistant Commissioner of Central Excise, Mysore-III, 2012 (276) ELT 335 (Kar.)
- Abhedya Industries Ltd. v. Commissioner of C. Ex. & S.T., Hyderabad-III, 2016 (340) E.L.T. 398 (Tri.-Hyd.) (as applied in Y.C. Electric Vehicle)
Cited by the parties
- ITC Limited (Supreme Court), relied on by the appellant on the finality of self-assessment and read by the Revenue as holding that self-assessment is an appealable order
- CBEC Circular No. 55/95 dated 30 May 1995 on CKD and SKD imports; HSN Explanatory Notes to Chapter 87 (Revenue)
Background, not cited in the order
- Canon India Pvt. Ltd. v. Commissioner of Customs (Supreme Court), on assignment of Section 28 functions
- Commissioner of Customs v. Dilip Kumar & Co. (Supreme Court), on strict construction of exemption notifications
Legislation and instruments
- Sections 2(34), 17(1), 27, 28, 46, 111(m), 112 and 125, Customs Act, 1962 — https://www.indiacode.nic.in/
- General Rules for the Interpretation of the First Schedule, Rule 2(a), Customs Tariff Act, 1975 — https://www.indiacode.nic.in/
- Notification No. 50/2017-Customs dated 30 June 2017, Serial Nos. 531 and 531A, as amended by Notification No. 03/2019-Customs dated 29 January 2019
Judgment text: https://indiankanoon.org/doc/12255960/
This article is not legal advice and does not create an attorney–client relationship. Readers should verify the certified copy of the judgment and any subsequent clarificatory orders before relying on it, and consult a qualified advocate on the facts of their matter.