Incomplete electric two-wheelers retain complete-vehicle classification, but CKD exemption requires import of all necessary components.

The appellant imported electric two-wheeler components in CKD condition, declared them under CTH 87116020, and claimed concessional duty under Notification No. 50/2017-Cus, as amended.

The Department alleged that the goods did not meet the notification’s CKD conditions and issued a show cause notice; the adjudicating authority confirmed differential duty of ₹54,82,066, ordered confiscation under Section 111(m) of the Customs Act, 1962, and imposed a penalty under Section 112.

The appellant challenged the order, including on the grounds of the issuing officer’s jurisdiction, defective pre-notice consultation, classification and exemption eligibility, and the absence of misdeclaration

1. Whether the show cause notice and ensuing proceedings were invalid because of the issuing officer’s alleged lack of monetary jurisdiction or the subsequent corrigendum, and whether pre-notice consultation was inadequate

2. Whether Section 28 proceedings could be initiated to recover differential duty without first challenging the self-assessments on the Bills of Entry

3. Whether the imported goods had the essential character of complete electric two-wheelers under GRI 2(a), and whether they qualified for the claimed CKD exemption under Notification No. 50/2017-Cus

4. Whether confiscation under Section 111(m) and the penalty under Section 112 were sustainable

Under Section 2(34) of the Customs Act, 1962, a Customs officer assigned the relevant functions may act as the “proper officer”; a corrigendum correcting or clarifying a notice may relate back to it where it causes no prejudice.

Section 28 permits recovery of duty not levied or short-paid, including where an exemption was wrongly availed; under Jain Shudh Vanaspati Ltd. v. Union of India, a clearance order obtained by fraud does not bar subsequent proceedings, and Famous Steel v. Commissioner of Customs, Mundra distinguished Section 28 recovery from a refund claim requiring amendment of an assessment.

GRI 2(a) treats an incomplete or unassembled article as the complete article where, as presented, it has the latter’s essential character; the HSN Explanatory Notes recognize that a vehicle may retain that character even without, for example, its battery.

The CKD exemption under the relevant entry of Notification No. 50/2017-Cus required the specified necessary components; the Tribunal also relied on Y.C. Electric Vehicle v. Principal Commissioner of Customs concerning classification of incomplete vehicles and an unclaimed notification benefit.

Sections 111(m) and 112 concern, respectively, goods not corresponding with the relevant entry and penalties for acts rendering goods liable to confiscation.

The Tribunal rejected the jurisdictional objection, holding that the corrigendum merely changed the notice’s “answerable to” clause, caused no prejudice, and related back to the original notice; it also relied on the appellant’s reference to receipt of the pre-consultation letter.

It held that Section 28 proceedings were not barred merely because the self-assessments had not first been challenged.

On classification, the appellant’s own description of the imports as an e-bike CKD kit, together with GRI 2(a) and the HSN notes, supported classification as a complete electric vehicle despite the absence of certain components.

But the missing battery pack, charger and electric compressor meant the goods did not satisfy the notification’s requirement for a CKD kit containing all necessary components; the alternative exemption was also rejected because it had not been claimed at import.

The Tribunal found no basis to disturb the adjudicating authority’s order on confiscation or penalty.

It found no reason to interfere with the order-in-original and dismissed the appeal.