2025(04)LCX0095(AAR)

Valeo India Private Limited

decided on 17-04-2025

Customs Authority for Advance Rulings

New Custom House, Ballard Estate, Mumbai - 400 001

E-MAIL: cus-advrulings.mum@gov.in

N.B:-

1. A copy of this order made under sub-section (2) of Section 28-1 of the Customs Act, 1962 is granted to the concerned free of charge.

2. Any appeal against this Advance Ruling order shall lie before the High Court of concerned jurisdiction, within 60 days from the date of the communication of such ruling or order.

3. The advance ruling pronounced by the Authority under Section 28 - I shall remain valid for three years or till there is a change in law or facts on the basis of which the advance ruling has been pronounced, whichever is earlier.

4. Where the Authority finds that the advance ruling was obtained by the applicant by fraud or misrepresentation of facts, the same shall be declared void ab initio.

Advance Ruling

    M/s. Valeo India Private Limited (IEC No.: 0508058899) (hereinafter referred to as ‘the Applicant’) filed an application (CAAR-1) for advance ruling in the Office of Secretary, Customs Authority for Advance Ruling (CAAR) Mumbai. The said application was received in the secretariat of the CAAR, Mumbai on 03.12.2024 along with its enclosures in terms of Section 28H(1) of the Customs Act, 1962(hereinafter referred to as the ‘Act also’). The Applicant is seeking advance ruling on the issue of classification of the Vehicle Control Unit (VCU) or Powertrain Control Unit (PCU) under CTH 8537 as a control equipment, or under CTH 8543 as an electrical equipment having individual function, or under CTH 9032 as an automatic regulating or controlling equipment, or under CTH 8708/8714 as parts of two/three/four wheeled electric vehicle, of the First Schedule of the Customs Tariff Act, 1975.

2. Submission by the Applicant:

2.1 M/s. Valeo India Private limited (“the Applicant”), a Private Limited company is a leader in passenger car segment, engaged in the manufacture of automobile components. The applicant is a preferred supplier to automotive majors in the country.

2.2 The applicant is proposing to import Powertrain Control Unit (PCU), also referred as Vehicle Control Unit (VCU), (hereinafter referred to as “VCU/PCU in question/the subject good”).

2.3 The VCU/ PCU in question is the control unit which is used in two wheeled, three wheeled electric vehicles and four wheeled light electric vehicles. Main purpose of the VCU/PCU in an Electric vehicle are:

• To control I monitor the iBSG (Integrated Belt Starter Generator)/SMMG (Small Mobility Motor generator);
   

• To control / monitor the BMS (Battery Management System) and On-board/Off-board charger;
   

• To control / monitor BCM (Body Control Module), ABS (Anti-braking system);
   

• Manage or send diagnostics to HMI (Human Machine Interface) or other devices on CAN (Controller Area Network);

2.4 The description, application and purpose of the PCU in question are tabulated below:

2.5 Picture of PCU in question along with diagrams illustrating its architecture are attached below:

2.6 Functions of the VCU/PCU in question

a. The vehicle key (12V Supply) is used to wake up the VCU/PCU.

b. Once the VCU/PCU wakes up, it will wake up the motor & BMS.

c. Motor & BMS will send its sensor status messages (Speed, Temperature, Voltage, Current, State of Charge (SoC), Error, Warning, etc.) over the CAN communication to VCU/PCU.

d. The VCU/PCU also receives Driver inputs such as Throttle sensor (5V), Brake switch (12V) and Gear mode switch (12V) inputs to VCU/PCU.

e. VCU/PCU is the master of the vehicle that will monitor the driver inputs, motor, BMS and so on (parameters such as speed, temperature, voltage, current, SoC, error, warning etc., and it will control the Motor and BMS by sending a torque request to the motor according to the throttle demand from the driver and based on the boundaries of the motor, battery and vehicle and sending discharge request to the BMS.

f. Motor will produce the torque according to the VCU/PCU Torque request that comes over the CAN.

g. Motor torque will be transferred to the Vehicle wheel through the gearbox /differential to provide the traction.

h. VCU/PCU sends Battery SoC, Vehicle speed, Gear drive status (Neutral, Forward & Reverse), Motor / BMS warning, Error information to the HMI (Cluster) over the CAN.

2.7 From the above, the principal functions of the VCU/PCU could be gathered as:

a. Sending a torque request to the motor based on driver inputs

b. Monitoring the State of Charge (SoC) and provide the torque request to the motor, and more importantly tailoring the torque request and discharge request to BMS, keeping in mind the SoC, notwithstanding the throttle inputs from the driver. This is an essential function of the VCU/PCU as a Master Controller.

c. Monitoring the battery and gear drive status.

d. Sending battery information, vehicle speed, gear drive status, and other error information to the cluster.

3. Applicants interpretation of Law/Facts:

3.1 The Applicant submit that according to Rule 1 of GRI, titles of Section and Chapters in the Schedules are provided for ease of reference only. For legal purposes, classification shall be determined according to the terms of the headings and any relevant section or Chapter Notes. The other rules for interpretation shall be required only when the relevant Heading or Section Notes are not sufficient to lead to a definitive classification.

Classification under Heading 8537

3.2 Chapter 85 of the First Schedule to the Customs Tariff Act, 1975 covers goods described as “Electrical machinery and equipment and parts thereof; sound recorders and reproducers, parts and accessories of such articles”. Chapter Heading 8537 covers “Boards, panels, consoles desks, cabinets and other bases, equipped with two or more apparatus of heading 8535 or 8536, for electric control or the distribution of electricity, including those incorporating instruments or apparatus of Chapter 90, and numerical control apparatus, other than switching apparatus of heading 85.17”

3.3 The HSN Explanatory notes under the heading 8537 explain the scope of this heading. It may be inferred from the heading 8537 that the most essential requirement for an equipment to fall under this heading is that these should be equipped with two or more apparatus of the heading 8535 or 8536 such as fuses, relays, switches, circuit breakers etc.

3.4 The VCU/PCU in question is not such an assembly of the apparatus of the headings 8535 or 8536 The VCU/PCU is essentially a populated Printed Circuit Board loaded with an appropriate software for interpreting the signals received from various sensors such as throttle position, brake switch and gear mode switch etc. But the VCU/PCU in question will function similar to Programmed Logic Controller (PLC). In fact, the VCU/PCU tailors the throttle request to the motor, taking into account the SoC notwithstanding the higher throttle request from the driver. The response from the VCU/ PCU is therefore a dynamic response depending on the requirement of driver’s inputs vis-à-vis throttle, brake, gear selection, etc. It also analyses brake inputs based on that it can control/ monitor the vehicle traction /regeneration. So, the VCU/ PCU receives data or inputs from multiple sensors and modules and electrically controls various functions of the engine based upon the programmed instructions contained in the VCU/PCU memory. After receiving t is data, the VCU/ PCU processes the information and controls the operation of other devices.

3.5 The applicant has placed reliance on US Customs Ruling no. N244506 dated 28.08.2013, which classified the Electronic Control Unit (ECU) under subheading 8537.10.9060, HTSUS, which provides for “Boards, panels, consoles, desks, cabinets and other bases, equipped with i o or more apparatus of 8535 or 8536, for electric control or the distribution of electricity…: For a voltage not exceeding 1,000 V. Other: Other: Programmable controllers.” They also relied upon another European Customs Ruling no. ATBT12024000041-DEC dated 10.04.2024, which classifed the Electronic Control unit (ECU) used in an automobile under 1-ISN code 8537109170. Both in United States and European customs, Electronic Control unit (ECU) will generally be classifed under other category of programmable controllers. The VCU/PCU it is designed for Electric 2 Wheelers / Electric 3 Wheelers / Light Electric 4 Wheelers but it will function same as the Electronic Control Unit (ECU).

3.6 Therefore, classification of the VCU/PCU under heading 8537 can be justified.

Classification under Heading 8543

3.7 Chapter 85 of the First Schedule to the Customs Tariff Act, 1975, falling under Section XVI, covers goods described as “Electrical machinery and equipment and parts thereof sound recorders and reproducers, parts and accessories of such articles”. Furthermore, Chapter Heading 8543 covers “Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this Chapter.”

3.8 The HSN ENs under the heading 85 explain the scope of the coverage of t e machines/apparatus of this heading. It is thus apparent that for purposes of classification under the heading 8543, the machines/ apparatus must have ‘individual functions’, as explained in the HSN ENs under the heading 8479.

3.9 Applying the requirements for being regarded as an instrument/ apparatus having an individual function, it could be seen that:

a) VCU/PCU is an electronic instrument

b) VCU/ PCU in question is not excluded by the operation of any Section or Chapter Note

c) The VCU/PCU is not covered more specifically by any heading in any other Chapter oft is Nomenclature, and

d) The VCU/PCU cannot be classified in any other particular heading since:

(i) No other heading covers the VCU/PCU by reference to its functioning, description or type and

(ii) No other heading covers the VCU/ PCU by reference to its use or industry in which the VCU/PCU is employed.

3.10 It therefore appears that the VCU/PCU in question could meet requirement for individual function, for it to be classified under the heading 8543. Therefore, classification of the VCU/PCU in question under CTH 8543 can also be justified.

3.11 Having said that, the VCU/PCU is a master controller, to the effect that it tailors the torque request to the motor, taking into account the SoC of the batteries, notwithstanding the throttle request from the driver. This is an essential safety function protecting the batteries and the motor. In other words, if the battery charge is low, a high throttle request from driver, will not be transmitted as a corresponding throttle request to the motor, which will require a higher discharge from the battery, which the battery may not be able to fulfil. Therefore, an algorithm is built into the VCU/PCU that will assess the SoC of the batteries, and also the throttle request from the driver and provide a corresponding torque request to the motor, which will maintain the running condition of the motor at an appropriate speed, and also at the same time, will not fully drain the battery. This is an essential feature of the VCU/PCU, and which feature becomes an important part of the vehicle also. As the feature of ‘individual function’ will not include any device or apparatus that can be considered as a ‘part of the any equipment’ to which the device is attached, CTH 8543 may not cover this feature. The HSN ENs under CTH 8479 describing the features of individual functions refer in this connection. It is therefore necessary to consider the applicability of CTH 9032 as an automatic regulating or controlling device or apparatus.

Classification under Heading 9032

3.12 Chapter 90 of the First Schedule to the Customs Tariff Act, 1975 covers goods described as “Optical, Photographic, Cinematographic, Measuring, Checking, Precision, Medical or Surgical Instruments and Apparatus; Parts and Accessories Thereof’. Furthermore, Chapter Heading 9032 covers “Automatic regulating or controlling instruments and apparatus”

3.13 The scope of coverage of the instruments and apparatus of the heading 9032 are defined by Note 7 to Chapter-90. It is important to note that Note 7 to Chapter 90, states that the heading 9032 applies only to the type of instruments and apparatus of the types described in Note 7 (a) and 7 (b). Therefore, unless the instrument or apparatus in question meets the requirements of Note 7 (a) or 7 (b) ibid, such instruments or apparatus cannot be classified under CTH 9032.

3.14 Note 7 (a) ibid, deals with instrument or apparatus for automatically controlling the flow, level, pressure or other variables of liquids or gases or for automatically controlling temperature. The VCU/ PCU in question does no control any of these features inside the vehicle, though it monitors the temperature of the batteries. However, this monitoring function cannot be regarded as an automatic regulation/controlling function. Therefore, classification in terms of Note 7 (a) ibid can be ruled out.

3.15 Note 7 (b) covers a well-defined category of regulating or controlling instruments or apparatus that automatically control a non-electrical phenomenon/factor, the operation of which depends on an electrical signal that varies according to the factor/ phenomenon to be controlled and the entire process should be driven by the objective of maintaining the non-electrical phenomenon factor at the desired level stabilised against disturbances. The maintenance at the desired level should be carried out by the instrument by constantly/periodically measuring the actual value of the non-electrical phenomenon /factor and initiate corrective actions whenever disturbances are notices in the non-electrical phenomenon/ factor so that the said factor/ phenomenon is maintained at he desired level.

3.16 The HSN ENs under the heading 9032 for the type of instruments/ apparatus covered by Note 7 (b) ibid explain the scope of these instruments/apparatus. The automatic regulation/ con A of feature of the VCU/PCU in question in regard to following function could bring it under he category of automatic regulation/ control instrument covered referred under Note 7 (b) to Chapter 90.

3.17 An important requirement for bringing an instrument under CTH 9032 is that the instrument should maintain the desired value which should be a non-electrical quantity, at constant levels is protected from disturbances. The non-electrical parameter in the case of VCU/PCU is the torque of the motor, which is constantly monitored by the VCU/PCU vis-a-vis the throttle input and the SoC. The Torque request is tailored according to the available charge in the batteries despite a higher throttle input from the driver. By doing so, the VCU/PCU ensures that the torque is maintained at the desired level corresponding to the available change in the battery, which is decided by the VCU/PCU on the basis of the algorithm built into the VCU/PCU. The throttle input is conveyed to the VCU/ PCU in the form of electrical signal, the SoC is also conveyed to the VCU/PCU in e form of electrical signal. Based on these electrical signals, the VCU/PCU decides the corresponding torque taking into account the SoC, and the VCU/PCU decides the appropriate torque to maintain the speed of the vehicle at the desired level and provides a torque request to the motor again in the form of electrical signals notwithstanding a higher throttle input from the driver.

3.18 This aspect of the VCU/PCU to maintain the torque and hence the speed at the desired level is on an aspect that falls squarely within the confines of Note 7 (b) to Chapter 90 and therefore, classification of the VCU/PCU under CTH 9032 can be justified in regard to this aspect. This function is an essential feature of the VCU/PCU.

3.19 Therefore, the VCU/PCU could be regarded as carrying out a controlling or regulatory function in regard to the function of maintenance of the torque at the desired level. Therefore, t is aspect of the VCU/PCU will fall within the Note 7 (b) and therefore can be classified under CTH 9032.

3.20 The applicant submitted that classification of the VCU/PCU can be justified under CTH 8537 and 8543 based on a few features of the VCU/PCU. They have also noted that the VCU/PCU has an essential feature of maintaining the torque at the desired level and hence CTH 9032 can al o be justified.

3.21 Under such circumstances, G1R 3 could be replied to resolve the question. As the headings 8537, 8543 and 9032 are equally specific, by application of GIR 3 (c) of the VCU/PCU under CTH 9032 can be justified. Under CTH 9032 the applicable Tariff Items will be 90328910 as Electronic Automatic Regulators.

Classification under CTH 8708

3.22 Chapter 87 of the First Schedule to the Customs Tariff Act, 1975 covers goods described as “Vehicles other than Railway or Tramway Rolling-stock and parts and Accessories thereof” Chapter Heading 8708 covers “Parts and accessories of the motor vehicles of headings 8701 to 8705.”

3.23 As the VCU/PCU in question is identifiable for use with two wheelers, three wheelers and four wheelers, classification under CTH 8708 or 8714 as parts of two wheelers/three wheelers or as parts of four wheelers respectively should also be considered.

3.24 Further, the EN to Heading 87.08 reads as follows:

“This heading covers parts and accessories of the motor vehicles of headings 87.01 to 87.05, provided the parts and accessories fulfil both the following conditions:

(i) They must be identifiable as being suitable for use solely or principally with the above-mentioned vehicles; and

(ii) They must not be excluded by the provisions of the Notes to Section XVII (see the corresponding General Explanatory Note)”.

3.25 The HSN Explanatory Notes under Section XVII referred above lay down the most important principle for classification of parts and accessories of the goods of Section XVII thus:

“(III) PARTS AND ACCESSORIES It should be noted that Chapter 89 makes no provision for parts (other than hulls) or accessories of ships, boats or floating structures. Such parts and accessories, even if identifiable as being for ships, etc., are therefore classified in other Chapters in their respective headings. The other Chapters of this Section each provide for the classification of parts and accessories of the vehicles, aircraft or equipment concerned

It should, however, be noted that these headings apply only to those parts or accessories which comply with all three of the following conditions:

(a) They must not be excluded by the terms of Note 2 to this Section

(b) They must be suitable for use solely or principally with the articles of Chapters 86 to 88 and

(c) They must not be more specifically included elsewhere in the Nomenclature (emphasis supplied).”

3.26 It could be seen that for classification of parts and accessories of the goods of Section XVII, satisfaction of all the three conditions cumulatively is a must. The first condition is that the part/accessory in question should not be excluded by Note 2 of Section XVII. In this regard Note 2 (f) and (g) ibid, which is relevant is extracted below:

“2. The expressions “parts” and “parts and accessories” do not apply to the following articles, whether or not they are identifiable as for the goods of this Section: (a)-(e)….

(f) Electrical machinery or equipment (Chapter 85);

(g) articles of Chapter 90:”

3.27 It is thus apparent that Electrical machinery or equipment (Chapter 85) and all articles of Chapter 90 are excluded from being classified as parts/accessories of motor vehicles under CTH 8708 by Note 2(f) and (g) ibid even when such parts/ accessories are identifiable for use with the motor vehicles of Chapter 87. Since the VCU/PCU in question falls under Chapter 90,first condition is not satisfied.

3.28 In the light of the discussions supra the VCU/ PCU in question is more appropriately covered under CTH 90328910. Therefore, the third condition is also not satisfied.

3.29 Therefore, notwithstanding the fact that the VCU/PCU in question is identifiable for se with motor vehicles, classification of the VCU/PCU in question under CTH 8708 can be ruled out in terms of Note 2 to Section XVII read with the HSN explanatory notes under Section XVII cited supra.

3.30 This classification principle has been accepted by the Hon’ble Supreme Court in the case of Commissioner of Central Excise, Delhi-III v. Unit Products India Ltd-2020 (372) E.L.T. 65 (S.C.), which principle has also been reiterated by CBIC in their Instructions No 1/2022 Customs dated 5-1-2022 and 25/2022 Customs dated 3-10-22.

3.31 It is therefore apparent that classification of the VCU/PCU in question under CTH 87089900 as parts of motor vehicles (Two wheelers/ three wheelers/ four wheelers) can be rued out.

4. Port of Import and reply from jurisdictional Commissionerate:

4.1 The applicant in their CAAR-1 indicated that they intend to import the subject goods i e. VCU/PCU at the jurisdiction of Office of the Commissioner of Customs, Air Cargo Complex, Mumbai. The application was forwarded to the Office of the Commissioner of Customs, Air Cargo Complex, Mumbai for their comments on 09.12.2024.

The concerned jurisdictional Commissionerate vide their letter dated 27.01.2025 as submitted as follows:

• A Vehicle Control Unit (VCU) or Powertrain Control Unit (PCU) is a critical component modern vehicles, particularly in electric vehicles (EVs) and hybrid electric vehicles (HEY Major components of the VCU/PCU are:
  
  Microcontroller: A high-performance microcontroller is the brain of the VCU/PC executing software instructions and controlling the powertrain system.
  
  Power Electronics: The VCU/PCU contains power electronic components, such insulated-gate bipolar transistors (IGBTs) or power MOSFETs, which control the flow electrical energy.
  
  Sensors and Actuators: Various sensors, such as temperature, current, and voltage senso provide input to the VCU/PCU. Actuators, like motor controllers and solenoid valv receive commands from the VCU/PCU.
   

• On going through the Chapter Headings and Explanatory Notes, it can be seen that equipment falling, under Chapter Heading 8537 is essentially equipped with two or more apparatus of the heading 8535 or 8536. Applicant, in their clarification stated that:

(i) VCU/PCU in question is not an assembly of the apparatus of the headings 8535 or 8536 and it is a populated Printed Circuit Board loaded with an appropriate software for interpreting the signals received from various sensors such as throttle position, brake switch and gear mode switch etc.;

(ii) VCU/PCU receives data or inputs from multiple sensors and modules and electrically controls various functions of the engine based upon the programmed instructions contained in the VCU/PCU memory;

(iii) After receiving data, VCU/PCU processes the information and controls the operation of other devices.

However, based on two rulings of United States and European Customs on Electronic Control Unit (ECU), the applicant justified the classification of VCU/PCU under heading 8537 as VCU/PCU is designed for Electronic 2/3 Wheelers/Light Electric 4 Wheelers will function as the Electronic Control Unit (ECU). As the VCU/PCU is designed specifically for automotive applications, classifying it under HS code 8537 might not be the most accurate or appropriate.

• As regards classification under Heading 8543, which covers electrical machines and apparatus having individual functions, not specified or included elsewhere in the said Chapter. As the VCU/PCU meets the criteria for individual function, control units, electronic control devices, powertrain control units, applicant justified its classification under Heading 8543. In this regard, it is stated that, as the VCUIPCU is part of a larger system or assembly, and does not have an individual/single, isolated electrical function, it is not meet the criteria for classification under Heading 8543. The principal function of the VCU/PCU is not as a control unit, but rather as part of a larger system, such as a vehicle’s engine or transmission, it may be classified elsewhere.
   

• VCU/PCU is a complex electronic device that manages various functions within a vehicle, including powertrain systems, battery management, and other critical components. The primary function of a VCU/PCU is not to regulate or control a specific physical variable like temperature, pressure, or flow. Instead, it is managing and coordinating a vast array of complex functions within the vehicle. The VCUIPCU is often deeply integrated with other vehicle systems, such as the engine control unit (ECU), transmission control unit (TCU), and braking systems. This integration suggests that its primary purpose extends beyond simple regulation. Modern VCUs/PCUs rely heavily on sophisticated software and algorithms to perform their functions. This software component adds another layer of complexity that differentiates them from traditional regulating or controlling instruments. The HS code system is designed to be specific and detailed. If there is a more specific heading that better captures the essential characteristics and functions of the VCU/PCU, it would likely take precedence over Heading 9032.
   

• The VCU/PCU is not merely an electronic component; it’s an integral part of the vehicle’s essential operating systems. It directly controls and manages critical functions like Powertrain operation, Battery management, Safety systems etc. As the VCU/PCU contains electronics, its primary function is to control and manage critical vehicle systems, making it an integral part of the vehicle’s overall operation. The VCU/PCU may be involved in controlling safety features like regenerative braking, traction control, and electronic stability control and this can be considered as an essential part of the vehicle’s operating systems and therefore it appears that these can be correctly classifiable under HS code 8708.

5. Details of Hearing

5.1 A hearing was held on 22.01.2025 at 01.00 PM. Sh. P. Sridharan, Advocate appeared online for the hearing on behalf of the applicant and reiterated the contention submitted with the application. He submitted that the subject goods i.e., VCU/PCU is used to manage the powertrain , BMS and cluster, including vehicle input for traction and regeneration; that the subject device is multifunctional viz. it sends a torque request to the motor based on driver input, monitor the state of charge (SoC), discharge request to Battery Management System (BMS) keeping in mind the charge level. It also monitors the battery, vehicle speed or gear drive status and other error information to the cluster. He stated that the subject goods can be used in electric vehicle including 2 wheelers 3 wheelers and 4 wheelers. He argued that the goods are most appropriately classifiable under CTH 9032 in terms of Note 7(b) of Chapter 90.

He also contended that, to some extent, the goods could fall under CTH 8537; however, this may not be the most suitable classification. He ruled out classification under CTH 8543 since this heading covers individual functions, whereas the subject unit performs multiple functions. He also argued that CTH 8708 will not merit consideration even if the goods are primarily and solely to be used in a motor vehicle as the goods are excluded in terms of Note 2(g) of Section Note to Section XVII and as per FISN EN, all three conditions for classification of parts of motor vehicle are not satisfied. He also relied upon the decision of Hon’ble Supreme Court in the case of Commissioner of Central Excise, Delhi-HI v. Uni Products India Ltd-2020 (372) E.L.T. 465 (S.C.), CB C Instructions No 1/2022 Customs dated 5-1-2022 and 25/2022 Customs dated 3-10-22 and reiterated that end use cannot be decisive for classification.

    Nobody appeared on behalf of the department for the hearing.

DISCUSSION AND FINDINGS

6.1 I have considered all the materials placed before me in respect of the subject goods. I have gone through the submissions made by the applicant during the hearing. Therefore, I proceed to pronounce a ruling on the basis of information available on record as well as existing legaI framework.

6.2 The Applicant has sought advance ruling in respect of the following question:

a. Whether the products i.e. Vehicle Control Unit (VCU) or Powertrain Control Unit (PCU) is classifiable under CTH 8537 as a control equipment, or under CTH 8543 as an electrical equipment having individual function, or under CTH 9032 as an automatic regulating or controlling equipment, or under CTH 8708/8714 as parts of two/three/four wheeled electric vehicle, of the First Schedule of the Customs Tariff Act, 1975.

6.3 At the outset, I find that the issue raised in the question in the Form CAAR-I is squarely covered under Section 28H(2) of the Customs Act, 1962 being a matter related to classification of goods under the provisions of this Act.

6.4 Before deciding on the issue, let me deliberate on the legal framework prescribed in Customs Tariff Act, 1975, Chapter/ Section notes along with HSN explanatory notes. As per Rule 1 of GRI, the titles of Sections, Chapters and sub-Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of, the headings and an relative Section or Chapter Notes.

6.5 The applicant stated that the VCU/PCU is used in two-wheeled, three-wheeled, and light four-wheeled electric vehicles. Its main functions include controlling and monitoring the iBSG (Integrated Belt Starter Generator) and SMMG (Small Mobility Motor Generator), as well as the BMS (Battery Management System) and the on-board/off-board charger. It also manages the BCM (Body Control Module) and ABS (Anti-lock Braking System) to ensure proper vehicle operation. Additionally, the VCU/PCU is responsible for sending diagnostics and managing communication with the HMI (Human Machine Interface) and other devices through the CAN (Controller Area Network).

    In the context of electric vehicles, a Vehicle Control Unit (VCU) or Powertrain Control Unit (PCU) acts as the central brain, managing and coordinating various subsystems like motor drive, battery management, and energy regeneration, ensuring efficient and harmonious operation of the vehicle’s electrical system.

    Inside a VCU/PCU, a microcontroller that acts as the central nervous system, processing data from various vehicle sensors and executing control algorithms, managing powertrain components and other vehicle functions.

6.6 Now, I take up the matter requiring the ruling on the classification of the product i.e., VCU/PCU under CTH 8537 as proposed by the applicant.

6.6.1 The applicant submitted that the VCU/PCU is not an assembly of apparatus under headings 8535 or 8536 but is a populated Printed Circuit Board with software that interprets signals from sensors like throttle position, brake switch, and gear mode switch. It functions similarly to a Programmable Logic Controller (PLC) by adjusting motor response based on driver inputs and SoC, and managing traction and regeneration based on brake inputs.

    In this regard, I note that the Chapter Heading 8537 covers “Boards, Panels, Consoles, Desks, Cabinets and other bases, equipped with two or more apparatus of heading 8535 or 8536, for electric control or the distribution of electricity, including those incorporating instruments or apparatus of chapter 90, and numerical control apparatus, other than switching apparatus of heading 8517″. The relevant Explanatory Note to CTH 8537 provides that,

“8537.10 For a voltage not exceeding 1,000 V

8537.20 -For a voltage exceeding 1,000 V

These consists of an assembly of apparatus of the kind referred to in the two preceding headings (e.g., switches and fuses) on a board, panel, console, etc., or mounted in a cabinet, desk etc. They usually also incorporate meters, and sometimes also subsidiary apparatus such as transformers, valves, voltage regulators, rheostats or luminous circuit diagrams.

The goods of this heading vary from small switchboards with only a few switches, fuses, etc. (e.g., for lighting installations) to complex control panels for machine- tools, rolling mills, power stations, radio stations, etc., including assemblies of several of the articles cited in the text of this heading.

The heading also covers:

(1) Numerical control panels with built-in automatic data processing machine, which are generally used to control machine-tools.

(2) Programmed switchboards to control apparatus; these permit variations in he choice of operations to be followed They are normally used in domestic electri al appliances, such as washing machines and dish washers.

(3) “Programmable controllers” which are digital apparatus using a progrmmmao le memory for the storage of instructions for implementing specific functions such as logic, sequencing, timing, counting and arithmetic, to control, through digital or ana pg input/output modules, various types of machines. The heading does not cover automatic controlling apparatus of heading 90.32.

 PARTS

Subject to the general provisions regarding the classification of parts (see the General Explanatory Note to Section XVI), parts of the goods of this heading are classed in heading 85.38″.

On plain reading of the above Explanatory Note, it is apparent that the heading 8537 covers individual apparatus/instrument when it is used solely or on standalone basis for control and/or distribution of electricity. The VCU/PCU, however, functions primarily as a control unit within an electric vehicle, managing and coordinating various subsystems such as motor drive, battery management, and energy regeneration based on driver inputs and vehicle status. Its purpose is not to distribute electricity but to process signals and execute programmed logic to optimize vehicle performance.

Unlike an apparatus for electric control or the distribution of electricity, which primarily functions to regulate, distribute, and control electrical power in various systems, the VCU/PCU in electric vehicle is specifically designed to process inputs from various sensors (such as throttle, brake, and gear position) and execute programmed logic to regulate motor performance, battery usage, traction, and regenerative braking rather than control electrical distribution Apparatus for electric control, such as board and distribution panels, are used in electrical networks to manage power flow, prevent overloads, and ensure electrical safety. In contrast, VCU/PCU operates at and higher functional level by interpreting signals, executing complex algorithms, a making real-time adjustments to optimize vehicle performance rather than distribute electricity.

6.6.2 In light of the above, it is evident that the VCU/PCU is not a stand-alone item or apparatus but rather a component designed specifically for use as a part of the main equipment, i.e., an electric vehicle. Therefore, the VCU/PCU would merit classification as a part rather than as an independent apparatus falling under its own heading.

The Explanatory Notes to CTH 8537 clearly state that parts of the goods classified under this heading are to be classified under heading 85.38. This confirms that heading 85.37 applies only to complete apparatus or equipment used for the control or distribution of electricity, not to individual parts. Since the VCU/PCU functions within an electric vehicle to process inputs from various sensors and manage vehicle operations rather than to control or distribute electricity directly, it cannot be classified under CTH 8537 as these heading covers only apparatus/equipment for control or distribution of electricity.

6.6.3 The applicant cited US Customs Ruling No. N244506 (dated 28.08.2013) and European Customs Ruling No. ATBT12024000041-DEC (dated 10.04.2024), which classified Electronic Control Units (ECU) under CTH 8537 as programmable controllers the submitted that the VCU/PCU for electric two-wheelers, three-wheelers, and light four-wheelers functions similarly to an ECU. However, I note that these rulings were issued by the authorities outside of India, and the findings and reasoning in these rulings have not been adequately discussed or analyzed. Therefore, these rulings are not binding and cannot be accepted as a basis for classification in this case.

6.7 Now, I proceed to examine the classification of the goods i.e., VCU/PCU under CTH 8543 as proposed by the applicant.

6.7.1 The applicant submitted that the VCU/PCU qualifies as an electronic instrument with an individual function. It is recognized as an electronic instrument and is not excluded by any Section or Chapter Note. Additionally, it is not more specifically covered by any other heading in the Nomenclature. Furthermore, no other heading covers the VCU/PCU based on its function, description, or type, nor by its use or the industry in which it is employed. Therefore, the VCU/PCU meets the requirements for classification under heading 8543.

6.7.2 In this regard, I note that the Chapter Heading 8543 covers “Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this Chapter”. The relevant Explanatory Note to CTH 8543 provides that:

“This heading covers all electrical appliances and apparatus, not falling in any other heading of this Chapter, nor covered more specifically by a heading of any other Chapter of the Nomenclature, nor excluded by the operation of a Legal Note to Section XVI or to this Chapter: The principal electrical goods covered more specifically by other Chapters are electrical machinery of Chapter 84 and certain instruments and apparatus of Chapter 90.

The electrical appliances and apparatus of this heading must have individual functions. The introductory provisions of Explanatory Note to heading 84.79 concerning machines and mechanical appliances having individual functions apply, mutatis mutandis, to the appliances and apparatus of this heading.

Most of the appliances of this heading consist of an assembly of electrical goods or parts (valves, transformers, capacitors, chokes, resistors, etc.) operating wholly electrically. However, the heading also includes electrical goods incorporating mechanical features provided that such features are subsidiary to the electrical function of the machine or appliance. (emphasis supplied)”

6.7.3 It is thus apparent that for purposes of classification under the heading 8543, the machines/ apparatus must have ‘individual functions’, as explained in the HSN Explanatory Notes to heading 8479. The relevant Explanatory Notes under Heading 84.79 is extracted below:

“This heading is restricted to machinery having individual functions, which:

(a) Is not excluded from this Chapter by the operation of any Section or Chapter Note, and

(b) Is not covered more specifically by a heading in any other Chapter of the Nomenclature, and,

(c) Cannot be classified in any other particular heading of this Chapter since:

(i) No other heading covers it by reference to its method of functioning, description or type. and

(ii) No other heading covers it by reference to its use or to the industry in which it is employed or

(iii) It could fall equally well into two (or more) other such headings (general purpose machines).”

The machinery of this heading is distinguished from the parts of machinery, etc., that fall to be classified in accordance with the general provisions concerning parts, by the fact that it I as individual functions”.

6.7.4 From the above, it is clear that Chapter Heading 8543 covers electrical machines d apparatus with individual functions, which are not specified or included elsewhere in Chapter 85. According to the Explanatory Notes, for classification under Heading 8543, the apparatus must have an individual function and should not be excluded by any Section or Chapter Note. It must also not be more specifically covered by a heading in any other Chapter, nor should it be classifiable under any other heading based on its method of functioning, description, type, or use in a particular industry.

However, in the present case, the VCU/PCU is not a standalone apparatus or machine ; rather, it forms a part of an electric vehicle. The Explanatory Notes to Heading 8543 specifically exclude parts of machinery that are classified according to the general provisions concerning parts. Since the VCU/PCU functions as a art of the electric vehicle and not as an independent machine or apparatus with an individual function, it cannot be classified under Heading 8543.

6.8 Now, I proceed to examine the classification of the goods i.e. VCU/PCU under CTH 9032 as proposed by the applicant.

6.8.1 The Chapter Heading 9032 covers “Automatic regulating or controlling instruments and apparatus”. The relevant Explanatory Notes to CTH 9032 is reproduced below for ease of reference:

“In accordance with Note 7 to this Chapter, this heading covers:
(A) Instruments and apparatus for automatically controlling the flow, level, pressure or other variables of liquids or gases, or for automatically controlling temperature, whether or not their it operation depends on an electrical phenomenon varies according to the factor to be automatically controlled, which are designed to bring this factor to, and maintain it at, a desired value, stabilized against disturbances, by constantly or periodically measuring its actual value; and

(B) Automatic regulators of electrical quantities, and instruments or apparatus for automatically controlling non-electrical quantities, the operation of which depends on an electrical phenomenon varying according to the factor to be controlled, which are designed to bring this factor to, and maintain it at, a desired value, stabilised against disturbances, by constantly or periodically measuring its actual value.

(I) INSTRUMENTS AND APPARATUS FOR AUTOMATICALLY CONTROLLING THE FLOW, LEVEL, PRESSURE OR OTHER VARIABLES OF LIQUIDS OR GASES, OR FOR AUTOMATICALLY CONTROLLING TEMPERATURE

Automatic control apparatus for liquids or gases and apparatus for automatically controlling temperature form part of complete automatic control systems and consist essentially of the following devices:

(A) A device for measuring the variable to be controlled (pressure or level in a tank, temperature in a room, etc.); in some cases, a simple device which is sensitive to changes in the variable (metal or bi-metal rod, chamber or bellows containing an expanding liquid float, etc.) may be used instead of a measuring device.

(B) A control device which compares the measured value with the desired value and actuates the device described in (C) below accordingly.

(C) A starting, stopping or operating device.

Apparatus for automatically controlling liquids or gases or temperature, within the meaning of Note 7 (a) to this Chapter, consists of these three devices forming a single entity or in accordance with Note 3 to this Chapter, a functional unit.

Some instruments and apparatus do not incorporate devices which compare the measured value with the desired value. They are directly activated by means of a switch, e.g., when the predetermined value is reached

(II) AUTOMATIC REGULATORS OF ELECTRICAL QUANTITIES, AND INSTRUMENTS OR APPARATUS FOR AUTOMATICALLY CONTROLLING NON-ELECTRICAL QUANTITIES TUE OPERATION OF WHICH DEPENDS ON AN ELECTRICAL PHENOMENON VARYING ACCORDING TO THE FACTOR TO BE CONTROLLED

The automatic regulators of this heading are intended for use in complete automatic control systems which are designed to bring a quantity, electrical or non-electrical, to, and maintain it at, a desired value, stabilised against any disturbances, by constantly or periodically measuring its actual value. They consist essentially of the following devices:

(A) A measuring device (sensing device, converter, resistance probe, thermocouple, etc.) which determines the actual value of the variable to be controlled and converts it into a proportional electrical signal.

(B) An electrical control device which compares the measured value with the desired value and gives a signal (generally in the form of a modulated current).

(C) A starting, stopping or operating device (generally contacts, switches or circuit breakers, reversing switches or, sometimes, relay switches) which supplies current to an actuator in accordance with the signal received from the control device. An automatic regulator within the meaning of Note 7 (b) to this Chapter consists of the devices described in (A), (B) and (C) above, whether assembled together as a single entity or in accordance with Note 3 to this Chapter, a functional unit.”

6.8.2 From the above Explanatory Notes, it is clear that heading 9032 applies exclusively to instruments and apparatus described under Note 7(a) and Note 7(b). Note 7(a) covers instruments and apparatus for automatically controlling the flow, level, pressure, or other variables of liquids or gases, as well as for automatically controlling temperature. Note 7(b) refers to a specific category of regulating or controlling instruments or apparatus that automatically control a non-electrical phenomenon or factor, where the operation depends on an electrical signal that varies according to the factor or phenomenon being controlled. The entire process should be designed to maintain the non-electrical phenomenon or factor at the desired level, stabilized against disturbances.

6.8.3 The applicant has stated that the VCU/PCU does not control the flow, level, pressure, or other variables of liquids or gases within the vehicle. Although it monitors the battery temperature, such monitoring cannot be regarded as automatic regulation or control. Therefore, classification under Note 7(a) can be ruled out. In view of this, I find that no further discussion on this point is necessary.

6.8.4 The applicant has stated that the non-electrical parameter in the case of the VCU/PCU is the motor torque, which is constantly monitored based on the throttle input and state of charge (SoC). The VCU/PCU adjusts the torque request according to the available battery charge, even if the driver provides a higher throttle input, to maintain the torque at the desired level. The throttle input and SoC are transmitted to the VCU/PCU as electrical signals, based on which the VCU/PCU calculates and adjusts the torque to maintain the vehicle’s speed. This function represents an essential feature of the VCU/PCU, which can be regarded as performing a controlling or regulatory function in maintaining the torque at the desired level. Accordingly, this aspect of the VCU/PCU falls within the provisions of Note 7(b) and supports its classification under CTH 9032.

6.8.5 However, according to the HSN Explanatory Notes to Note 7(b) of heading 9032, automatic regulators of this heading are intended for use in complete automatic control systems designed to bring a quantity, whether electrical or non-electrical, to and maintain it at a desired value. stabilized against disturbances, by constantly or periodically measuring its actual value. Such regulators typically consist of a measuring device, a control device that compares the measured value with the desired value, and a starting or stopping or operating device that supplies current to an actuator based on the signal from the control device.

6.8.6 In the present case, the VCU/PCU is neither an instrument nor an apparatus in itself but rather a component designed specifically for use in an electric vehicle. Based on the records of the case and the detailed technical submissions made by the applicant, it is evident that the VCU/PCU neither measures any parameter nor independently regulates any function. Its role is limited to analyzing data received from sources such as the throttle position sensor, brake pedal sensor, Battery Management System (BMS), motor controller, wheel speed sensors, and temperature sensors, and sending control signals to different vehicle systems to adjust their it operation. Therefore, the VCU/PCU functions as part of the vehicle’s drive system rather than as an independent automatic regulator.

6.8.7 Automatic regulators, as defined in the HSN Explanatory Notes to Note 7(b) of heading 9032, must include a measuring device, a control device, and a starting, stopping or operating device. The VCU/PCU lacks these specific capabilities, aside from the ability to analyze data. Its function of adjusting torque based on electrical signals from the throttle and SoC is part of the vehicle’s drive system rather than an independent automatic regulation process as defined under CTH 9032. Therefore, the VCU/PCU does not meet the definition of an automatic regulating or controlling instrument under CTH 9032 and cannot be classified under this heading.

6.8.8 The applicant has submitted that headings 8537, 8543, and 9032 are equally specific, and therefore, by the application of General Interpretative Rule (GIR) 3(c), the VCU/PCU should be classified under CTI 90328910 as Electronic Automatic Regulators. However, the principle under GIR 3(c) applies only when there are two equally plausible competing entries. Since it has been established that the VCU/PCU clearly does not fall under headings 8537, 8543, or 9032, this submission does not support the applicant’s claim.

6.9 Let me examine the issue of classification of the product i.e. VCU/PCU under CTH 8708/8714 as parts of two-wheeled, three-wheeled, and four-wheeled electric vehicles.

6.9.1 The applicant has stated that the VCU/PCU is used in two-wheeled, three-wheeled, and four-wheeled electric vehicles. Its primary function is to analyze data received from various sources, such as the throttle position sensor, brake pedal sensor, Battery Management System (BMS), motor controller, wheel speed sensors, and temperature sensors, and to send control signals to different vehicle systems to adjust their operation. This shows that the VCU/PCU functions as an integral part of the vehicle’s drive system, contributing to the overall operation and performance of the electric motor vehicle. As it forms a critical component necessary for the functioning of an electric vehicle, it qualifies as a part of the motor vehicle. The Chapter 87 of the First Schedule to the Customs Tariff Act, 1975 covers goods, described as “Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof’.

6.9.2 Chapter 87 is covered under Section XVII (vehicles, aircraft, vessels and associated transport equipment). Classification of parts and accessories of motor vehicle is governed by Section Note 2 of Section XVII and same as mentioned below:

2. The expressions- “parts” and “parts and accessories” do not apply to the following articles, whether or not they are identifiable as for the goods of this Section:

(a) joints, washers or the like of any material (classified according to their constituent material or in heading 8484) or other articles of vulcanized rubber other than hard rubber (heading 4016);

(b) parts of general use, as defined in Note 2 to Section XV; of base metal (Section XIS), or similar goods of plastics (Chapter 39);

(c) articles of Chapter 82 (tools);

(d) articles of heading 8306;

(e) machines and apparatus of headings 8401 to 8479, or parts thereof, other than the radiators for the articles of this Section, articles of heading 8481 or 8482 or, provided they constitute integral parts of engines and motors, articles of heading 8483;

(f) electrical machinery or equipment (Chapter 85);

(g) articles of Chapter 90;

(h) articles of Chapter 91; (j) arms (Chapter 93);

(k) luminaries and lighting fittings and parts thereof heading 9405; or

(l) brushed of a kind used as parts of vehicles (heading 9603).

6.9.3 Thus, Section Note 2 of Section XVII restricts the application of the expression “parts” and “parts and accessories” by excluding certain articles from being classified under the chapter 87 of this Section. The applicant has argued that electrical machinery or equipment (classified under Chapter 85) is excluded from being classified as parts or accessories of motor vehicles under CTH 8708 by virtue of Note 2(1) of Section XVII. However, I note that the applicant has not provided any additional reasoning to support the classification of the product under Chapter 85. Moreover, as discussed earlier, the VCU/PCU is not classifiable under CTH 8543.

Additionally, the applicant has argued that the subject goods (VCU/PCU) are excluded from classification under Chapter 87 as per Clause (g) of Note 2 to Section XVII, which excludes “articles of Chapter 90” as the VCU/PCU falls under Chapter 90.

However, as discussed earlier, the VCUI/PCU does not meet the definition of an automatic is regulating or controlling instrument under CTH 9032 as defined in HSN Explanatory Notes 7 (a) and 7(b). Therefore, the VCU/PCU cannot be classified under Chapter 90. Since the VCU/PCU is not an article of Chapter 90, the exclusion under Section Note 2(g) does not apply. Consequently, the VCU/PCU is not excluded from classification under Chapter 87.

Furthermore, the VCU/PCU does not fall under any of the other exclusion categories listed under Section Note 2 of Section XVII. Therefore the VCU/PCU qualifies for classification under Chapter 87.

6.9.4 The HSN Explanatory Notes to Section XVII further amplifies the scope and ambit of the Section Notes. Part III deals with Parts and accessories. The same is reproduced below for ease of reference:

(III) PARTS AND ACCESSORIES

“…. The other Chapters of this Section each provide for the classification of parts and accessories of the vehicles, aircraft or equipment concerned It should, however, be noted that these headings apply only to those parts or accessories which comply with all three of the following conditions: (a) They must not be excluded by the terms of Note 2 to this Section and

(b) They must be suitable for use solely or principally with the articles of Chapters 86 to 88 and

(c) They must not be specifically included elsewhere in the Nomenclature.

The above provisions show that for any item to be classified as a part and accessories in Chapter 87, all the three conditions as at (a), (b) and (c) above have to be fulfilled cumulatively.

6.9.5 I have gone through the list of ‘parts and accessories’ excluded as per the provisions of the Explanatory Notes 2 to Section XVII and found that `VCU/PCU’ is not listed among the excluded items, thereby satisfying the first condition. Furthermore, based on the applicant’s submission, it is clear that the VCU/PCU, by its configuration, specific functions, and intended use, is designed for exclusive or principal use in two-wheeled, three-wheeled, and four-wheeled electric motor vehicles. These vehicles are classified under headings 87.03 and 87.11 of Chapter 87 of the First Schedule to the Customs Tariff Act, 1975, thereby meeting the second condition. Additionally, the product is not specifically classified under any other heading in the Tariff, thereby satisfying the third condition.

Since all the three conditions have been satisfied. it can be concluded that the `VCU/PCU’ qualifies as Darts of motor vehicle under Chapter 87 in accordance with the Rule 1 of G1R. Section XVII and Chapter Notes of Customs Tariff Act. 1975.

6.9.6 The Heading 8708 falls under Section XVII of HSN covers ‘Parts and accessories of Motor vehicles of Heading 8701 to 8705’. Motor Vehicles which are covered under the headings 8701 to 8705 are described as under,

The above CTH i.e. 8701 to 8705 covers Motor Vehicles such as Tractors, Motor cars, etc. and not two wheelers. It is important to note that three-wheeled and four-wheeled electric vehicles designed for the transport of persons are classified under heading 8703, which covers “Motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 8702), including station wagons and racing cars”. Since the Vehicle Control Unit (VCU) or Power Control Unit (PCU) are designed for use in such three-wheeled and four-wheeled electric vehicles, they are considered as parts of these vehicles.

    Therefore, VCU/PCU would appropriately fall under CTH 8708 as parts and accessories of motor vehicles classified under Heading 8703. The relevant entries under CTH 8708 are reproduced hereunder:

6.9.7 Based on the above entries and the explanatory notes to heading 8708, which provide only an illustrative list of the parts and accessories covered under that heading and not an exhaustive one, the absence of a specific parts or accessories in the illustrative list does not imply that such parts or accessories cannot or should not be classified under the said heading. A plain reading of Chapter Heading 8708 indicates that it covers parts and accessories of motor vehicles falling under heading 8701 to 8705, and the scope of this heading is broad enough to include all parts and accessories of motor vehicles, subject to the relevant conditions.

Therefore, I am of the opinion that parts and accessories of motor vehicles falling under heading 8701 to 8705, which are not specifically covered under any of the sub-headings from 87081010 to 87089500 under heading 8708, would appropriately fall under the residual sub-heading 87089900. In the present case, the product, VCU/PCU intended for use in three-wheeled and four wheeled-electric vehicle, is more specifically classifiable under the residual entry 87089900 (Parts and Accessories of the Motor vehicles of Heading 8701 to 8705-Other) of the Customs Tariff Act, 1975 by application of GIR 1, Section XVII and Explanatory Notes to heading 8708, since no specific sub-heading is provided for it under heading 8708.

6.9.8 It is noted that Chapter Heading 8714 pertains to “Parts and accessories of vehicles of headings 8711 to 8713”. The heading 8711 to 8713, are described as under:

Thus, I find that two-wheeled electric vehicle (Motorcycle) is classified under heading 8711, which covers “Motorcycles (including mopeds) and cycles fitted with an auxiliary motor, with or without side-cars;” and the VCU/PCU will be used in such two-wheeled electric vehicle. Hence, these VCU/PCU are nothing but part of two-wheeled electric vehicle and fall under CTH 8714. The relevant entries for parts and accessories of two-wheeled electric vehicle under CTH 8714 are reproduced hereunder:

 From the above it is clear that parts and accessories of motorcycle falling under heading 8711, get covered under 8714 10. Since two wheeled electric vehicle (motorcycles) also fall specifically under CTH 8711, the same also applies to VCU/PCU intended for use in two-wheeled electric vehicle. So, parts and accessories, other than ‘Saddles’, of two wheeled electric vehicle get covered under 8714 10 90. In the present case, the product. VCU/PCU intended for use in two-wheeled electric vehicle, is more specifically classifiable under CTI 87141090 (Parts and Accessories of the vehicles of Heading 8711 to 8713-Other) of the Customs Tariff Act. 1975 by application of GIR 1, Section XVII and Explanatory Notes to heading 8714.

6.10 At paragraph 3.18 of Annexure-B of their application, the applicant has submitted that the VCU/PCU is designed for use in Electric Two-Wheelers, Electric Three-Wheelers, and Light Electric Four-Wheelers but it will function same as the Electronic Control Unit (ECU). In this regard, reliance is placed on the decision in Continental Automotive Brake Systems India Pvt. Ltd vs. Commissioner of Customs, Delhi [2024 (389) E.L.T. 93 (Tri.-Del)], wherein the Hon’ble CESTAT, Delhi held that the Electronic Control Unit (ECU), although not a regulator of electrical quantity nor an instrument or apparatus for regulating non-electrical quantities, does not fall under Section Note 7(b) of heading 9032 and is thus excluded from Heading 9032. Consequently, it was held to be classifiable under Tariff Item 8708 99 00 as a part of automobiles.

6.11 The Applicant has argued that end use cannot determine the classification. They also relied upon the case of CCE, Delhi v. Uni Products Ltd 2020 (372) E.L.T. 465 (SC), wherein the Supreme Court has placed reliance on all the three conditions that need to be fulfilled for the goods to be classified under the chapters of Section XVII. In this regard, it is submitted that classification of the product i.e., VCU/PCU under Chapter 87 is considered after taking into account the Chapter Notes, Section Notes, three conditions under part-III of General Explanatory Note to Section XVII and Explanatory Notes to Chapter 87.

Additionally, I observe that that Hon’ble Supreme Court in the case of Commissioner of Central Excise Vs. Wockhardt Life Sciences Ltd reported in 2012 (277) ELT 299 (SC) had held that the functional utility and predominant usage of the commodity must be taken into account apart from the understanding in common parlance to determine the correct classification of the product. The Hon’ble Supreme Court in the case of Collector of Customs Vs. Kumudam Publications [1997 (96) ELT 226 (SC)] has held that “it is not entirely correct to say that the end use or function of the goods is irrelevant to decide the question of classification”. A three Judge Bench of the Hon’ble Supreme Court had also relied upon the function and end use in determining the classification in the case of Indian Tool Manufactures Vs. Asst. Collector of Central Excise, Nasik & Others reported in 1994 (74) ELT 12 (SC). Therefore, while end use alone may not be decisive for classification, it remains a relevant factor that should be considered along with other statutory criteria when determining the appropriate classification of goods.

7. The jurisdictional Commissionerate has argued that the VCU/PCU is not just an electronic component but an integral part of the vehicle’s operating system, managing critical functions like powertrain operation, battery management, and safety systems. It also controls key safety features such as regenerative braking, traction control, and electronic stability control, making it essential to the vehicle’s operation. Therefore, it appears that the VCU/PCU can be correctly classified under HS code 8708.

I broadly agreed with the view expressed by the concerned jurisdictional Commissionerate regarding the classification of VCU/PCU intended for use in three-wheeled and four-wheeled electric vehicle under CTH 8708. However, with respect to the classification of VCU/PCU intended for use in two-wheeled electric vehicles, I find that such products are more appropriately classifiable under CTH 8714, which covers “Parts and accessories of vehicles of Heading 8711”.

8. On the basis of foregoing discussions and findings, I reach to conclusion that:

a. The VCU/PCU intended for use in three-wheeled and four-wheeled electric vehicle merit classification under CTH 8708 (Parts and Accessories of the Motor vehicles of Heading 8701 to 8705), more specifically under CTI 87089900 (Other) of the First Schedule of the Customs Tariff Act, 1975.

b. The VCU/PCU intended for use in two-wheeled electric vehicle merit classification under CTH 8714 (Parts and Accessories of Vehicles of Headings 8711 to 8713), more specifically under CTI 87141090 (Other) of the First Schedule of the Customs Tariff Act, 1975.

9. I rule accordingly.

(Prabhat K Rameshwaram)      
     Customs Authority for Advance Rulings, Mumbai

F. No. CAAR/CUS/APPL/164/2024-O/o Commr-CAAR-Mumbai                    Dated: 17-04-2025

This copy is certified to be a true copy of the ruling and is sent to:

1. M/s. Valeo India Private Limited
CEE DEEYES IT Park, Block No. 1,
No.63, Rajiv Gandhi Salai, Navalur,
Chennai-600 130.
{Email: dinesh-raja.r@valeo.com}

2. The Commissioner of Customs, NS-V,
JNCH, Nhava ShevaTal: Uran Distt: Raigad
Maharashtra-400707
{Email: commr-nsSffigov.in)

3. The Customs Authority for Advance Rulings,
Room No. 24, New Customs House,
Near IGI Airport, New Delhi-110037. Email: cus-advrulings.del@gov.in

4. The Chief Commissioner of Customs,
Mumbai Customs Zone-I, Ballard Estate,
Mumbai -400001.
Email: ccu-cusmuml@nic.in

5. The Commissioner (Legal), CBIC Offices,
LegaI/CX.8A, Cell, 5th floor, Hudco Vishala Building,
C-Wing, Bhikaji Cama Place, R. K. Puram, New Delhi - 110066.
Email: anishgupta.irs@.gov.in, commr.legal-cbec@,nic.in

6. The Member (Customs), Central Boards of Indirect Taxes & Customs, North Block, New
Delhi-l 10001.
Email: mem.cus-cbec@nic.in

7. The Webmaster, Central Boards of Indirect Taxes & Customs.
Email: webmaster.cbec@icegate.gov.in

8. Guard file.

(Vivek Dwivedi)              
Dy. Commissioner & Secretary  
Customs Authority for Advance Rulings,
Mumbai