Classification of parts & accessories of motor vehicles
India is a member of the World Customs Organization (WCO) and has adopted the International Harmonised Commodity Description and Coding System for Customs classification. While the system has been in place for a long time, classification of several products continues to be under debate.
Recently, the department has been challenging the classification adopted by the taxpayers for parts and accessories of motor vehicles. The dispute originates from the rate arbitrage between Headings 8708 and 8714 covering parts and accessories of motor vehicles and attract basic customs duty (BCD) of 15% and GST of 28% vis-à-vis other Headings which usually attract lower BCD of 7.5% and GST of 18%.
We are happy to share our Associate Partner Deepak Suneja’s podcast on this issue at https://youtu.be/aH6nyDdni5Y. In this video, Deepak has explained the background of the issue, governing legal provisions, illustrations as well as the recommended way forward.