In Ruling Nos. CAAR/Mum/ ARC/64/2023 -AAR- AAR (Maharashtra) clarifies ‘Turbochargers’ not eligible for exemption benefits based on use in ‘On-Highway’ or ‘Off-Highway’ vehicles
Member Samar Nanda [08-09-2023]

Read Order: In Re: Garrett Motion Technologies (India) Pvt. Ltd.

Chahat Varma

New Delhi, September 22, 2023: The Maharashtra bench of the Authority for Advance Rulings has ruled that the imported turbochargers by Garrett Motion Technologies (India) Pvt. Ltd., cannot be classified based on their use in ‘on-highway’ or ‘off-highway’ vehicles to avail benefits under Sr. No. 448H of Notification No. 50/2017 dated 30.06.2017.

In the present case, the applicant was engaged in the import and trading of turbochargers, suitable for both on-highway and off-highway applications. They sought clarification regarding their eligibility for exemption benefits under Sl. No. 448H of Notification No. 50/17-Cus. dated 30.06.17 for the import of turbochargers (classified under Tariff Item 8414 80 30), specifically those suitable for use only in off-highway equipment.

The single-member bench of Samar Nanda observed that the term ‘Off-Highway equipment’ encompasses a wide range of machinery primarily used off-road, including large mining trucks to small agricultural machines. Upon a thorough examination of CTH 8418 of the tariff and Sr. No. 448H of the mentioned notification, it becomes apparent that neither the terms ‘On-highway’ nor ‘Off-highway’ goods are mentioned, nor is there any distinction made for turbochargers classified under CTH 8414 80 30 based on their intended use. Consequently, according to the tariff, it was clear that turbochargers, whether for on-highway or off-highway use, fall under CTH 8414 80 30.

The bench further observed that Sr. No. 448H of Notification No. 50/2017 dated 30.06.2017, explicitly states that turbochargers are subject to a 7.5% duty rate instead of 15%, provided they are not used in motor vehicles, cars, cycles falling under headings 8702, 8704, 8703, and 8711.

Thus, the bench concluded that the imported turbochargers cannot be categorized based on their use in on-highway or off-highway vehicles to qualify for the benefits under the notification. According to the notification, turbochargers will only be eligible for the notification's benefits if they are suitable for use in goods other than motor vehicles, cars, cycles falling under headings 8702, 8703, 8704, and 8711.