The Bombay High Court has held that where classification turns on specialised technical considerations, the adjudicating authority must meaningfully evaluate expert opinion and can only reject it based on commensurate scientific material, not subjective assumptions. Where the assessee places reliance on an expert opinion based on physical inspection and detailed component-level analysis, the adjudicating authority cannot reject it merely by observing that it is ‘not relevant’.
The Court clarified that classification of BMS under CTH 9032 8990 and CSC under CTH 8537 1000 / 8537 1090 was not in dispute. The real controversy was whether the imported products fall within the exclusion of ‘Printed Circuit Board Assembly’ under Serial No. 512 of Notification No. 50/2017-Customs. The Court treated the VJTI report as a credible, independent technical opinion from a premier engineering institute with a specific EV automotive division, and held that it deserved meaningful evaluation rather than a one-line rejection.
Despite the availability of a statutory appeal under Section 129A of the Customs Act before CESTAT, the Court entertained the writ petition in view of the settled position that technical classification disputes warrant interference at the threshold.
The Division Bench comprising Justice M.S. Karnik and Justice Sandesh D. Patil noted that Veermata Jijabai Technological Institute (VJTI) is one of the premier engineering institutes in India with a specific Electric Vehicle (EV) automotive division, and the products were physically verified by VJTI with a detailed component-level analysis. The VJTI opinion unequivocally concluded that the products cannot themselves be understood as Printed Circuit Board Assembly (PCBA) used in the manufacture of battery packs.
The Court observed that the impugned order had simply brushed aside the VJTI opinion by observing that it is ‘not relevant’, and that no counter-expert opinion, independent technical testing or other scientific/technical material had been obtained by the Department to rebut the findings recorded by VJTI.
The Court further observed that the classification of Battery Management Systems (BMS) under CTH 9032 8990 and CSC under CTH 8537 1000 / 8537 1090 is not in dispute. The real question is whether the products BMS and CSC are parts of PCBA or not. If they are to be regarded as PCBA, they would stand excluded from the Exemption Notification. The Court also noted that the Exemption Notification gives an impetus to manufacturing of battery packs for EVs in India, and that the manufacturing of EVs in India is being encouraged, so the Exemption Notification has to be viewed from that angle.
Briefly, Mahindra & Mahindra Limited, the petitioner, imported Battery Management Systems (BMS) and Cell Supervisory Circuits (CSC) for use in its Electric Vehicle (EV) manufacturing operations, specifically for manufacturing lithium-ion battery packs. The petitioner classified BMS under CTH 9032 8990 and CSC under CTH 8537 1000 / 8537 1090 of the First Schedule of the Customs Tariff Act, 1975, and availed the concessional Basic Customs Duty (BCD) of 2.5% under Serial No. 512 of Notification No. 50/2017-Customs dated 30/06/2017 (Exemption Notification), which grants concessional duty to parts, components and accessories (except Lithium-ion cell and Printed Circuit Board Assembly (PCBA) for use in the manufacture of Lithium-ion battery and battery packs.
By the impugned Order in Original dated Dec 20, 2025, the Principal Commissioner of Customs (Import), Air Cargo Complex, Sahar, Mumbai denied the concessional rate on the ground that the imported products are PCBAs and are therefore excluded from Serial No. 512 of the Exemption Notification and accordingly confirmed a demand of differential duty of INR 14.07 Crores along with applicable interest and penalty under the Customs Act, 1962.
In its reply to the show cause notice, the petitioner specifically contended that the products do not qualify as PCBAs, placing reliance on a detailed and independent Technical Expert Opinion dated July 17, 2025, from Veermata Jijabai Technological Institute (VJTI), Mumbai, one of the premier engineering institutes in India having a specific EV automotive division. After physical inspection of the products and detailed component-level analysis, VJTI opined that the products cannot themselves be understood as PCBA used in the manufacture of battery packs. The adjudicating authority, however, brushed aside the VJTI opinion by observing that the VJTI opinion was not relevant, since PCBA is a universally applicable electronics terminology, regardless of whether it is used for mobile phones or EV battery packs.
