In Commissioner of Customs, Chennai-II (Imports) v. ILJIN Automotive Pvt. Ltd. (Final Order No. 40847/2025, 21 August 2025), CESTAT Chennai held that hub assemblies and parts of hub assemblies imported by ILJIN Automotive fall under India tariff item 8708 50 00 (axles and parts thereof), not the residual 8708 99 00 the importer had used. The Tribunal found that the hub “is part and parcel of the Axle”, relied on the HS Explanatory Notes and a WCO HS Committee opinion, and denied the hubs the 5% concession under the India-Korea agreement. Because the classification was “highly interpretational”, it refused the extended limitation period, confiscation and every penalty.
The case is one of the more instructive recent Indian decisions on parts of motor vehicles under heading 8708. It shows how the specific subheadings of 8708 take priority over “other parts”, and how an interpretational dispute limits the department to the normal period.
Background
ILJIN had classified six automotive components under tariff item 8708 99 00 since 1997 and claimed concessional duty under Notification No. 152/2009-Customs (Sl. No. 896), which implements the India-Korea agreement. The Directorate of Revenue Intelligence (DRI) alleged misclassification, proposed the specific functional subheadings, sought denial of the preferential rate, and issued a show cause notice demanding ₹71,00,62,952 under the extended period of Section 28(4).
The Principal Commissioner of Customs (Audit), Chennai, accepted the DRI’s reclassification for four items (door checker parts, stabilizer link assemblies, ball joints and tie rods) but not for the hub assembly and its parts. The demand was confirmed only for the normal period, at ₹11,11,92,854 with interest. ILJIN did not appeal on the four items, so their classification became final. The department appealed on the hubs, the limitation period and the penalties.
The Tribunal therefore had to decide:
- the correct classification of the hub assembly and its parts;
- whether the extended period under Section 28(4) could be invoked; and
- whether confiscation and penalties under the Customs Act, 1962 were sustainable.
Legal framework
GRI 1
Classification is determined according to the terms of the headings and any relevant Section or Chapter Notes. Once a specific subheading applies, there is no room for the residual “other” subheading.
Section XVII notes
Note 3 to Section XVII provides that references in Chapters 86 to 88 to “parts” or “accessories” do not apply to parts or accessories that are not suitable for use solely or principally with the articles of those Chapters. Note 2 lists articles that can never be vehicle parts, such as parts of general use. The case study on ‘solely’ vs ‘principally’ explains how Note 3 is applied.
Heading 8708
Heading 8708 covers “Parts and accessories of the motor vehicles of headings 87.01 to 87.05”. It is divided by function: bodies, brakes, gear boxes, axles, wheels, suspension, radiators, steering and so on. Subheading 8708.99 is the residual entry, used only when no specific subheading applies.
Item-wise classification
| No. | Item | Declared (India tariff item) | Final (India tariff item) | Functional basis | How it became final |
| 1 | Hub assembly | 8708 99 00 | 8708 50 00 | Axle system | Tribunal (department’s appeal allowed) |
| 2 | Parts of hub assembly | 8708 99 00 | 8708 50 00 | Parts of axle | Tribunal (department’s appeal allowed) |
| 3 | Door checker parts | 8708 99 00 | 8708 29 00 | Motor vehicle body | Not appealed by importer |
| 4 | Stabilizer link assembly | 8708 99 00 | 8708 80 00 | Suspension system | Not appealed by importer |
| 5 | Ball joint | 8708 99 00 | 8708 80 00 | Suspension system | Not appealed by importer |
| 6 | Tie rod | 8708 99 00 | 8708 94 00 | Steering system | Not appealed by importer |
At HS six-digit level these are subheadings 8708.99 (declared) and 8708.50, 8708.29, 8708.80 and 8708.94 (final).
Technical and legal justification by item
Hub assembly and parts of hub assembly: 8708.50
Subheading 8708.50 covers drive-axles with differential, whether or not provided with other transmission components, non-driving axles, and parts thereof. The Tribunal relied on the HS Explanatory Notes, which group hubs with axles, and on an opinion of the WCO’s 63rd HS Committee, which it held to have persuasive value. On the hub, it said:
Hub assembly is part and parcel of the Axle.
It added that the hub “is not a separate part carrying out a function independent of the axle”, and, on the parts of the hub, that “part of a part has to be classified as part of the main item.” The hub and its parts were also held not eligible for the 5% concessional rate under Notification No. 152/2009-Customs (Sl. No. 896).
The classification steps were:
- GRI 1 applies.
- The hub’s function is tied to the axle.
- The residual subheading 8708.99 is excluded.
Door checker components: 8708.29
Classified as parts of motor vehicle bodies, consistent with the subheading text and the Explanatory Notes on doors, hinges and body fittings. This classification was confirmed by the adjudicating authority and not challenged before the Tribunal.
Stabilizer link assembly and ball joint: 8708.80
Subheading 8708.80 covers suspension systems and parts thereof. Stabilizer links, ball joints and control arms are suspension components, so “other parts” does not apply. These items, too, were settled at the adjudication stage.
Tie rod: 8708.94
Tie rods transmit steering movement to the wheels, which places them under steering wheels, steering columns and steering boxes, and parts thereof. The Tribunal did not discuss the tie rod separately; the classification stood because the importer did not appeal it.
The US ruling N276944
ILJIN relied on several US CBP rulings, including N276944, which classified Korean-origin cast hub assemblies under HTSUS 8708.99.6890. The Tribunal noted the reliance on US rulings but did not discuss N276944 in its findings. It decided the hub question on the HS Explanatory Notes and the WCO HS Committee opinion.
The practical lesson is the usual one: foreign rulings are persuasive at most, and in an Indian dispute the HS legal texts, the Explanatory Notes and HS Committee decisions carry more weight than another country’s national tariff practice. For how far rulings on the same product can diverge between countries, see the comparative analysis of smartwatch rulings.
Penalties: why none survived
Provisions in issue
- Section 28(4): extended limitation period (collusion, wilful mis-statement, suppression of facts).
- Sections 111(m) and 111(q): confiscation.
- Section 112(a): penalty for improper importation.
- Section 114A: penalty for short levy by reason of collusion, wilful mis-statement or suppression.
- Section 114AA: penalty for false or incorrect declarations and documents.
The Tribunal’s findings
The Tribunal held that “there is no misdeclaration or mala fide intention on the part of the Respondent” and that “classification of goods falling under CTH 8708 has always been highly interpretational in nature.” It relied on these facts:
- the goods were correctly described;
- ILJIN had used 8708 99 since 1997, and the Korean certificates of origin showed the same classification; and
- 48 of the 482 bills of entry had been re-assessed or examined by Customs.
As a result, the extended period under Section 28(4) could not be invoked, the goods were not liable to confiscation, and penalties under Sections 112(a), 114A and 114AA were not imposable. The demand was limited to the normal two-year period under Section 28(1), read with Section 28(10B), with interest.
Final penalty outcome: nil (₹ 0).
Compliance takeaways
For importers and supply chain teams: avoid blanket use of “other” codes, describe goods by function in bills of entry, and keep technical literature ready to defend the classification. A long history of unchallenged assessments helped ILJIN on limitation and penalties, but not on classification. A classification file of the kind described in building an audit-proof HS classification file helps on both.
For classification professionals: within heading 8708, test every specific subheading before 8708.99, treat foreign rulings as persuasive only, and check the Explanatory Notes and HS Committee decisions. For a component that fails every vehicle-part provision and ends up in Section XV, see the crankshaft position sensor wheel analysis.
The decision settles three points: specific functional subheadings of heading 8708 override the residual code, a hub follows the axle, and penalties do not survive a genuinely interpretational classification dispute.