Parts Used For Intelligent Manual Transmission Not Clutch Parts, CESTAT Rules In Hyundai Transys' Favour

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that auto parts imported by Hyundai Transys India Private Limited for use in intelligent manual transmission vehicles were wrongly classified by customs authorities, leading to unsustainable duty demands.

A bench of Judicial Member P. Dinesha and Technical Member Vasa Seshagiri Rao ruled that the actuator assembly and tube connector assembly used in iMT vehicles cannot be treated as “clutches and parts thereof” under the customs tariff.

The bench said the components only assist clutch operation during gear shifts and do not form an essential part of the clutch itself.

“The Actuator Assembly and Tube Connector, even though help in engagement and disengagement of clutch plate, they cannot be considered as part of clutch' since they only enhance the function and helps to ease the effort of the driver in shifting the gear. Therefore, they can be considered as 'accessories to the Clutch Assembly System'.” the tribunal observed.

The case involved imports made by Hyundai Transys through Chennai Sea Customs and the Air Cargo Complex. Customs officials had classified the two items under tariff entry 8708 9300, which covers clutches and their parts.

The company challenged this classification, arguing that the goods were wrongly treated as clutch parts.

During the proceedings, Hyundai Transys tried to explain how the transmission system works in its cars. In intelligent Manual Transmission vehicles, gear shifting is assisted by an electronic transmission control unit that sends signals to an actuator, which in turn helps engage or disengage the clutch. The company said the clutch can operate independently and that the actuator and tube connector only make the process smoother and reduce driver effort.

The tribunal agreed after examining the technical role of the components and the tariff structure. It noted that the explanatory notes to the clutch entry list specific items such as clutch plates, casings and mounted linings, and do not include actuator assemblies or tube connectors.

“Hence, the subject items which are not included as per the Explanatory Notes cannot be considered as 'parts of clutch',” the bench said. It also cautioned that stretching the meaning of clutch parts to include these items would lead to absurd results, as it could then bring electronic control units and sensors within the same entry.

Holding that the imported items are accessories classifiable under tariff entry 8708 9900 (other), the tribunal rejected the department's appeal and allowed Hyundai Transys's appeal, setting aside the duty demands and penalties.

Case Title: The Commissioner of Customs v. M/s.Hyundai Transys India Private Limited with M/s.Hyundai Transys India Private Limited v. The Commissioner of Customs

Citation: 2026 LLBiz CESTAT(CHE) 24

Case Number: Customs Appeal No. 40335 of 2024, Customs Appeal No. 40292 of 2025

Counsel for Hyundai Transys: A. Aruna

Counsel for Customs Department: Anoop Singh