The issues and controversy in the classification of the automobile parts and accessories arises because of the rate differences. Most of the motor vehicles are taxed at 28% and parts and accessories at lesser rates, but since the parts and accessories are supplied for motor vehicles, they also get taxed at the same rate as motor vehicles.
Generally, automobiles are covered under the Chapter 87 of Section XVII of the Customs Tariff Act (CTA). The broad headings under the Chapters are as follows:
8701 – Tractors (other than tractors of heading 8709)
8702 – Motor vehicles for the transport of ten or more persons, including the driver
8703 – Motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 8702) including station wagons and racing cars.
8704 – Motor vehicles for the transport of goods
Source Taxguru
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