2024(05)LCX0098(AAR)

Elentec India Private Limited

decided on 21/05/2024

CUSTOMS AUTHORITY FOR ADVANCE RULINGS
O/o THE CHIEF COMMISSIONER OF CUSTOM
NEW CUSTOM HOUSE, NEAR IGI AIRPORT, NEW DELHI-110037
[E-MAIL: cus-advrulings.del@gov.in]

F.No. VIII/CAAR/Delhi/Elentec/13/2024

Samar Nanda (Customs Authority for Advance Rulings, New Delhi)

The day of 21 May, 2024

Ruling No. CAAR/Del/Elentec/17/2024 / 887/21/05/2024

In Application No. 08 /2024 dated 05.03.2024

Ruling

M/s Elentec India Pvt. Ltd, 57/1&2, Ecotech-1, xtension-1, Greater Noida-201308, U.P. (herein after referred as applicant) are registered under GSTIN 09AADCR21071’1ZQ and having IEC no. 0505095629. They are manufacturer of “Parts of Cellular Mobile Phone” and majority of their manufactured items are being supplied to M/s Samsung India Electronics Pvt. Ltd. Noida (here-in-after referred as customer).

1.1 The manufacturing process involves Injection Moulding, Coating, Sub-assembly, Inspection, Quality Testing, Outward Quality Control (OQC), Packaging etc.

1.2 Recently one Notification no. 09/2024-Customs dated 31.01.2024 issued by CBIC amending the Notification no. 57/2017-Customs dated 30.06.2017 under which the applicant wish to avail Custom duty exemption mentioned at Serial no. 6E for manufacturing of product mentioned at Serial no. 6D(ii) of this notification.

1.3 In this regard, the applicant wants to have clarification related to custom duty exemption available under Notification no. 09/2024-Customs dated 30.01.2024: –

I. “ASSY-CASE-FRONT” can be named in lieu of “FRONT COVER” or not: – New product which will be manufactured by the applicant, will be sold to their customer shall be named as “ASSY-CASE-FRONT”, because their customer is using SAP Software worldwide and he can’t amend it only for his Indian vendor (applicant). The product name mentioned as “Front cover” is featuring at sI. no. 6D (ii) of the Notification no. 09/2024-Customs dated 30.01.2024. Moreover, the customs duty exemption under Notification no. 09/2024-Customs dated 30.01.2024 mentioned at SI. No. 6E is available for manufacturing the products mentioned at sl. no. 6D. Therefore, the applicant wants to know whether Customs Dept. will allow them exemption under this situation or not.

II. HS Code 85177990 can be used in lieu of Chapter 39, 73 or not, as mentioned against sI. no. 61) of this notification: – The HS Code of the Final Product has been mentioned at SI. No. 6D is mentioned as 39, 73 in Column 2 of the above-mentioned notification. However, we the applicant will mention the HS Code as 85177990. The applicant wants to know, if it is permissible or not to avail Custom duty exemption under above mentioned Notification.

III. Process which the applicant has been undertaking for manufacturing of the “ASSY- CASE-FRONT” on the goods imported under this notification at SI. no. 6E will amount to manufacture or not:- The process to be undertaken on the “Inputs and/or parts” imported duty free against sl. no. 6H of the Notification no. 09/2024-Customs Dated 30.01.2024 will amount to manufacture or not because goods imported duty free under IGCR Rules should undergo through manufacturing process and/or a new product should emerge through the said manufacturing process. (Process Flow chart attached with this application Form CAAR-1).

1.4 Therefore, it is requested to clarify the above 3 Questions of Law, based on the facts mentioned here-in-above so that the applicant can decide whether to take or not to take benefit of Custom Duty Exemption under the Notification no. 09/2024-Customs Dated 30.01.2024.

2. Comments in the matter have been received from the concerned Commissionerate wherein, it is inter-alia stated that,

(i) Eligibility of the applicant, in terms of Section 28E(c) of the Customs Act, 1962 to seek such advance ruling:

• Yes, M/s Elentec India Pvt. Ltd is a valid applicant within the meaning of Section 28E(c) (i) of the Customs Act, 1962, having IEC Code 0505095629.

(ii) Applicability of proviso (1 of section 28-1 (2) of the Customs Act, 1962 regarding the question raised in the application:

• As per records available in the Section, no application for the advance ruling of the applicant is pending with any officer of the Customs, other Appellate Tribunal or any Court as per proviso of Section 28(I) (2) of Customs Act, 1962.

(iii) Please specify whether the claim of the applicant regarding the nature of activity, i.e. it is ongoing/proposed is correct:

• As per available records, these items were not imported previously by this importer at this port.

(iv) Comments on merit:

• The questions raised by the applicant in their application have been examined in view of the material evidence submitted by them. Subsequently, comments on merit are discussed in the below paras:

2.1. “ASSY–CASE–FRONT” can he named in lieu of “FRONT COVER” or not:

2.1.1 The Applicant stated that they will manufacture a new product named “ASSY-CASE-FRONT” and proposed to import the inputs for manufacture of “ASSY-CASE- FRONT–as per IGCR Rules by availing benefit of SI. No.6E of Customs Notification No. Notification No. 09/2024 dated 30.01.2024. Further, the applicant stated that as the product name mentioned against SI. No, 6D (ii) of the Customs Notification No. 09/2024 dated 30.01.2024 is “Front Cover” and questioned whether the “ASSY-CASE-FRONT” can be named in lieu of “FRONT COVER” and whether the duty exemption under 1GCR Rules at SI. No. GE is available for manufacturing the final product mentioned at SI. No. 6D.

2.1.2 Comment/Reply: Since the proposed final product description in the instant case i.e. ASSY-CASE-FRONT is different from the specific product name given in the said Notification under SI. No. 6D (ii), therefore the duty exemption benefit vide SI. No. 6E of Customs Notification No. 09/2024 dated 30.01.2024 for manufacture of ASSY-CASE- FRONT is inadmissible.

2.1.3 Front Cover of Mobile refers to the external protective panel that covers the front face of the mobile device. It primarily focuses on the aesthetic and protective aspects of the front-facing surface, which usually includes the display screen, front- facing camera, and sometimes sensors and speaker grilles. The front cover is often a separate piece that can be removed or replaced independently of the rest of the casing.

2.1.4 While. Assy Case Front of Mobile refers to the fully assembled front portion of the mobile device’s casing or enclosure. This encompasses not only the external front cover but also all components that are integrated into or attached to the front face of the device, such as the display screen, touch panel, sensors, buttons, and other internal elements. It includes both the structural and functional aspects of the front part of the device.

2.1.5 Further, it may be kept in mind that the wordings of Notification is absolute in nature and since there are no goods with the description “Assy-Case-Front” given in the said Notification No. 09/2024 dated 30.01.2024 as such whether “ASSY-CASE-FRONT” can be named in lieu of –FRONT COVER” or not, cannot be interpreted neither by the department nor by the importer. As such, the said benefit cannot be extended.

2.2 HS Code 85177990 can be used in lieu of Chapter 39,73 or not, as mentioned against SI. No. 6D of this Notification:

2.2.1. The Applicant stated that “the HS Code of the Final Product mentioned at SI. No. 6D is mentioned as 39,73 in Column 2 of the above mentioned Notification, however will mention I-1S Code as 85177990. Is this permissible or not?”

-Comment/Reply: As per the entry in the said Notification against SI. No. 6D, the benefit of Notification is permissible only when the Final product pertains to Chapter Head 39 or 73 specially as mentioned in Column 2. However. in the instant case the final product emerged out of manufacturing process will be named as “Assy-Case-Front” and the same will he classified under 85177990 as stated by the applicant, therefore, as such the benefit of Notification for the final product under I IS Code 85177990 is not permissible as the SI. No. 6D is specific to goods pertaining to Chapter 1-lead 39 or 73.

2.3 Process which we are undertaking for manufacturing of the “Asst’-Case-Front” on the goods imported under this notification at SI. No. 6E will amount to manufacture or not:

-The Applicant stated that the process to be undertaken on the “Inputs and/or parts” imported duty free against sl. No. 6E of the Notification No. 09/2024-Customs dated January 31, 2024 will amount to manufacture or not because goods imported duty free under IGCR Rules.

– Comment/Reply: As such the goods imported as Inputs and/or parts for manufacture of new Final product comes under manufacturing activity and its duty free import is subject to fulfilment of IGCR Rules and conditions specified therein. However as per the condition of the Notification as given in Table above, the benefit of Notification No. 09/2024-Customs dated January 31, 2024 under SI. No. 6E is permissible only when the final product emerged out of the Inputs and/or parts, falls under the code 39 or 73.

3. Personal Hearing in the matter was held on 16.05.2024 wherein, the authorised person representing the applicant started by giving brief technical explanation of the goods in question. Reiterating the submissions made in the application for advance ruling, he mentioned that the goods in question arc mentioned as “ASSY-CASE-FRONT”. which is nothing but the front cover and should be entitled to avail the benefit of the Notification no. 09/2024-Customs Dated 30.01.2024. There is no clarity on seeking any ruling on Classification, but only on the applicability of benefit of Notification provided under 6E of the said Notification. He further sought clarification on whether process amounts to manufacture or not. However. it was made absolutely clear that the this authority does not have the mandate under the Customs Act 1962 to provide answers on whether a process amounts to manufacture or not. The applicant agreed to the comments of the concerned Commissionerate.

4. Finding that the application is valid in terms of the provisions of the Customs Act, 1962 and the Customs Authority for Advance Rulings Regulations, 2021, having gone through submissions of the applicant, comments of the concerned Commissionerate and having heard the applicant, I proceed to examine the question on merits.

4.1 Before, getting into the wordings of the Notification, the Applicant has stated that they will manufacture a new product named “ASSY- CASE-FRONT” and proposed to import the inputs for manufacture of “ASSY-CASE-FRONT”. However, as mentioned in the proceedings during the personal hearing, CAAR is not mandated to provide ruling on whether any process amounts to manufacture or not. Further, it may also be taken note that the applicant on his own has agreed and submitted that a new product is manufactured. However, even though the said product is different than the heading that enjoys the benefit under the Notification, the newly manufactured product must also get the benefit, as it is similar to the item mentioned under the SI. No. 6D (ii) of Customs Notification No. 09/2024-Customs dated January 31, 2024. It appears that the applicant wants in any manner whatsoever to justify the product “ASSY-CASE-FRONT” to be named as “FRONT COVER” being mentioned under SI. No.6D (ii) of Customs Notification No. 09/2024 dated 30.01.2024.

4.2 Further, on the question of whether the product name mentioned against SI. No. 6D (ii) of the Customs Notification No. 09/2024 dated 30.01.2024 i.e. “Front Cover” is entitled to duty exemption under 1GCR Rules at SI. No. 6E being available for manufacturing the final product mentioned at SI. No. 6D (ii), it can be safely concluded that since the proposed final product description in the instant case i.e. ASSY-CASE-FRONT is different from the specific product name given in the said Notification under SI. No. 6D (ii), therefore the duty exemption benefit vide SI. No. 6E of Customs Notification No. 09/2024 dated 30.01.2024 for manufacture of ASSY-CASE- FRONT is inadmissible.

4.3 It is rightly being provided by the Commissionerate that the ‘Front Cover of Mobile’ refers to the external protective panel that covers the front face of the mobile device. It primarily focuses on the aesthetic and protective aspects of the front-facing surface, which usually includes the display screen, front- facing camera, and sometimes sensors and speaker grilles. The front cover is often a separate piece that can be removed or replaced independently of the rest of the casing. While, 'Assy Case Front of Mobile’ refers to the fully assembled front portion of the mobile device’s casing or enclosure. This encompasses not only the external front cover but also all components that are integrated into or attached to the front face of the device, such as the display screen, touch panel, sensors, buttons, and other internal elements. It includes both the structural and functional aspects of the front part of the device.

4.4 Further, it may be kept in mind that the wordings of Notification is absolute in nature and since there are no goods with the description “Assy-Case-Front” given in the said Notification No. 09/2024-Customs dated January 31, 2024 as such whether “ASSY-CASE-FRONT” can be named in lieu of “FRONT COVER” or not, cannot be interpreted neither by the department nor by the importer. As such, the said benefit cannot be extended.

4.5 As per the entry in the said Notification against SI. No. 6D, the benefit of Notification is permissible only when the Final product pertains to Chapter Head 39 or 73 specifically as mentioned in Column 2. However, in the instant case the final product emerged out of manufacturing process will be named as “Assy-Case-Front” and the same will be classified under 85177990 as stated by the applicant, therefore, as such the benefit of Notification for the final product under HS Code 85177990 is not permissible as the SI. No. 6D is specific to goods pertaining to Chapter Head 39 or 73.

4.6 As such the goods imported as Inputs and/or parts for manufacture of new Final product comes under manufacturing activity and its duty free import is subject to fulfilment of IGCR Rules and conditions specified therein. However as per the condition of the Notification as given in Table above, the benefit of Notification No. 09/2024-Customs dated January 31, 2024 under SI. No. 6E is permissible only when the final product emerged out of the Inputs and/or parts, falls under the HS code 39 or 73.

5. The clarification sought by the applicant in the above application are:

Question 1: “ASSY-CASE-FRONT” can be named in lieu of “FRONT COVER” or not; & whether HS Code 85177990 as mentioned at SI. No. 6D (ii) of the Notification no. 09/2024-Customs Dated 30.01.2024 can be used in lieu of Chapter 39, 73 or not, as mentioned against sI. no. 6D of this notification?

Ruling: No, “ASSY-CASE-FRONT” cannot be named in lieu of “FRONT COVER”; As the final product emerged out of manufacturing process will be named as “Assy-Case-Front” and the same will be classified under HS Code 85177990. No, HS code 85177990 as mentioned at SI. No. 6D (ii) of the Notification no. 09/2024-Customs Dated 30.01.2024 cannot be used in lieu of Chapter 39, 73.

Question 2: Can we import ‘Inputs and/or parts’ under Notification no. 09/2024-Customs Dated 30.01.2024 against sl. No. 6E for manufacturing of “ASSY-CASE-FRONT” because name of the manufactured products is slightly different from the name of product mentioned at SI. no. 6D (ii) of this notification. However, sl. 6E is directly related to the SI. 6D of the above-mentioned notification.

Ruling: Since the proposed final product description in the instant case i.e. ASSY-CASE-FRONT is different from the specific product name given in the said Notification under SI. No. 6D (ii), therefore the duty exemption benefit vide SI. No. 61; of Customs Notification No. 09/2024 dated 30.01.2024 for manufacture of ASSY CASE- FRONT is inadmissible.

Question 3: The process which we are undertaking for manufacturing of the “ASSY-CASE-FRONT” on the goods imported under Notification no. 09/2024-Customs Dated 30.01.2024 at sl. no. 6E will amount to manufacture or not?

Ruling: CAAR is not mandated to provide any ruling on whether any process amounts to manufacture or not. It can only issue rulings on the matters mentioned under Section 28-I-1 of the Customs Act, 1962.

       I rule accordingly.

(Samar Nanda)
Customs Authority for Advance Rulings. Nevy Delhi

This copy is certified to be a true copy of the ruling and is sent to: -

1. M/s. Elentec India Pvt. Ltd., 57/1&2. Ecotech-1. Extension-1, Greater Noida. UP-201308

2. The Principal Commissioner of Customs, ACC (Import). New Custom House. Indira Gandhi International Airport. New Delhi 110037

3. The Customs Authority for Advance Rulings, Mumbai, New Custom House. Ballard Estate. Mumbai-400001

4. The Chief Commissioner (AR). Customs Excise & Service Tax Appellate Tribunal (CESTAT), West Block-2,Wing-2, R.K. Puram, New Delhi-110066

5. The Chief Commissioner of Customs, Delhi Customs Zone, New Custom House. IGI Airport Complex. New Delhi-110037.

6. Guard file

7. Webmaster.

(Anamika Singh)

Secretary,

Customs Authority for Advance Rulings. New Delhi