2025(01)LCX0409(AAR)

Apple Operations International Limited

decided on 23-01-2025

CUSTOMS AUTHORITY FOR ADVANCE RULINGS
O/o THE CHIEF COMMISSIONER OF CUSTOMS
NEW CUSTOM HOUSE, NEAR IGI AIRPORT, NEW DELHI-110037

[Email:cus-advrulings.del@gov.in]
DIN-20250174OR000011161C

Present

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

F. No. VIII/CAAR/Delhi/Apple Operations (Bengaluru)/154/2024

The day of 23^rd January, 2025

Ruling No. CAAR/Del/Apple/10/2025/2445 to 2451/23/01/2025

In application No. 135/2024 dated 09.10.2024

Ruling

    M/s Apple Operations International Limited ('Applicant') a company having its registered head office located at Hollyhill Industrial Estate Hollyhill, T23 YK84, Ireland. The Applicant is engaged in the business of electronics consumer goods under the brand name of Apple'. The Applicant in furtherance of its business activities will be exporting mobile phone parts, namely, Receiver Upper Antenna Subassembly, Housing Module, Cover Glass Module, etc to India

1.1 In this regard, the Applicant's request is to obtain clarity from the Customs Authority for Advance Ruling for classification of "Receiver Upper Antenna Subassembly" ('product'), which shall be exported by the Applicant to the various importers based in India.

I.Overview of the Receiver Upper Antenna Subassembly exported by the Applicant to India

1.2 The Receiver Upper Antenna Subassembly is the radio frequency subassembly of a mobile phone which enables the communication of the mobile phone with other networks The housing of the Receiver Upper Antenna Subassembly comprises of the following components

a Upper Antenna module, and
b. Receiver module

1.3 Upper Antenna Module - The Upper Antenna of the mobile phone is a key component that supports a range of wireless communications, contributing to the phone's overall functionality and performance. The Upper Antenna handles the reception of radio frequency (RF) signals from cell towers and the transmission of signals back to the network. Therefore, it is responsible for maintaining connectivity with the mobile network for calls, texts, and data This antenna is also responsible for receiving and transmitting Wi-Fi signals, thereby helping connect to wireless networks for internet access Further, it also facilitates Bluetooth connections and GPS signal reception, thus enabling functions like pairing with other devices and location tracking. The RF signal it receives from the cell towers (or other wireless networks), is transmitted by it to the receiver end for its conversion and production of sound for the end user.

1 4 Receiver Module - The receiver of the mobile phone is responsible for receiving and converting radio frequency signals into audio signals. The mobile phone's receiver picks up radio frequency signals transmitted by the upper antenna from the cell towers and converts these signals into electrical signals that can be processed by the phone's internal systems. The electrical signals are then converted into audio content. In general terms, radio waves received by it are converted into mechanical vibrations in the speaker to create the sound waves that one hears through the earpiece of the mobile phone Thus, the receiver integrated with upper antenna in the mobile phone enables communication function of the mobile phone.

1.5 The receiver and the Upper Antenna are bonded together to form the Receiver Upper Antenna Subassembly through robotic soldering process. This integration of Receiver and Upper Antenna allows improved signal reception, reduced interference, and enhanced performance. After importation, this subassembly integrated into the mobile phone using a calibrated screw fastening process and is placed above the Main Logic Board ('MLB') of mobile phone near the rear camera module.

1.6 Here it is also pertinent to mention that the subassembly may comprise of additional parts which may be added to provide structural integrity to the subassembly and will assist in the integration of the subassembly in the mobile phone or maybe used as a placeholder for other parts of mobile phone. Thus, these additional component or parts will not alter the principal function of the subassembly.

1.7 Further, it is pertinent to mention here that Receiver Upper Antenna Subassembly cannot function as a self-contained unit. To operationalize the Receiver Upper Antenna Subassembly, the same must be connected to the MLB using a Flexible Printed Circuit Board Assembly ('FPCBA') and other components of the mobile phone.

1.8 Thus, in its as imported condition, the Receiver Upper Antenna Subassembly is not functional and becomes functional only when the same is incorporated along with other components of the mobile phone, i.e.. the Receiver Upper Antenna Subassembly becomes operational only after the complete mobile phone has been manufactured.

II. The Applicant qualifies as an 'applicant' under Section 28E(c) of the Customs Act, 1962 ('Customs Act')

1.9 Section 28E(c) of the Customs Act reads as under:

    "(c). "applicant" means any person
i. holding a valid Importer-exporter Code Number granted under section 7 of the Foreign Trade (Development and Regulation) Act, 1992; or

ii. exporting any goods to India;

or

iii. with a justifiable cause to the satisfaction of the Authority,
who makes an application for advance ruling under section 28H;"

1.10 As discussed earlier, the Applicant will be exporting the inputs and parts of mobile phones to various importers in India. Thus, the Applicant is rightly covered under the definition of 'applicant' as provided under Section 28E(c)(ii) of the Customs Act for making this application.

III. Question raised in the application for advance ruling by the Applicant squarely falls within the ambit of Section 28H(2)(a) of the Customs Act

1.11 Section 28H of the Customs Act provides for the questions in respect of which an advance ruling may be sought by an applicant. Section 28H of the Customs Act reads as under -

"28H. Application for advance ruling -

(1) An applicant desirous of obtaining an advance ruling under this Chapter may make an application in such form and in such manner and accompanied by such fee as may be prescribed, stating the question on which the advance ruling is sought.

(2) The question on which the advance ruling is sought shall be in respect of, -

(a) classification of goods under the Customs Tariff Act, 1975 (51 of 1975);

(b) applicability of a notification issued under sub-section (1) of section 25, having a bearing on the rate of duty;

(c) the principles to be adopted for the purposes of determination of value of the goods under the provisions of this Act.

(d) applicability of notifications issued in respect of tax or duties under this Act or the Customs Tariff Act, 1975 (51 of 1975) or any tax or duty chargeable under any other law for the time being in force in the same manner as duty of customs leviable under this Act or the Customs Tariff Act;

(e) determination of origin of the goods in terms of the rules notified under the Customs Tariff Act, 1975 (51 of 1975) and matters relating thereto.

(f) any other matter as the Central Government may, by notification, specify."

1.12 The Applicant wishes to obtain the advance ruling on questions relating to classification and applicability of exemption notification under Section 25(1) of Customs Act as detailed out in Annexure II. Therefore, the questions raised by the Applicant falls within the purview of the provisions of Section 28H(2)(a), 28H(2)(b) and 28H(2)(d) of the Customs Act.

1.13 Hence, the application for advance ruling is being filed in conformity with the provisions of Section 28H of the Customs Act.

IV. Question raised under the present advance ruling application is not before any officer of customs, the Appellate Tribunal or any Court.

1.14 As per Section 28I (2)(a) of the Customs Act with regard to procedure on advance ruling application, no application for advance ruling will be accepted if the question raised in the application is already pending before any forum. Relevant extracts of the provision are reproduced below:

"281. Procedure on receipt of application. -
(V
(2) The Authority may, after examining the application and the records called for, by order, either allow or reject the application:

Provided that the Authority shall not allow the application where the question raised in the application is -

a. already pending in the applicant's case before any officer of customs, the Appellate Tribunal or any Court,

b. the same as in a matter already decided by the Appellate Tribunal or any Court."

1.15 The Applicant submits that questions raised in the application are not already pending before any officer of Customs, the Appellate Tribunal or any Court, to the best of our knowledge. Further, the questions raised in the present case, have not already been decided by the Appellate Tribunal or any court in the Applicant's case.

1.16 Accordingly, the present application should not be considered as pending before any Court as neither the show cause notice has been issued to the Applicant nor the bill of entries has been provisionally assessed. Thus, relying on the above the facts of the current case, Applicant submits that in its case, the application shall be accepted for hearing on merits by the Hon'ble
CAAR.

1.17 The questions in respect of which an advance ruling from the Hon'ble Customs Authority for Advance Ruling ('CAAR') has been sought by the Applicant are:

a. Whether the Receiver Upper Antenna Subassembly exported by the Applicant to India merits classification under CTH 8517 79 90 of the Customs Tariff?

b. Whether benefit of concessional rate of BCD under Sr. No. 6J of the Notification No 57/2017 is available to such Receiver Upper Antenna Subassembly exported to third- party manufacturers engaged in manufacture of mobile phones in India?

I QUESTION 1: CLASSIFICATION OF RECEIVER UPPER ANTENNA SUBASSEMBLY

118 For the Receiver Upper Antenna Subassembly to be exported by the Applicant to India, the proposed classification and Applicant's interpretation to reach to the proposed classification is discussed as under.

1.19 The import and export of goods into and out of India is regulated by the Customs Act. Section 12 of the Customs Act is the charging section which stipulates that duties of customs shall be levied on all goods imported into India or exported out of India at such rates as may be specified under the Customs Tariff. Section 2 of the Customs Tariff provides that the rates at which BCD shall be levied under the Customs Act are specified In two schedules, namely, the First Schedule and the Second Schedule. First Schedule of the Customs Tariff deals with the applicable duty structure on import of goods and the Second Schedule deals with the applicable duty structure on export of goods.

1.20 To determine the said rates of BCD applicable on the imported good it is important to identify the tariff heading in which the good would fall under the First Schedule of the Customs Tariff. Classification of goods covered under the Customs Tariff is done as per the General Rules of Interpretation ('GIR'). GIR 1 to 5 lay down the principles for determining classification of goods under a specific Heading whereas GIR 6 is applicable if the objective is to determine the classification of goods in the Sub-headings of a Heading.

1.21 GIR 1 stipulates that the goods under consideration should be classified in accordance with the terms of the Headings and any relevant Section or Chapter Notes. These Section or Chapter Notes and Sub-Notes give detailed explanation as to the scope and ambit of the respective Sections and Chapters. These Notes have been given statutory backing and have been incorporated at the beginning of each Section / Chapter. For ready reference, Rule 1 is extracted herein below:

"Classification of goods in this Schedule shall be governed by the following principles:

1. The titles of Sections, Chapters and Sub-Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions ..."

1.22 The Larger Bench of the Hon'ble Tribunal in the matter of Saurashtra Chemical, Porbandar vs. Collector of Customs, 1986 (23) E.L.T. 283 (Tri. -LB) had held that the tariffs must be interpreted in the light of relevant Section and Chapter Notes which are statutorily binding like the Headings themselves. Thus, the Section and Chapter Notes have an overriding force on the respective Headings. This judgment was approved by the Hon'ble Supreme Court of India in the case of Saurashtra Chemicals vs. Collector of Customs, 1997 (95) E.L.T. 455 (S.C.).

Harmonized System of Nomenclature

1.23 The Customs Tariff in India is based on Harmonized Commodity Description and Coding System, generally referred to as Harmonized System of Nomenclature ('HSN') developed by the World Customs Organization ('WCO') which is applied uniformly by more than 137 countries of the world. Under the HSN, various goods are classified under different headings, sub-headings and tariff items. For the purposes of the uniform interpretation of the HSN, the WCO has published detailed explanatory notes to HSN which have long been recognized as a safe guide to interpret the Tariff Schedule.

1.24 In the case of O. K. Play (India) Ltd. vs. C.C.E. Delhi III, 2005 (180) E.L.T. 300 (S.C.). a 3-member bench of the Hon'ble Supreme Court of India made the following observations:

a. There cannot be a static parameter for correct classification.

b. HSN along with the explanatory notes provide a safe guide for interpretation of an Entry.

c. Functional utility, design, shape and predominant usage have also got to be taken into account while determining the classification of an item.

(d) Aforementioned aids and assistance are more important than the names used in the trade or common parlance in the matter of correct classification.

1.25 It was held by the Hon'ble Supreme Court in L.M.L Limited vs. Commissioner of Customs, 2010 (258) E.L.T. 321 (S.C.) that in order to resolve a dispute on tariff classification, internationally accepted nomenclature emerging from HSN Explanatory Notes is a safe guide. Further, HSN Explanatory Notes are also dependable guide for interpretation of Customs Tariff. Some other judicial pronouncements wherein this proposition was also affirmed, upheld and followed have been enumerated below:

i.CC vs. Gujarat Perstorp Electronics Ltd., [(2005)7 SCC 118, (2005) 186 E.L.T. 532 (3- member S.C. bench)];

ii.CCE vs. Phil. Corporation Ltd, [(2008) 223 E.L.T. 9 (S.C.)]

1.26 Therefore, the HSN Explanatory Notes are an important aid for ascertaining the classification of a good, in addition to the GRI and corresponding Chapter Notes and Section Notes

Relevance of dashes in the Customs Tariff:

1.27 The entries in the Customs Tariff are further divided into sub-categories using dashes. The First Schedule of the Customs Tariff explains that:

"Where in column (2) of this Schedule, the description of an article or group of articles under a heading is preceded by the said article or group of articles shall be taken to be a sub-classification of the article or group of articles covered by the said heading. Where, however, the description of an article or group of articles is preceded by the said article or group of articles shall be taken to be a sub-classification of the immediately preceding description of the article or group of articles which has Where the description of an article or group of articles is preceded by "—' or the said article or group of articles shall be taken to be a sub-classification of the immediately preceding description of the article or group of articles which has "-" or

['Where the description of an article or group of articles is preceded by " ", 'in addition
to being a sub-classification of"-" or"- -", the said article or group of articles may also be taken to be a sub-classification of the immediately preceding description of the article or group of articles which has "—". ';]"

1.28 Thus, classification of a product under a heading (four-digit entry) is to be done using dashes. Firstly, the entries at single dash level under the heading are to be compared, then entries at double-dash level are compared and so on

1.29 In the light of above legal provisions, to analyze the classification of above product following needs to be kept in mind:

a General Rules of Interpretation (GIR).

b. Heading/sub-heading of the First Schedule in conjunction with Section/Chapter/ Explanatory notes.

c. Entries at equivalent dash level under a heading.

d. Principal function of the subject good.

1.30 Hence, upon application of GIR 1, since the Receiver Upper Antenna Subassembly is used in mobile phone the Applicant submits that the most specific entry at the four-digit level under which the Receiver Upper Antenna Subassembly may be classified is CTH 8517 which covers "Telephone sets, including telephones for cellular networks or for other wireless networks: other apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network), other than transmission or reception apparatus of heading 8443, 8525. 8527 or 8528". Therefore, it is pertinent to analyze classification of Receiver Upper Antenna Subassembly under the said entry.

ANALYSIS OF CTH 8517:

1.31 In the present case, as the Receiver Upper Antenna Subassembly is used as a part during the manufacture of the mobile phones which are classified under CTH 8517, it becomes pertinent to analyze the classification of the Receiver Upper Antenna Subassembly under CTH 8517. CTH 8517 is further subdivided into various entries. The entries at single dash level under CTH 8517 have been extracted as follows:

1.32 Upon perusal of the above entries, there are two relevant single dash entries wherein the product may be classified, viz.,

1.33 Accordingly, we now proceed to analyze the relevant single dash entry under CTH 8517 wherein the Receiver Upper Antenna Subassembly can be classified. In this regard, the Applicant humbly submits that the Receiver Upper Antenna Subassembly cannot qualify as "other apparatus for transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network" Therefore, the Receiver Upper Antenna Subassembly is to merit classification as 'parts'. To support its understanding above, the Applicant makes the following submissions.

A. The Receiver Upper Antenna Subassembly is not an "apparatus".

1.34 Considering that in the present case, the main function of the product under consideration, i.e., Receiver Upper Antenna Subassembly is to carry out transmission and reception of signals to enable communication function of mobile phone, one may consider it to be classifiable under the single dash entry for other apparatus for transmission or reception of voice.

1.35 For the Receiver Upper Antenna Subassembly to qualify single dash level which covers "other apparatus for transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network", it is important to determine whether Receiver Upper Antenna Subassembly qualifies as an apparatus.

1.36 Since the term "apparatus" has not been defined under the Customs tariff, reference is made to its dictionary meaning to highlight the meanings of apparatus. The Modern Dictionary of Electronics, 7th Edition by Rudolf F Graf defines "apparatus" as follows:

Apparatus- "Equipment or instruments used for a specific purpose."

1.37 Further, the Modern Dictionary of Electronics, 7^th Edition by Rudolf F Graf defines the terms 'equipment' and 'instrument' as:

"Equipment- An item having a complete function apart from being a substructure of a system. Sometimes called a set."

"Instrument- A device capable of measuring, recording, and/or controlling."

1.38 In view of the above definitions, for an item to qualify as an apparatus, it should be used for a specific purpose and should be capable of performing complete function (apart from being a substructure of the system) i.e., it should function as a self-contained unit and should not borrow external support for being operational for performing its specified function.

1.39 In view of the factual matrix and the functioning of the Receiver Upper Antenna Subassembly discussed In Annexure I, it is evident that the Receiver Upper Antenna Subassembly in as imported condition cannot qualify as an "apparatus" because in it is not capable of standalone functioning. It is only after the Receiver Upper Antenna Subassembly is connected to the MLB using a FPCBA, the same becomes operational. Therefore, the Receiver Upper Antenna Subassembly is not hardwired to function as a self-contained unit. To this extent, it cannot be covered under the single dash entry covering "apparatus for transmission and
reception of data".

B. The Receiver Upper Antenna Subassembly in its as imported condition cannot carry out reception and transmission of information.

1.40 Further, even if the Receiver Upper Antenna Subassembly is considered to be an "apparatus" since the same in its as imported condition is unable to carry out transmission and reception of data, the same cannot be covered under the single dash entry of "apparatus for transmission and reception of data".

1.41 To substantiate this stand, the Applicant submits that it is a settled principle of classification that the goods must be assessed in the form and condition in which they are imported. The subsequent operations carried out onto the goods is not relevant for the purpose of customs assessment. In this regard, reliance is placed on Vizag Shipping and Metal Processors vs. CC, [2005 (189) E.L.T. 40], wherein it was held that imported goods are to be
assessed in the form in which importation takes place. The relevant extract of the judgment is as
follows:

"6...In our view the imported goods should be assessed in the form by which the importation takes place. What happens to the goods afterwards, may not be a criteria to assess them, unless the tariff specifically says so 'Ocean going vessels during the relevant period were exempted from excise duty by virtue of Notification No. 234/82. The vessels which were imported arrived at the port of importation by their own motive power. They might be very old and used. On that account we cannot say that they cease to be ocean going vessels"

1.42 In another case, Vareil Weaves vs. UOI, [1996 (83) E.L.T. 255 (S.C.)], it was held that countervailing duty is to be levied on goods in the stage in which they are imported, since Section 3 of the Customs Tariff Act so mandates. The stage reached subsequent to processing of imported goods is not relevant. Further, in the case of Dunlop India Ltd. vs. UOI, [1983 (13) E.L.T. 1566 (SC)] it has been held that condition of the article at the time of importation is a material factor for the purpose of classification as to under what head duty will be leviable.

1.43 In view of the above, the Applicant submits that in the instant case the Receiver Upper Antenna Subassembly in its as imported condition is not capable of transmission or reception of digital information At the time of import, the Receiver Upper Antenna Subassembly have no capability of transmission or reception of digital information. Post importation, only when the Receiver Upper Antenna Subassembly is connected to the MLB using a FPCBA, the product becomes operational. Accordingly, it cannot be an "apparatus capable of transmission and reception of data'.

1.44 To buttress its stand, the Applicant places reliance on the recent judgment of Hon'ble CESTAT, New Delhi in the case of Samsung Electronics India Pvt. Ltd. Vs. CC, [2024 (7) TMI 1409 - CESTAT NEW DELHI],wherein the issue under consideration was classification of IC codec imported by the Appellant which were used in mobile phones for transmission and reception of audio signals. As per the Appellant, the IC codec was classifiable as a "monolithic IC" under CTH 8542, however, as per the department, since the product was capable of transmission and reception of data, it was more appropriate classifiable under CTH 8517 62 which covers "apparatus for transmission and reception of data" In this case, the Hon'ble CESTAT New Delhi held that since the IC codecs were not functional on a stand-alone basis and also that in their as imported condition they were incapable of carrying out transmission and reception of data, the same were more appropriately classifiable under CTH 8542 as monolithic IC and not under CTSH 8517 62 as "apparatus for transmission and reception of data".

1.45 Similarly, since in the present case, the Receiver Upper Antenna Subassembly, once assembled in the mobile phone is responsible for transmission and reception of information, this judgment is squarely applicable in this case, to the extent of classification of the product as an "apparatus for transmission and reception of data". Applying the ratio of the aforementioned judgment in the present case, since the Receiver Upper Antenna Subassembly also is a not functional on a stand-alone basis and is incapable of carrying out transmission and reception of data in its as imported condition, it is also excluded from the purview of single dash entry covering "apparatus for transmission and reception of data".

C The Receiver Upper Antenna Subassembly qualifies as a 'part' of mobile phone

1.46 Considering that the Receiver Upper Antenna Subassembly is a component which is solely designed for use in mobile phones, the most relevant single dash entry under CTH 8517 is the entry which covers "parts of mobile phone". In view of the above, it becomes pertinent to analyze whether the Receiver Upper Antenna Subassembly can be considered as a 'part' of mobile phones.

1.47 The term 'parts' has not been defined in the HSN Explanatory Notes or the Customs Tariff. Hence, reliance must be made to the Hon'ble Supreme Court's Ruling in the case of CCE, Delhi Vs. Insulation Electrical (P) Ltd., [ 2008 (224) E.L.T. 512 (S.C.)]. In this case, the Apex Court while relying on various other earlier rulings has defined the term "parts" as "an essential component of the whole without which the whole cannot function".

1.48 A similar ruling has been made in the case of Electrosteel Castings Vs. CCE, [1989 (43) E.L.T. 305 (Tribunal)] which has been maintained by the Hon'ble Supreme Court in [1996 (83) ELTA48 (Supreme Court)].

1.49 In the present case, as stated in the facts in Annexure-I, the product under consideration is a Receiver Upper Antenna Subassembly which enables the communication of the mobile phone with other networks (including wireless network) thereby contributing to the phone's overall functionality and performance. Further, without the Receiver Upper Antenna Subassembly, the mobile phone cannot carry out the communication functions which is the most essential feature of a mobile phone.

1.50 In view of the above facts, the Applicant submits that the Receiver Upper Antenna Subassembly of the mobile phone is an essential component of the mobile phone allowing the mobile phone to function in an efficient manner. Accordingly, the Applicant submits that the Receiver Upper Antenna Subassembly should be considered as a 'part' of the mobile phone Accordingly, the product will be covered within the single dash entry of 'parts' under CTH 8517.

1.51 To buttress the submissions above, reference is also made to Section Note 2 of the Section XVI (which covers Chapter 84 and Chapter 85) which deals with classification rules for parts of machines. Relevant portion of Section Note 2 to Section XVI is mentioned hereunder for ease of reference -

"2. Subject to Note 1 to this Section, Note 1 to Chapter 84 and to Note 1 to Chapter 85, parts of machines (not being parts of the articles of heading 8484, 8544, 8545, 8546 or 8547) are to be classified according to the following rules :

(a) parts which are goods included in any of the headings of Chapter 84 or 85 (other than headings 8409, 8431, 8448, 8466, 8473, 8485, 8503, 8522, 8529, 8538 and 8548) are in all cases to be classified in their respective headings;

(b) other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 8479 or 8543) are to be classified with the machines of that kind or in
heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate. 2[However, parts which are equally suitable for use principally with the goods of headings 8517 and 8525 to 8528 are to be classified in heading 8517, and parts which are suitable for use solely or principally with the goods of heading 8524 are to be classified in heading 8529];
(c) all other parts are to be classified in heading 8409, 8431, 8448, 8466, 8473. 8503,
8522, 8529 or 8538 as appropriate or, failing that, in heading 8485 or 8548."

1.52 In the instant case, since the Receiver Upper Antenna Subassembly is not being specifically covered under any heading, classification of the product shall not be done as per Section Note 2(a).

1.53 Section Note 2(b) clearly mentions that parts which are suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 8479 or 8543) are to be classified with the machines of that kind. Since the Receiver Upper Antenna Subassembly is suitable for use solely with mobile phone, it must be classified with this mobile phone as its part. In this light, since the mobile phones are covered under heading 8517. more specifically under CTH 8517 1300, the Receiver Upper Antenna Subassembly shall also merit classification as part of the mobile phone under CTH 8517.

D. Receiver Upper Antenna Subassembly satisfies the twin test of what is considered to be a "part

1 54 To ascertain whether an item should classify under a separate heading or as part of the main machine, reference is made to the judgment of the Hon'ble CESTAT Delhi in the matter of M/s. Vodafone Idea Limited Vs. Principal Commissioner of Customs (Imports), Final Order No. 50874 I 2022 dated 20.09.2022 wherein the Hon'ble bench held that an item will not be considered as a 'part' if, on a standalone basis, it can be considered as an article classifiable under its own appropriate heading. To this effect, it laid down the twin test for determining whether an item is classifiable under the separate heading or as part of the main machine:

a. Test 1: No separate identifiable function of its own.
b. Test 2: Incapable of operating independently of the main machine.

1.55 Therefore, where an article does not satisfy both the conditions of the twin test, it cannot be classified under a separate heading as an apparatus falling under its own appropriate heading and the same shall merit classification as parts of the main machine.

1.56 In view of the twin test laid above, even though the Receiver Upper Antenna Subassembly has a separate identifiable function of its own (i.e., communication of the mobile phone with other networks), it cannot operate independently of the main machine. To operationalize the Receiver Upper Antenna Subassembly, the same must be connected to the MLB using a FPCBA and other components of the mobile phone. Thus, in its as imported condition, the Receiver Upper Antenna Subassembly is not functional and becomes functional only when the same is incorporated along with other components of the mobile phone, i.e., the Receiver Upper Antenna Subassembly becomes operational only after the complete mobile phone has been manufactured. To this extent, it does not qualify both the conditions of the twin test, and hence Receiver Upper Antenna Subassembly shall not merit classification under the separate heading and shall merit classification only as part of the mobile phone Accordingly, the product will be covered within the single dash entry of "parts" under CTH 8517.

Classification at eight-digit level

1.57 The single dash entry of "parts" under CTH 8517 is divided into the following entries at eight-digit level.

1.58 As mentioned above, CTH 8517 71 00 covers "Aerials and aerial reflectors of all kinds". The term "aerial" is also known as "antenna" in common parlance. In the present case, the product under consideration, i.e., Receiver Upper Antenna Subassembly comprises of two components, receiver and Upper Antenna Thus, as there is an additional component, I.e., receiver which is bonded onto the Upper Antenna the product under consideration becomes something over and above a simpliciter antenna as covered under CTH 8517 71 00. Accordingly, the same is excluded from the purview of this entry owing to the presence of receiver.

1.59 Further, since the product under consideration is not a printed circuit board, hence, it is excluded from CTH 8517 79 10. Therefore, the Receiver Upper Antenna Subassembly is classifiable under the residuary entry of 'Other' parts under CTH 8517 79 90 which reads as-"Telephone sets, including smartphones and other telephones for cellular networks or for other wireless networks: Other apparatus for the transmission or reception of vice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network), other than transmission or reception apparatus of heading 8443, 8525, 8527 or 8528- Parts—Other—Other, in terms of GIR 1 read with GIR 6.

QUESTION 2: APPLICABILITY OF EXEMPTION UNDER S. NO. 6J OF THE I NOTIFICATION NO. 57/2017

1.60 The Applicant will be exporting the Receiver Upper Antenna Subassembly to the third-party manufacturers of mobile phones and accordingly wishes to seek clarity on eligibility of availing exemption benefit under Sr. No. 6J of Notification No. 57/2017. The Central Government in terms of Section 25(1) of the Customs Act has issued Notification No. 57/2017 which intends to provide concessional exemption benefit to the import of machinery items, electrical appliances and its parts and accessories covered in the notification.

1.61 In this regard, Notification No. 57/2017 vide its Sr. No. 6J provides exemption from BCD to "all goods for use in manufacture of cellular mobile phone"which are covered under CTH 8517 79 90. This exemption is available subject to compliance with the procedure set out in the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 [as amended by Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022] ('IGCR Rules 2022'). For ease of reference, the aforementioned entry under Notification No. 57/2017 has been extracted as follows:

1.62 Thus, by virtue of Sr. No. 6J, BCD at the rate of 10% is applicable for all goods for use in manufacture of cellular mobile phone" which are covered under CTH 8517 79 90.

1 63 In view of the above, considering that the Receiver Upper Antenna Subassembly which is to be exported by the Applicant is classifiahle under CTH 8517 79 90 and is an essential part of mobile phone, as discussed above, the Applicant submits that the benefit of concessional rate of duty under Sr.No. 6J should be available at the time the import of Receiver Upper Antenna Subassembly, subject to compliance with IGCR Rules, 2022.

1.64 Therefore, the Applicant humbly submits that the Hon'ble Authority may kindly issue the advance ruling as prayed at an early date.

1.65 In the light of the above, a ruling is sought from the Hon'ble CAAR as follows:

A. The Receiver Upper Antenna Subassembly to be exported by the Applicant to India is
correctly classifiable under CTH 8517 79 90 of the First Schedule of the Customs Tariff at
the time of import; and

B. The Receiver Upper Antenna Subassembly exported by the Applicant to India is eligible to avail the concessional BCD vide Sr. No. 6J of Notification No. 57/2017 at the time of import.

1.66 The Applicant craves leave to alter, amend or modify any of the aforesaid grounds or submissions made herein this application and make such additional submissions without prejudice to the submissions made herein, at the time of hearing of the said application. The Applicant also craves leave to produce and provide any such further additional documents in support of its submissions at the time of hearing and before conclusion of the proceedings.

Comments of the Port Commissionerate

2. As per the provision of CAAR Regulation, 2021, the complete application of the applicant was provided to the concerned Custom Port, and requested to furnish the requisite comments in the instant matter The port authority furnished its comments as follows :-

2.1 Para3(i)

Eligibility in terms of Section 28E© of the Customs Act, 1962: Eligible;

2 2 Para 3(ii)

Proviso (1)(a) of Section 28I (2) of the Customs Act, 1962: No application from the Applicant pending before this office;

Proviso (1)(b) of Section 28I (2) of the Customs Act, 1962: Not known.

2.3 Para 3(iii)
Claim of the applicant regarding the nature of their activity: Correct.

2.4 Para 3(iv)

Comments on the merits of the question raised: As in the succeeding paras; 2 5 Para3(v) Whether the question raised is pending before any officer of customs, the Appellate Tribunal or any Court: No application from the Applicant pending before this office: Comments on the merits of the question raised.

2.6 The item "Receiver Upper Antenna Subassembly" (product)" as per the submissions given by the applicant is a radio frequency subassembly of a mobile phone which enables the communication of the mobile phone with other networks. The housing of the Receiver Upper Antenna Subassembly comprises of the following components -

i. Upper Antenna Module
ii. Receiver Module

2.7 The Upper Antenna module and Receiver Module are bonded together to form the Receiver Upper Antenna Subassembly through an advanced adhesive application process. After importation, Receiver Upper Antenna subassembly is integrated into the mobile phone using a calibrated screw fastening process and is placed above the Main Logic Board (MLB) and connected by a flexible printed circuit board assembly. Therefore, it can be said that the Receiver Upper Antenna Subassembly carries out varied functions, such as transmission and reception of radio frequency signals to enable communication function (upper antenna module); receiving and converting radio frequency signals into electrical signals which are then processed by the phone's internal system (Receiver Module).

2.8 From the submissions given by the importer, the item "Receiver Upper Antenna Subassembly" ('product)" has varied components with different/dedicated functions. As such, based on its components and functions, the item has assumed the characteristic of a part of a Cell phone. To be classified under a specific heading or tariff item, the item as a whole does not have a singular function, but has multiple functions. Hence, the item doesn't have any specific entry under Chapter 84 or 85. Furthermore, these are specifically manufactured to work with a particular model number of cellular mobile phone and not with any other model of cellular mobile phone manufactured by the same company These goods as imported is not capable of standalone function and after it is connected to the FPCBA.

2.9 As per the note 2(b) to Section XVI the "parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 84.79 or 85.43) are to be classified with the machines of that kind or in heading 84.09, 84.31, 84.48, 84.66, 84.73, 85.03, 85.22, 85.29 or 85.38 as appropriate. Therefore, the item, being part of mobile phone falling under CTH 8517, is appropriately classifiable under the heading 8517 as parts of cellular mobile phone. Under the heading 8517, the item is appropriately classifiable under the tariff item 8517 7990 which provide for other parts.

2.10 With regard to the applicability of benefit of notification no. 57/2017-cus dated 30.06.2017 Sl.no. 6J (as amended), for reference the same is reproduced below for reference:

2.11 As the item under consideration is a part of cellular mobile phone and is used in the manufacturing of the cellular mobile phone, the subject notification benefit is applicable for the item under consideration on fulfilment of condition no. 1 given to the Notification no. 57/2017-cus.

2 12 In light of the above, the item "Receiver Upper Antenna Subassembly" ('product)" is appropriately classifiable under the tariff item 8517 7990 and is eligible for the benefit of notification no. 57/2017-cus dated 30.06.2017 Sl.no. 6J (as amended) with effective rate of BCD being 10%, as claimed by the applicant.

Personal Hearing

3. The personal hearing in the matter was conducted on 16.01.2025 wherein the port authorities and the authorized representative of the applicant attended the same. During the personal hearing, the authorized representative reaffirmed the points that had already been presented in the applicant's initial submission. Likewise, the port authorities reiterated the arguments and details previously outlined in their formal response.

Additional Submissions

4. M/s Apple Operations International Limited through letter dated 15.01.2025 submitted
that:-

4.1 The Receiver Upper Antenna Subassembly is not an "apparatus" -

a. The Receiver Upper Antenna Subassembly is not considered an "apparatus" under customs tariff classification. For an item to qualify as an apparatus, it must be capable of performing a complete function on its own, without relying on other components [refer definition of "apparatus", "equipment" and "instrument" provided under the Modern Dictionary of Electronics, 7* Edition by Rudolf F Graf].

b. The Receiver Upper Antenna Subassembly, by itself, cannot function independently and requires connection to other components (like the Main Logic Board of mobile through FPCBA) to operate.

c. As it does not perform its function as a self-contained unit, it does not meet the criteria for being classified as an "apparatus for transmission and reception of voice or data". Therefore, it cannot be classified under the relevant tariff entry for such apparatus.

4.2 The Receiver Upper Antenna Subassembly in its as imported condition cannot carry out reception and transmission of information -

a. Even if the Receiver Upper Antenna Subassembly (RUA) is classified as an apparatus', it cannot be covered under the category of "apparatus for transmission and reception of data" because, in its as-imported condition, it is incapable of performing transmission and reception of data. It is trite law that goods must be assessed based on their condition at importation and post-import modifications are not relevant for classification purposes [refer cases Vizag Shipping and Metal Processors vs. CC & Vareil Weaves vs. UOI].

b. Since, the Receiver Upper Antenna Subassembly, in its as-imported condition, cannot transmit or receive data and only becomes operational after being connected to the MLB using a FPCBA, thus, it cannot be classified as an "apparatus capable of transmission and reception of
data".

4.3 The Receiver Upper Antenna Subassembly qualifies as a 'part' of mobile phone -_

a. Since, the Receiver Upper Antenna Subassembly is designed solely for use in mobile phones, it is to be considered as a "part" of the mobile phone under CTH 8517.

b. The term "parts" is not defined in the HSN Explanatory Notes or Customs Tariff, so reliance is placed on legal precedents, including CCE, Delhi Vs. Insulation Electrical (P) Ltd. & Electrosteel Castings Vs. CCE which defines "parts" as essential components without which the whole cannot function.

c. As mentioned previously, the Receiver Upper Antenna Subassembly enables communication between the mobile phone and other networks, including wireless networks, thereby contributing significantly to the phone's overall functionality and performance. Thus, the same is critical to the phone's overall performance Accordingly, it fulfils the definition of "parts" mentioned above

d. Further, Section Note 2 of Section XVI provides classification rules for parts, stating that parts suitable for use with a specific type of machine (e.g., mobile phones) should be classified with that machine

e As the Receiver Upper Antenna Subassembly is suitable only for mobile phones and is not classifiable under any other heading of Chapter 84 or 85, it should be classified as part of the mobile phone under CTH 8517, in terms of Section Note 2 (b).

4.4 Receiver Upper Antenna Subassembly satisfies the twin test of what is consideredto be a "part"

a. The Receiver Upper Antenna Subassembly qualifies as a "part" of a mobile phnne based on the twin test established by the Hon'ble CESTAT Delhi in the M/s. Vodafone Idea Limited Vs. Principal Commissioner of Customs (Imports) case. The test assesses whether an item can be classified under a separate heading or must be considered part of a larger machine. The twin test has two conditions to be classified as parts:

• The item should not have a separate identifiable function of its own
   

• The item should be incapable of operating independently of the main machine.

b. While the Receiver Upper Antenna Subassembly has a distinct function (enabling communication with networks), it cannot operate independently of the mobile phone. It only becomes functional when integrated with other components of the phone. Therefore, it meets both conditions of the twin test and hence it cannot be classified under a separate heading as an apparatus and must be classified as part of the mobile phone under CTH 8517.

4.5 Applicability of concessional BCD under S. No. 6J of Notification No. 57/2017 -

a S. No. 6J of Notification No. 57/2017 provides for concessional BCD at 10% for goods used in the manufacture of cellular mobile phones, classified under CTH 8517 79 90. As the Receiver Upper Antenna Subassembly is classified under CTH 8517 79 90 and is an essential part of a mobile phone, it should qualify for the concessional rate of duty under Sr. No. 6J of the notification, provided the necessary compliance with the IGCR Rules, 2022 is met during its import.

Analysis and Conclusion

5. The Receiver Upper Antenna Subassembly is the radio frequency subassembly of a mobile phone which enables the communication of the mobile phone with other networks. The housing of the Receiver Upper Antenna Subassembly comprises of the following components -

a. Upper Antenna module, and

b. Receiver module.

5.1 The receiver and the Upper Antenna are bonded together to form the Receiver Upper Antenna Subassembly through robotic soldering process. This integration of Receiver and Upper Antenna allows improved signal reception, reduced interference, and enhanced performance. After importation, this subassembly integrated into the mobile phone using a calibrated screw fastening process and is placed above the Mam Logic Board ('MLB') of mobile phone near the rear camera module. Thus, the Receiver Upper Antenna Subassembly is not functional and becomes functional only when the same is incorporated along with other components of the mobile phone, i.e.. the Receiver Upper Antenna Subassembly becomesoperational only after the complete mobile phone has been manufactured.

5.2 As far as the classification of Receiver Upper Antenna Subassembly is concerned, the said rates of BCD applicable on the imported good it is important to identify the tariff heading in which the good would fall under the First Schedule of the Customs Tariff. Classification of goods covered under the Customs Tariff is done as per the General Rules of Interpretation ('GIR'). GIR 1 to 5 lay down the principles for determining classification of goods under a specific Heading whereas GIR 6 is applicable if the objective is to determine the classification of goods in the Sub-headings of a Heading. GIR 1 stipulates that the goods under consideration should be classified in accordance with the terms of the Headings and any relevant Section or Chapter Notes. These Section or Chapter Notes and Sub-Notes give detailed explanation as to the scope and ambit of the respective Sections and Chapters. These Notes have been given statutory backing and have been incorporated at the beginning of each Section / Chapter. For ready reference, Rule 1 is extracted herein below:

"Classification of goods in this Schedule shall be governed by the following principles:

2. The titles of Sections, Chapters and Sub-Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions ..."

5.3 The Larger Bench of the Hon'ble Tribunal in the matter of Saurashtra Chemical, Porbandar vs. Collector of Customs, 1986 (23) E.L.T. 283 (Tri. -LB) had held that the tariffs must be interpreted in the light of relevant Section and Chapter Notes which are statutorily binding like the Headings themselves. Thus, the Section and Chapter Notes have an overriding force on the respective Headings. This judgment was approved by the Hon'ble Supreme Court of India in the case of Saurashtra Chemicals vs. Collector of Customs, 1997 (95) E.L.T. 455 (S.C.).

5.4 The Customs Tariff in India is based on Harmonized Commodity Description and Coding System, generally referred to as Harmonized System of Nomenclature ('HSN') developed by the World Customs Organization ('WCO') which is applied uniformly by more than 137 countries of the world. Under the HSN, various goods are classified under different headings, sub-headings and tariff items. For the purposes of the uniform interpretation of the HSN, the WCO has published detailed explanatory notes to HSN which have long been recognized as a safe guide to interpret the Tariff Schedule. In the case of O. K. Play (India) Ltd. vs. C.C.E. Delhi III, 2005 (180) E.L.T. 300 (S.C.), a 3-member bench of the Hon'ble Supreme Court of India made the following observations:

a. There cannot be a static parameter for correct classification.

b. HSN along with the explanatory notes provide a safe guide for interpretation of an entry

c. Functional utility, design, shape and predominant usage have also got to be taken into account while determining the classification of an item,

d Aforementioned aids and assistance are more important than the names used in the trade or common parlance in the matter of correct classification.

5.5 It was held by the Hon'ble Supreme Court in L.M.L Limited vs. Commissioner of Customs, 2010 (258) E.L.T. 321 (S.C.) that in order to resolve a dispute on tariff classification, internationally accepted nomenclature emerging from HSN Explanatory Notes is a safe guide. Further, HSN Explanatory Notes are also dependable guide for interpretation of Customs Tariff. Some other judicial pronouncements wherein this proposition was also affirmed, upheld and followed have been enumerated below:

i. CC vs. Gujarat Perstorp Electronics Ltd., [(2005)7 SCC 118, (2005) 186 E.L T. 532 (3- member S.C. bench)];

ii. CCE vs. Phil. Corporation Ltd, [(2008) 223 E.L. T. 9 (S.C.)]

Therefore, the HSN Explanatory Notes are an important aid for ascertaining the classification of a good, in addition to the GRI and corresponding Chapter Notes and Section Notes.

Relevance of dashes in the Customs Tariff:

5.6 The entries in the Customs Tariff are further divided into sub-categories using dashes. The First Schedule of the Customs Tariff explains that:

"Where in column (2) of this Schedule, the description of an article or group of articles under a heading is preceded by the said article or group of articles shall be taken to be a sub-classification of the article or group of articles covered by the said heading. Where, however the description of an article or group of articles is preceded by the said article or group of articles shall be taken to be a sub-classification of the immediately preceding description of the article or group of articles which has"-". Where the description of an article or group of articles is preceded by "—" or "—", the said article or group of articles shall be taken to be a sub-classification of the immediately preceding description of the article or group of articles which has "-" or

['Where the description of an article nr group of articles is preceded by" ", 'in addition
to being a sub-classification of"-" or"- -", the said article or group of articles may also be taken to be a sub-classification of the immediately preceding description of the article or group of articles which has "—".';]"

Thus, classification of a product under a heading (four-digit entry) is to be done using dashes. Firstly, the entries at single dash level under the heading are to be compared, then entries at double-dash level are compared and so on.

5.7 In the light of above legal provisions, to analyze the classification of above product following needs to be kept in mind:

a. General Rules of Interpretation (GIR).

b. Heading/sub-heading of the First Schedule in conjunction with Section/Chapter/ Explanatory notes.

c. Entries at equivalent dash level under a heading.

d. Principal function of the subject good.

5 8 Hence, upon application of GIR 1, since the Receiver Upper Antenna Subassembly is used in mobile phone, the most specific entry at the four-digit level under which the Receiver Upper Antenna Subassembly may be classified is CTH 8517 which covers "Telephone sets, including telephones for cellular networks or for other wireless networks; other apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network), other than transmission or reception apparatus of heading 8443. 8525, 8527 or 8528". Therefore, it is pertinent to analyze classification of Receiver Upper Antenna Subassembly under the said entry

ANALYSIS OF CTH 8517:

5.9 In the present case, as the Receiver Upper Antenna Subassembly is used as a part during the manufacture of the mobile phones which are classified under CTH 8517, it becomes pertinent to analyze the classification of the Receiver Upper Antenna Subassembly under CTH 8517. CTH 8517 is further subdivided into various entries. The entries at single dash level under CTH 8517 have been extracted as follows:

5.9.1 Upon perusal of the above entries, there are two relevant single dash entries wherein the
product may be classified, viz.,
 

5.9.2 Accordingly, it can be safely submitted that the Receiver Upper Antenna Subassembly cannot qualify as "other apparatus for transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network". Therefore, the Receiver Upper Antenna Subassembly merits classification as 'parts'.

The Receiver Upper Antenna Subassembly is not an "apparatus"

5.10 Considering that in the present case, the main function of the product under consideration, i.e., Receiver Upper Antenna Subassembly is to carry out transmission and reception of signals to enable communication function of mobile phone, one may consider it to be classifiable under the single dash entry for other apparatus for transmission or reception of voice. For the Receiver Upper Antenna Subassembly to qualify single dash level which covers "other apparatus for transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network", it is important to determine whether Receiver Upper Antenna Subassembly qualifies as an apparatus.

5.11 Since the term "apparatus" has not been defined under the Customs tariff, reference is made to its dictionary meaning to highlight the meanings of apparatus. The Modern Dictionary of Electronics, 7,h Edition by Rudolf F Graf defines "apparatus" as follows:

        Apparatus- "Equipment or instruments used for a specific purpose."

Further, the Modern Dictionary of Electronics, 7^th Edition by Rudolf F Graf defines the terms 'equipment' and 'instrument' as:

"Equipment- An item having a complete function apart from being a substructure of a system. Sometimes called a set."

"Instrument- A device capable of measuring, recording, and/or controlling."

5.11.1 In view of the above definitions, for an item to qualify as an apparatus, it should be used for a specific purpose and should be capable of performing complete function (apart from being a substructure of the system) i.e., it should function as a self-contained unit and should not borrow external support for being operational for performing its specified function. In view of the factual matrix and the functioning of the Receiver Upper Antenna Subassembly, it is evident that the Receiver Upper Antenna Subassembly in as imported condition cannot qualify as an "apparatus'' because in it is not capable of standalone functioning. It is only after the Receiver Upper Antenna Subassembly is connected to the MLB using a FPCBA, the same becomes operational. Therefore, the Receiver Upper Antenna Subassembly is not hardwired to function as a self-contained unit. To this extent, it cannot be covered under the single dash entry covering "apparatus for transmission and reception of data".

The Receiver Upper Antenna Subassembly in its as imported condition cannot carry out reception and transmission of information.

5.12 Further, even if the Receiver Upper Antenna Subassembly is considered to be an "apparatus" since the same in its as imported condition is unable to carry out transmission and reception of data, the same cannot be covered under the single dash entry of "apparatus for transmission and reception of data". As it is a settled principle of classification that the goods must be assessed in the form and condition in which they are imported. The subsequent operations carried out onto the goods is not relevant for the purpose of customs assessment. In this regard, reliance is placed on Vizag Shipping and Metal Processors vs. CC, [2005 (189) E.L.T. 40], wherein it was held that imported goods are to be assessed in the form in which importation takes place. The relevant extract of the judgment is as follows:

"6...In our view the imported goods should be assessed in the form by which the importation takes place. What happens to the goods afterwards, may not be a criteria to assess them, unless the tariff specifically says so 'Ocean going vessels' during the relevant period were exempted from excise duty by virtue of Notification No. 234/82. The vessels which were imported arrived at the port of importation by their own motive power They might he very old and used. On that account we cannot say that they cease to be ocean going vessels"

5.13 In another case, Vareil Weaves vs. UOI, [1996 (83) E.L.T. 255 (S.C.)], it was held that countervailing duty is to be levied on goods in the stage in which they are imported, since Section 3 of the Customs Tariff Act so mandates. The stage reached subsequent to processing of imported goods is not relevant. Further, in the case of Dunlop India Ltd. vs. UOI, [1983 (13) E.L.T. 1566 (SC)] it has been held that condition of the article at the time of importation is a material factor for the purpose of classification as to under what head duty will be leviable.

5.14 In view of the above, the Receiver Upper Antenna Subassembly in its as imported condition is not capable of transmission or reception of digital information. At the time of import, the Receiver Upper Antenna Subassembly have no capability of transmission or reception of digital information. Post importation, only when the Receiver Upper Antenna Subassembly is connected to the MLB using a FPCBA, the product becomes operational. Accordingly, it cannot be an "apparatus capable of transmission and reception of data".

5.15 The Applicant has placed reliance on the recent judgment of Hon'ble CESTAT, New Delhi in the case of Samsung Electronics India Pvt. Ltd. Vs. CC, [2024 (7) TM11409 - CESTAT NEW DELHI], wherein the issue under consideration was classification of IC codec imported by the Appellant which were used in mobile phones for transmission and reception of audio signals, As per the Appellant, the IC codec was classifiable as a "monolithic IC" under CTH 8542, however, as per the department, since the product was capable of transmission and reception of data, it was more appropriate classifiable under CTH 8517 62 which covers "apparatus for transmission and reception of data". In this case, the Hon'ble CESTAT, New Delhi held that since the IC codecs were not functional on a stand-alone basis and also that in their as imported condition, they were incapable of carrying out transmission and reception of data, the same were more appropriately classifiable under CTH 8542 as monolithic IC and not under CTSH 8517 62 as "apparatus for transmission and reception of data".

5.16 Similarly, since in the present case, the Receiver Upper Antenna Subassembly, once assembled in the mobile phone is responsible for transmission and reception of information, this judgment is squarely applicable in this case, to the extent of classification of the product as an "apparatus for transmission and reception of data". Applying the ratio of the aforementioned judgment in the present case, since the Receiver Upper Antenna Subassembly also is a not functional on a stand-alone basis and is incapable of carrying out transmission and reception of data in its as imported condition, it is also excluded from the purview of single dash entry covering "apparatus for transmission and reception of data".

The Receiver Upper Antenna Subassembly qualifies as a 'part' of mobile phone

5.17 Considering that the Receiver Upper Antenna Subassembly is a component which is solely designed for use in mobile phones, the most relevant single dash entry under CTH 8517 is the entry which covers "parts of mobile phone". In view of the above, it becomes pertinent to analyze whether the Receiver Upper Antenna Subassembly can be considered as a 'part' of mobile phones. The term 'parts' has not been defined in the HSN Explanatory Notes or the Customs Tariff. Hence, reliance must be made to the Hon'ble Supreme Court's Ruling in the case of CCE, Delhi Vs. Insulation Electrical (P) Ltd., [ 2008 (224) E.L.T. 512 (S.C.)]. In this case, the Apex Court while relying on various other earlier rulings has defined the term "parts" as "an essential component of the whole without which the whole cannot function".

5.18 In the present case, the product under consideration is a Receiver Upper Antenna Subassembly which enables the communication of the mobile phone with other networks (including wireless network) thereby contributing to the phone's overall functionality and performance. Further, without the Receiver Upper Antenna Subassembly, the mobile phone cannot carry out the communication functions which is the most essential feature of a mobile phone. Accordingly, the Receiver Upper Antenna Subassembly should be considered as a 'part' of the mobile phone. Accordingly, the product will be covered within the single dash entry of 'parts under CTH 8517.

5.19 The applicant has made a reference to Section Note 2 of the Section XVI (which covers Chapter 84 and Chapter 85) which deals with classification rules for parts of machines. Relevant portion of Section Note 2 to Section XVI is mentioned hereunder for ease of reference -

"2. Subject to Note 1 to this Section, Note 1 to Chapter 84 and to Note 1 to Chapter 85, parts of machines (not being parts of the articles of heading 8484, 8544, 8545, 8546 or 8547) are to be classified according to the following rules:

(a) parts which are goods included in any of the headings of Chapter 84 or 85 (other than headings 8409, 8431, 8448, 8466, 8473, 8485. 8503, 8522, 8529, 8538 and 8548) are in all cases to be classified in their respective headings;

(b) other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 8479 or 8543) are to be classified with the machines of that kind or in heading 8409, 8431, 8448, 8466, 8473. 8503, 8522. 8529 or 8538 as appropriate. [However, parts which are equally suitable for use principally with the goods of headings 8517 and 8525 to 8528 are to be classified in heading 8517, and parts which are suitable for use solely or principally with the goods of heading 8524 are to be classified in heading 8529],

(c) all other parts are to be classified in heading 8409, 8431, 8448, 8466, 8473, 8503,
8522, 8529 or 8538 as appropriate or, failing that, in heading 8485 or 8548."
mm

5.20 In the instant case, since the Receiver Upper Antenna Subassembly is not being specifically covered under any heading, classification of the product shall not be done as per Section Note 2(a). Section Note 2(b) clearly mentions that parts which are suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 8479 or 8543) are to be classified with the machines of that kind. Since the Receiver Upper Antenna Subassembly is suitable for use solely with mobile phone, it must be classified with this mobile phone as its part. In this light, since the mobile phones are covered under heading 8517, more specifically under CTH 8517 1300, the Receiver Upper Antenna Subassembly shall also merit classification as part of the mobile phone under CTH 8517.

Receiver Upper Antenna Subassembly satisfies the twin test of what is considered to be a "part"

5.21 To ascertain whether an item should classify under a separate heading or as part of the main machine, reference is made to the judgment of the Hon'ble CESTAT Delhi in the matter of M/s. Vodafone Idea Limited Vs. Principal Commissioner of Customs (Imports), Final Order No. 50874 / 2022 dated 20.09.2022 wherein the Hon'ble bench held that an item will not be considered as a 'part' if, on a standalone basis, it can be considered as an article classifiable under its own appropriate heading. To this effect, it laid down the twin test for determining whether an item is classifiable under the separate heading or as part of the main machine:

a. Test 1: No separate identifiable function of its own.

b. Test 2: Incapable of operating independently of the main machine.

5.22 Therefore, where an article does not satisfy both the conditions of the twin test, it cannot be classified under a separate heading as an apparatus falling under its own appropriate heading and the same shall merit classification as parts of the main machine. In view of the twin test laid above, even though the Receiver Upper Antenna Subassembly has a separate identifiable function of its own (i.e., communication of the mobile phone with other networks), it cannot operate independently of the main machine. To operationalize the Receiver Upper Antenna Subassembly, the same must be connected to the MLB using a FPCBA and other components of the mobile phone. Thus, in its as imported condition, the Receiver Upper Antenna Subassembly is not functional and becomes functional only when the same is incorporated along with other components of the mobile phone, i.e.. the Receiver Upper Antenna Subassembly becomes operational only after the complete mobile phone has been manufactured To this extent, it does not quality both the conditions of the twin test, and hence Receiver Upper Antenna Subassembly shall not merit classification under the separate heading and shall merit classification only as part of the mobile phone. Accordingly, the product can be covered within the single dash entry of "parts" under CTH 8517.

Classification at eight-digit level

5.23 The single dash entry of "parts" under CTH 8517 is divided into the following entries at eight-digit level.

As mentioned above. CTH 8517 71 00 covers "Aerials and aerial reflectors of all kinds". The term "aerial" is also known as "antenna" in common parlance. In the present case, the product under consideration, i.e., Receiver Upper Antenna Subassembly comprises of two components, receiver and Upper Antenna. Thus, as there is an additional component, i.e., receiver which is bonded onto the Upper Antenna, the product under consideration becomes something over and above a simpliciter antenna as covered under CTH 8517 71 00. Accordingly, the same is excluded from the purview of this entry owing to the presence of receiver. Further, since the product under consideration is not a printed circuit board, hence, it is excluded from CTH 8517 79 10. Therefore, the Receiver Upper Antenna Subassembly is classifiable under the residuary entry of 'Other' parts under CTH 8517 79 90 which reads as- "Telephone sets, including smartphones and other telephones for cellular networks or for other wireless networks: Other apparatus for the transmission or reception of vice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network), other than transmission or reception apparatus of heading 8443. 8525, 8527 or 8528- Parts—Other—Other", in terms of GIR 1 read with GIR 6.

5.24 The Applicant intends to exporting the Receiver Upper Antenna Subassembly to the third-party manufacturers of mobile phones and accordingly has sought to seek clarity on eligibility of availing exemption benefit under Sr. No. 6J of Notification No. 57/2017 The Central Government in terms of Section 25(1) of the Customs Act has issued Notification No. 57/2017 which intends to provide concessional exemption benefit to the import of machinery items, electrical appliances and its parts and accessories covered in the notification. In this regard, Notification No. 57/2017 vide its Sr. No. 6J provides exemption from BCD to "all goods for use in manufacture of cellular mobile phone" which are covered under CTH 8517 79 90 This exemption is available subject to compliance with the procedure set out in the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 [as amended by Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022] ('IGCR Rules 2022'). For ease of reference, the aforementioned entry under Notification No 57/2017 has been extracted as follows:

5.24.1 Thus, by virtue of Sr. No. 6J, BCD at the rate of 10% is applicable for all goods for use in manufacture of cellular mobile phone" which are covered under CTH 8517 79 90. In view of the above, considering that the Receiver Upper Antenna Subassembly which is to be exported by the Applicant is classifiable under CTH 8517 79 90 and is an essential part of mobile phone, as discussed above, the benefit of concessional rate of duty under Sr. No. 6J may be available at the time the import of Receiver Upper Antenna Subassembly, subject to compliance with IGCR Rules, 2022.

5.25 The Port Commissionerate has also concluded that the said item "Receiver Upper Antenna Subassembly" ('product)" is appropriately classifiable under the tariff item 8517 7990 and is eligible for the benefit of notification no. 57/2017-cus dated 30.06.2017 Sl.no. 6J (as amended) with effective rate of BCD being 10%, as claimed by the applicant.

5.26 M/s Apple Operations International Limited through letter dated 15.01.2025 submitted additional points that:-

The Receiver Upper Antenna Subassembly qualifies as a 'part' of mobile phone -_

a. Since, the Receiver Upper Antenna Subassembly is designed solely for use in mobile phones, it is to be considered as a "part" of the mobile phone under CTH 8517.

b. The term "parts" is not defined in the HSN Explanatory Notes or Customs Tariff, so reliance is placed on legal precedents, including CCE, Delhi Vs. Insulation Electrical (P) Ltd. & Electrosteel Castings Vs. CCE which defines "parts" as essential components without which the whole cannot function.

c. As mentioned previously, the Receiver Upper Antenna Subassembly enables communication between the mobile phone and other networks, including wireless networks, thereby contributing significantly to the phone's overall functionality and performance. Thus, the same is critical to the phone's overall performance. Accordingly, it fulfils the definition of "parts"
mentioned above.

d. Further, Section Note 2 of Section XVI provides classification rules for parts, stating that parts
suitable for use with a specific type of machine (e.g.. mobile phones) should be classified with
that machine

e. As the Receiver Upper Antenna Subassembly is suitable only for mobile phones and is not classifiable under any other heading of Chapter 84 or 85, it should be classified as part of the mobile phone under CTH 8517, in terms of Section Note 2 (b).

Receiver Upper Antenna Subassembly satisfies the twin test of what is considered to be a "part"

a. The Receiver Upper Antenna Subassembly qualifies as a "part" of a mobile phone based on the twin test established by the Hon'ble CESTAT Delhi in the M/s. Vodafone Idea Limited Vs. Principal Commissioner of Customs (Imports) case. The test assesses whether an item can be classified under a separate heading or must be considered part of a larger machine. The twin test has two conditions to be classified as parts:

• The item should not have a separate identifiable function of its own.
   
• The item should be incapable of operating independently of the main machine.

b. While the Receiver Upper Antenna Subassembly has a distinct function (enabling communication with networks), it cannot operate independently of the mobile phone. It only becomes functional when integrated with other components of the phone. Therefore, it meets both conditions of the twin test and hence it cannot be classified under a separate heading as an apparatus and must be classified as part of the mobile phone under CTH 8517.

6. In the light of the above, the following is held:

I. The Receiver Upper Antenna Subassembly to be exported by the Applicant to India is correctly classifiable under CTH 8517 79 90 of the First Schedule of the Customs Tariff at the time of import; and

II. The Receiver Upper Antenna Subassembly exported by the Applicant to India is eligible to avail the concessional BCD vide Sr. No. 6J of Notification No. 57/2017 at the time of import.

7. I, rule accordingly.

(Samar Nanda)
Customs Authority for Advance Ruling

F. No VIII/CAAR/Delhi/Apple Operations (Bengaluru)/154/2024            Dated: 23.01.2025

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

1. M/s Apple Operations International Limited, Hollyhill Industrial Estate Hollyhill, T23 YK84, Ireland.

2. The Pr. Commissioner/Commissioner of Customs, Airport & Air Cargo Complex, Air India Sats, Air Freight Terminal, Kempegowda, Bengaluru-560300.

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

6. Guard file.

7. Webmaster.


 

(Bharti Sharma)
Additional Commissioner & Secretary,
Customs Authority for Advance Rulings, Delhi