2025(01)LCX0410(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-20250174OR0000813338

Present

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

F. No. VIII/CAAR/Delhi/Apple Operations (Bengaluru)/159/2024

The day of 23^rd January, 2025

Ruling No. CAAR/Del/Apple/12/2025/2459 to 2465/23/01/2025

In application No. 140/2024 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, housing module, cover glass module, etc. In this regard, the Applicant's request is to obtain clarity from the Customs Authority for Advance Ruling for classification of "housing modules" ('product'), which shall be exported by the Applicant to the various importers based in India.

I. Overview of the housing modules exported by the Applicant

1.1. The housing module of a mobile phone is the body or the casing of the mobile phone. It is essentially the physical framework of the phone that provides structural integrity, durability, and houses various other components of mobile phone.

1.2. The housing module in a mobile phone serves several important purposes

a. Protection: The housing module provides protection of the internal components of the phone from physical damage, such as drops, impacts, and scratches. It also prevents foreign materials from entering the mobile phone body.

b Physical framework and support: The housing module provides a physical framework of the mobile phone.

c. Functionality: It houses various external components such as buttons, haptics module, speaker, dock flex, pressure sensor, microphone, sim card module, etc.

d. Aesthetic Appeal: The housing module contributes to the overall look and feel of the phone.

1.3. In the present case, the housing module for which the Applicant is seeking the advance ruling are composed of aluminium or aluminium and titanium alloy wherein aluminium forms the base metal. The housing module which is being exported by the Applicant is a metallic framework which has been specifically designed and shaped for use in mobile phones. The product has specific cuts and grooves to accommodate and house other components of the mobile phone. Further, in its as exported/imported conditions, the housing module encompasses various other components such as buttons, haptics module, speaker, dock flex, pressure sensor, microphone, sim card module and Upper Antenna flex. All the components are integrated into the Housing module through a calibrated screw fastening process It also prevents foreign material from entering inside the mobile phone.

1.4. The buttons which are integrated into the housing module enable switching on/off the mobile phones, ringer, volume change and other functions while the haptics module enables haptic/vibratory feedback to the user. As the name suggests, the sim card module houses the physical sim card. Further, the speaker module is an acoustics module that emits sound to enable calling and voice recording functions. Pressure sensor is used for barometer readings at different altitudes. Microphone is used for voice capturing and enabling features such as phone calls and video recording. Further, the Dock Flex houses the USB-C charging port and Lower Antenna. This Lower Antenna is ultra-wide band radio frequency component which enables satellite calling, SOS, and 'Find My' functions of the mobile phone. The Upper Antenna enables the Radio Frequency functions such as GPS, Bluetooth, WiFi, LTE.

1.5. Further, the module may comprise of additional parts which may be added to provide structural integrity to the module and will assist in the integration of the module 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 module.

1.6. Here it is pertinent to mention that these components are not functional until and unless the same are incorporated along with other components of the mobile phone, i.e., the components become operational only after the complete mobile phone has been manufactured. The housing module thereby enables integration of the Cover Glass Assembly and Back Glass Assembly of mobile phones to complete the manufacturing process.

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

1.7. 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;"

1.8. 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

1.9. 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."

1.10. 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.

1.11. 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.

1.12. 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. -

(1)

(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."

1.13. The Applicant submits that questions raised in the application (as in Annexure II) 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.

1.14. Accordingly the present application should not be considered as pending before any Court as neither the show cause notice has been issued nor the bill of entries has been provisionally assessed.

1.15. 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.

1.16. The questions in respect of which an advance ruling from the Hon'ble CAAR has been sought by the Applicant are:

a. Whether the housing module exported by the Applicant merits classification under CTH 8517 79 90 of the First Schedule 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 housing modules to third-party manufacturers engaged in manufacture of mobile phones in India?

QUESTION 1: CLASSIFICATION OF HOUSING MODULE

1.17. For the housing module 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.

1.18. The import and export of goods into and out of India is regulated by the Customs Act, 1962 ('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.

1.19. 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.

1.21. 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.

1.22. 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 ..."

1.23. 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

1.24. 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.

1.25. 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.

1.26. 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.)

1.27. 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.

1.28. 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. Principal function of the subject good.

1.29. Hence, upon application of GIR 1, the most specific entry at the four-digit level under which the housing module 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 housing module under the said entry.

ANALYSIS OF CTH 8517:

A. The housing module is for specific use with mobile phone

1.30. At the outset, the Applicant submits that the housing module exported are specific for use with mobile phone. The product is specifically designed for integration with other parts of mobile phone in order to constitute a functional mobile phone. This product does is not capable of functioning with any other device Hence, it is submitted that the housing module is a product which is tailor made for use in the mobile phone.

B. The housing module is not classifiable under any specific heading at four-digit level

    The housing module is more specifically covered under CTH 8517

1.31. It is submitted that since the housing module is essentially made up of aluminium, reference may also be made to Chapter 76 which covers Aluminium and its articles, viz. CTH 7606 which covers "Aluminium plates, sheets and strip, of a thickness exceeding 0.2 mm". Chapter Note 9 (d) to Chapter 76, provides the meaning of the term "Plates, sheets, strip and foil'' as follows,

"9. For the purposes of Chapters 74 to 76 and 78 to 81, the following expressions shall have the meanings hereby assigned to them:

(d) Plates, sheets, strip and foil

Flat-surfaced products (other than the unwrought [products]), coiled or not, of solid rectangular (other than square) cross-section with or without rounded corners (including "modified rectangles" of which two opposite sides are convex arcs, the other two sides being straight, of equal length and parallel) of a uniform thickness, which are:

- of rectangular (including square) shape with a thickness not exceeding one-tenth of the
width;

- of a shape other than rectangular or square, of any size, provided that they do not assume the character of articles or products of other headings.

Headings for plates, sheets, strip, and foil apply, inter alia, to plates, sheets, strip, and foil with patterns (for example, grooves, ribs, chequers, tears, buttons, lozenges) and to such products which have been perforated, corrugated, polished or coated, provided that they do not thereby assume the character of articles or products of other headings.

1.32. In view of the above provision, it is abundantly clear that for a product to be identified as a plates, sheets, strip and foil under CTH 7606, the working(s) done should not make the product an article which is more aligned to be classified with other headings in the nomenclature or to be used as parts of such other headings.

1.33. Here, reference must also be made to the HSN Explanatory Notes to CTH 7606 which states that the Explanatory Notes to CTH 7409 (copper plates, sheets and strips) applies mutatis mutandis to this heading. The HSN Explanatory Notes to CTH 7409 states that "All such goods remain in this heading if worked (e.g., cut to shape, perforated corrugated, ribbed, channelled, polished, coated, embossed or rounded at the edges) provided that they do not thereby assume the character of articles or products of other headings...."

1.34. Upon application of the aforementioned Chapter Note and the HSN Explanatory Notes in the present case, the Applicant submits that as the housing module exported by the Applicant have been tailor made for sole use with mobile phones and comprise of additional components such as buttons, haptics module, speaker, dock flex, pressure sensor, microphone, sim card module and upper antenna flex, accordingly, the housing module exported by the Applicant is not in the nature of a simpliciter plate, sheet or strip of aluminium as defined in Chapter Note 9 (d). The housing module has thus acquired the character of a specific part of mobile phone. Hence, the Applicant submits that the housing module is excluded from the scope of CTH 7606.

1.35. The Applicant in this regard places reliance on the case of Samsung India Electronics Pvt. Ltd. Vs. Principal Commissioner of Customs, Air Cargo Complex (Import), New Delhi, [2023 (12) TMI 1155 - CESTAT NEW DELHI], wherein the question before the Hon'ble Tribunal was in relation to classification of mobile phone covers (front cover, middle cover and back cover) which were made up of plastic material. As per the department, the mobile phone covers were classifiable under CTH 3920 which covers plates, sheets, strips, etc. of plastic, whereas, as per the Appellant, the product was classifiable under CTH 8517 as parts of mobile phone. The aforementioned judgment was appealed before the Hon'ble Supreme Court by the Revenue authorities in [TS-290-SC-2024-CUST], however, the same was dismissed by the Hon'ble Supreme Court and accordingly the order of the Hon'ble Tribunal was maintained.

1.36. Here it is pertinent to mention that the entry CTH 3920 is analogous to CTH 7606 to the extent that this entry covers plates, sheets and strips of plastic which have been cut to shape and surface worked such as polishing, coating etc. but have not been subject to further working upon. Similarly, CTH 7606 covers plates, sheets and strips of aluminium which have been worked upon such as perforated, corrugated, polished or coated, provided that they do not thereby assume the character of articles classifiable in other heading. In essence, both - CTH 3920 and CTH 7606 excludes all those products which have undergone extensive treatment so as to make the product to be something over and above a normal plastic or aluminum plate, sheet, strip etc. and thereby giving the product a specific differentiating characteristic.

1.37. In the case of Samsung (supra), the Hon'ble CESTAT, New Delhi held that since the mobile phone covers underwent processes such as milling, thermoforming etc. they were considered to be "further worked upon" and were therefore excluded from the coverage under CTH 3920. Further, as the phone covers were being solely and principally used with mobile phones for the purpose of protection of other component of mobile phones from heat, dust, etc., the mobile phone covers were classifiable under CTH 8517.

1.38. A similar ruling has been provided by the Hon'ble CESTAT, New Delhi in the case of M/s. Vivo Mobile India Pvt. Ltd. Vs. Principal Commissioner of Customs, Air Cargo Complex, New Delhi, [Final Order Nos. 50226-50232 /2024J.

1.39. Thus, in view of the above, as the housing module has undergone various steps during the manufacturing and comprises of various other components and housing module has been specifically designed for use with a particular model of mobile phone, the Applicant submits that the housing module is excluded from the scope of Chapter 76, more specifically under CTH 7606, in terms of GIR 1 read with the Chapter Note to Chapter 76 and the HSN Explanatory Notes.

C. The housing module is a "part" of mobile phone in terms of Section Note 2 (b) to Section XVI

1.40. In the present case, as the housing module is used to manufacture the mobile phones which are classified under CTH 8517, it becomes pertinent to analyze the classification of the housing module under CTH 8517.

1.41. CTH 8517 inter alia covers "smartphones and its parts". In view of the above, it becomes pertinent to analyze whether the housing module can be considered as a 'part' of mobile phones.

1.42. 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''.

1.43. A similar ruling has been made in the case of Electrosteel Castings Vs. CCE, [1989 (43) E.L.J. 305 (Tribunal)] which has been maintained by the Hon'ble Supreme Court in [1996 (83) ELT A48 (Supreme Court)].

1.44. In the present case, as stated in the facts in Annexure-I, the product under consideration is a housing module which forms the physical framework of the mobile phone. The housing module provides protection of the internal components of the phone from physical damage, such as drops, impacts, and scratches.

1.45. Further, without the housing module, the other integral parts of the mobile phone will be susceptible to damage from dust, abrasion, water etc. additionally, the housing module also contributes to the overall look and feel of the phone.

1.46. In view of the above facts, the Applicant submits that the housing module of the mobile phone is an essential component of the mobile phone which allows a proper ecosystem for all other components of the mobile phone to function in an efficient manner along with providing a structural framework to the mobile phone.

1.47. Considering that the housing module is essential for a mobile phone to function effectively, the Applicant submits that the housing module should be considered as a "part" of the mobile phone.

1.48. Further, classification of 'parts' under Chapter 84 and Chapter 85 is governed in terms of rules provided in Section Note 2 of Section XVI. Section Note 2 is sub-divided in 3 sub-rules. Each of the sub-rule must be sequentially applied. For ease of reference, Section Note 2 has been extracted as follows:

"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."

1.49. Upon perusal of the aforementioned note, the classification of 'parts' under Chapter 84 and Chapter 85 is to be done in the following manner:
 

i. As per Section Note 2 (a), the parts for which there is a specific entry under Chapter 84 or 85 [other than a few entries listed in Section Note 2 (a)] have to be classified in their respective headings:

ii. As per Section Note 2 (b), all parts other than those covered in Section Note 2 (a), which are suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading 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;

iii. Lastly, all the other parts which are not covered in Section Note 2 (a) and Section Note 2 (b) above, 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.

1.50. Upon sequential application of the rules provided in Section Note 2 in the present case, the Applicant submits that since there is no specific entry at four-dash level, under Chapter 84 or Chapter 85 which specifically cover housing modules, the housing module are excluded from the purview of Section Note 2 (a). Therefore, reference must be made to Section Note 2 (b) which covers other parts which are suitable for use solely or principally with a particular machine.

1.51. In the present case, the housing module exported by the Applicant has been specifically cut, designed and tailor made for the manufacture of mobile phones and therefore capable of use solely and principally with mobile phones. Hence it is submitted that the housing module fulfills the condition of sole and principal test as enunciated in Section Note 2 (b). Accordingly, the housing module is covered under Section Note 2 (b) and is to be classified under CTH 8517 along with mobile phone.

1.52. Further, presence of components such as buttons, haptics module, speaker, dock flex, pressure sensor, microphone, sim card module and upper antenna flex also suggests that the housing module is a tailor-made product for use with mobile phones

1.53. In view of the above discussion, as the housing module is a 'part'of mobile phone and is solely and principally used with a mobile phone, it is to be classified under CTH 8517, in terms of GIR 1 read with Section Note 2 (b) to Section Note XVI.

D. The housing module merits classification under CTH 8517 even in terms of GIR 3 (c)

1.54. Without prejudice to the above submission, even if it is assumed that the product under consideration, i.e., the housing module also merits consideration under the scope of the CTH 7606, then also the appropriate classification of the product will not be under this entry by virtue of GIR 3 (c). GIR 3 (c) states that when a product cannot be classified by reference to Rule GIR 3(a) or GIR 3 (b), the same shall be classified under the heading which occurs last in numerical order among those which equally merit consideration. In the present case, even if it is assumed that the product equally merits classification under CTH 7606 and CTH 8517, then also the product will merit classification under CTH 8517 as the same occurs last in the numerical order.

1.55. Coming to classification at eight-digit level under CTH 8517, as the housing module is not covered under any specific entry at eight-digit level, it will be classified under the residuary entry under CTH 8517, i.e., under CTH 8517 79 90 which reads as "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-Parts—Other—Other".

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

1.56. The Applicant will be exporting the housing modules 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.

1.57. 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.

1.58. 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:

1.59. 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.

1.60. In view of the above, considering that the housing module 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 Applicant submits that the benefit of concessional rate of duty under Sr. No. 6J should be available at the time the import of housing module, subject to compliance with IGCR Rules, 2022.

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

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

a) The housing modules to be exported by the Applicant are correctly classifiable under CTH 8517 79 90 of the First Schedule of the Customs Tariff at the time of import; and,

b) The housing modules exported by the Applicant are eligible to avail the concessional BCD vide Sr. No. 6J of Notification No. 57/2017 at the time of import.

1.63. 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.

1.64. 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.

1.65. The Applicant further prays for an opportunity of being heard in person

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(c) 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;

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

2.4. Para 3(iii)

Claim of the applicant regarding the nature of their activity: Correct.

2.5. Para 3(iv)

Comments on the merits of the question raised: As in the succeeding paras;

2.6. The item "Housing Module" ('product')" as per the submissions given by the applicant refers to housing module of a mobile phone is the body or the casing of the mobile phone. It is essentially the physical framework of the phone that provides structural integrity, durability, and houses various other components of mobile phone. It is composed of aluminium or aluminium and titanium alloy wherein aluminium forms the base metal. The product has specific cuts and grooves to accommodate and house other components of the mobile phone. Further, in its as exported/imported conditions, the housing module encompasses various other components such as burtons, haptics module, speaker, dock flex, pressure sensor, microphone, sim card module and Upper Antenna flex. All the components are integrated into the Housing module through a calibrated screw fastening process

2.7. It was also submitted that these components are not functional until and unless the same are incorporated along with other components of the mobile phone, i.e., the components become operational only after the complete mobile phone has been manufactured. The housing module thereby enables integration of the Cover Glass Assembly and Back Glass Assembly of mobile phones to complete the manufacturing process.

2.8. From the submissions given by the importer, the item "Housing Module" ('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 Cellular mobile 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 could not be classified under any of the headings 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.

2.9. Further, 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" the item 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 "Housing Module" ('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%.

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 housing module is for specific use with mobile phone -

a. The housing module is specifically designed for use in mobile phones and cannot function with any other device. It is tailor-made for integration with other mobile phone components to form a fully functional phone.

4.2. The housing module is not classifiable under any specific heading at four-digit level-

    The housing module is more specifically covered under CTH 8517

a. As the housing module is made primarily of aluminium, there may be a possibility that it may be covered under Chapter 76, specifically under CTH 7606 for aluminium plates, sheets, and strips thicker than 0.2 mm. Further, Chapter Note 9(d) defines "plates, sheets, strip, and foil", and it is emphasized that for a product to be classified under CTH 7606, the product must not be worked in a way that transforms it into an article more aligned with other classifications or used as a part of products from other headings. In the present case, the housing module is specifically designed for use in mobile phones and includes additional components like buttons, a haptics module, speaker, dock flex, pressure sensor, microphone, sim card module, and antenna flex. Due to these additional components and its tailored design for mobile phones, the housing module has acquired the character of a specific mobile phone part, and therefore, should be excluded from classification under CTH 7606.

b. Reliance is placed on the case of Samsung India Electronics Pvt. Ltd. vs. Principal Commissioner of Customs & M/s. Vivo Mobile India Pvt. Ltd. Vs. Principal Commissioner of Customs, Air Cargo Complex, New Delhi, where the issue was the classification of mobile phone covers made of plastic. The department classified them under CTH 3920 (plastic plates, sheets, and strips), but the appellant argued they should be classified under CTH 8517 as mobile phone parts. The Supreme Court upheld the CESTAT's decision, agreeing the covers were parts of mobile phones as the phone covers were extensively processed, acquiring characteristics that differentiate them from basic plates, sheets, or strips.

c. Similarly, as the housing module has undergone various manufacturing steps and consisting of multiple components specifically designed for a particular mobile phone model, it should be classified as "parts" of mobile phone under CTH 8517.

4.3. The housing module is a "part" of mobile phone in terms of Section Note 2 (b) to Section XVI-

a. The term "parts" is defined as essential components without which the whole cannot function [CCE, Delhi Vs. Insulation Electrical (P) Ltd. & Electrosteel Castings Vs. CCE].

b. The housing module of a mobile phone serves as the physical framework, offering protection to internal components from damage due to drops, impacts, scratches, dust, abrasion, and water. It also plays a key role in the phone's overall appearance. The Applicant argues that the housing module is essential for the proper functioning of the phone, providing both structural support and a protective environment for other components. Thus, it ought to be considered as a part of mobile phone classified under CTH 8517.

c. Further, as the housing module is tailor-made for mobile phones it satisfies the "sole and principal use" test. Further, as there is no specific entry for the housing module in Chapter 84 or 85, it falls under CTH 8517 as "parts" of mobile phone in terms of Section Note 2(b).

4.4. The housing module merits classification under CTH 8517 even in terms of GIR 3 (c) -

a. Even if the housing module could be considered under CTH 7606, it should not be classified under this entry according to GIR 3(c). This rule states that if a product cannot be classified under GIR 3(a) or GIR 3(b), it should be classified under the heading that appears last in numerical order among equally valid classifications. In this case, if the product could be classified under both CTH 7606 and CTH 8517, it should be classified under CTH 8517, as it appears last in the numerical sequence.

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 Housing Module 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 housing module of a mobile phone is the body or the casing of the mobile phone. It is essentially the physical framework of the phone that provides structural integrity, durability, and houses various other components of mobile phone. The housing module in a mobile phone serves several important purposes:

a. Protection: The housing module provides protection of the internal components of the phone from physical damage, such as drops, impacts, and scratches. It also prevents foreign materials from entering the mobile phone body.

b. Physical framework and support: The housing module provides a physical framework of the mobile phone.

c. Functionality: It houses various external components such as buttons, haptics module, speaker, dock flex, pressure sensor, microphone, sim card module, etc.

d. Aesthetic Appeal The housing module contributes to the overall look and feel of the phone.

5.1 In the present case, the housing module for which the Applicant is seeking the advance ruling are composed of aluminium or aluminium and titanium alloy wherein aluminium forms the base metal. The housing module which is being exported by the Applicant is a metallic framework which has been specifically designed and shaped for use in mobile phones. The product has specific cuts and grooves to accommodate and house other components of the mobile phone. Further, in its as exported/imported conditions, the housing module encompasses various other components such as buttons, haptics module, speaker, dock flex, pressure sensor, microphone, sim card module and Upper Antenna flex. All the components are integrated into the Housing module through a calibrated screw fastening process. It also prevents foreign material from entering inside the mobile phone. It is pertinent to mention that these components are not functional until and unless the same are incorporated along with other components of the mobile phone, i.e., the components become operational only after the complete mobile phone has been manufactured. The housing module thereby enables integration of the Cover Glass Assembly and Back Glass Assembly of mobile phones to complete the manufacturing process.

5.2 The import and export of goods into and out of India is regulated by the Customs Act, 1962 ('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.

5.3 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:

3. 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 ..."

5.4 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 5 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.

5.6 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.

5.7 Hence, upon application of GIR 1, the most specific entry at the four-digit level under which the housing module 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 housing module under the said entry.

ANALYSIS OF CTH 8517:

The housing module is for specific use with mobile phone

5.8 At the outset, the Applicant submits that the housing module exported are specific for use with mobile phone. The product is specifically designed for integration with other parts of mobile phone in order to constitute a functional mobile phone. This product does is not capable of functioning with any other device Hence, it is submitted that the housing module is a product which is tailor made for use in the mobile phone.

The housing module is not classifiable under any specific heading at four-digit level- The housing module is more specifically covered under CTH 8517

5.9 It is submitted that since the housing module is essentially made up of aluminium, reference may also be made to Chapter 76 which covers Aluminium and its articles, viz. CTH 7606 which covers "Aluminium plates, sheets and strip, of a thickness exceeding 0.2 mm". Chapter Note 9 (d) to Chapter 76, provides the meaning of the term "Plates, sheets, strip and foil'' as follows

"9. For the purposes of Chapters 74 to 76 and 78 to 81, the following expressions shall have the meanings hereby assigned to them:

(d) Plates, sheets, strip and foil

Flat-surfaced products (other than the unwrought [products]), coiled or not, of solid rectangular (other than square) cross-section with or without rounded corners (including "modified rectangles" of which two opposite sides are convex arcs, the other two sides being straight, ot equal length and parallel) of a uniform thickness, which are:

- of rectangular (including square) shape with a thickness not exceeding one-tenth of the . width;

- of a shape other than rectangular or square, of any size, provided that they do not assume the character of articles or products of other headings.

Headings for plates, sheets, strip, and foil apply, inter alia, to plates, sheets, strip, and foil with patterns (for example, grooves, ribs, chequers, tears, buttons, lozenges) and to such products which have been perforated, corrugated, polished or coated, provided that they do not thereby assume the character of articles or products of other headings.

5.10 In view of the above provision, it is abundantly clear that for a product to be identified as a plates, sheets, strip and foil under CTH 7606, the working(s) done should not make the product an article which is more aligned to be classified with other headings in the nomenclature or to be used as parts of such other headings. Here, reference must also be made to the HSN Explanatory Notes to CTH 7606 which states that the Explanatory Notes to CTH 7409 (copper plates, sheets and strips) applies mutatis mutandis to this heading. The HSN Explanatory Notes to CTH 7409 states that "All such goods remain in this heading if worked (e.g., cut to shape, perforated corrugated, ribbed, channelled, polished, coated, embossed or rounded at the edges) provided that they do not thereby assume the character of articles or products of other headings...."

5:11 Upon application of the aforementioned Chapter Note and the HSN Explanatory Notes in the present case, the Applicant submits that as the housing module exported by the Applicant have been tailor made for sole use with mobile phones and comprise of additional components such as buttons, haptics module, speaker, dock flex, pressure sensor, microphone, sim card module and upper antenna flex, accordingly, the housing module exported by the Applicant is not in the nature of a simpliciter plate, sheet or strip of aluminium as defined in Chapter Note 9 (d). The housing module has thus acquired the character of a specific part of mobile phone. Hence, the Applicant submits that the housing module is excluded from the scope of CTH 7606.

5.12 The Applicant in this regard places reliance on the case of Samsung India Electronics Pvt. Ltd. Vs. Principal Commissioner of Customs, Air Cargo Complex (Import), New Delhi, [2023 (12) TMI 1155 - CESTAT NEW DELHI], wherein the question before the Hon'ble Tribunal was in relation to classification of mobile phone covers (front cover, middle cover and back cover) which were made up of plastic material. As per the department, the mobile phone covers were classifiable under CTH 3920 which covers plates, sheets, strips, etc. of plastic, whereas, as per the Appellant, the product was classifiable under CTH 8517 as parts of mobile phone. The aforementioned judgment was appealed before the Hon'ble Supreme Court by the Revenue authorities in [TS-290-SC-2024-CUST], however the same was dismissed by the Hon'ble Supreme Court and accordingly the order of the Hon'ble Tribunal was maintained.

5.13 Here it is pertinent to mention that the entry CTH 3920 is analogous to CTH 7606 to the extent that this entry covers plates, sheets and strips of plastic which have been cut to shape and surface worked such as polishing, coating etc. but have not been subject to further working upon. Similarly, CTH 7606 covers plates, sheets and strips of aluminium which have been worked upon such as perforated, corrugated, polished or coated, provided that they do not thereby assume the character of articles classifiable in other heading. In essence, both - CTH 3920 and CTH 7606 excludes all those products which have undergone extensive treatment so as to make the product to be something over and above a normal plastic or aluminum plate, sheet, strip etc. and thereby giving the product a specific differentiating characteristic.

5 14 In the case of Samsung (supra), the Hon'ble CESTAT, New Delhi held that since the mobile phone covers underwent processes such as milling, thermoforming etc. they were considered to be "further worked upon" and were therefore excluded from the coverage under CTH 3920 Further, as the phone covers were being solely and principally used with mobile phones for the purpose of protection of other component of mobile phones from heat, dust, etc., the mobile phone covers were classifiable under CTH 8517. A similar ruling has been provided by the Hon'ble CESTAT, New Delhi in the case of M/s. Vivo Mobile India Pvt. Ltd. Vs. Principal Commissioner of Customs, Air Cargo Complex, New Delhi, [Final Order Nos. 50226-5023212024].

5.15 Thus, in view of the above, as the housing module has undergone various steps during the manufacturing and comprises of various other components and housing module has been specifically designed for use with a particular model of mobile phone, the Applicant submits that the housing module is excluded from the scope of Chapter 76, more specifically under CTH 7606, in terms of GIR 1 read with the Chapter Note to Chapter 76 and the HSN Explanatory Notes.

The housing module is a "part" of mobile phone in terms of Section Note 2 (b) to Section XVI

5.16 In the present case, as the housing module is used to manufacture the mobile phones which are classified under CTH 8517, it becomes pertinent to analyze the classification of the housing module under CTH 8517. CTH 8517 inter alia covers "smartphones and its parts". In view of the above, it becomes pertinent to analyze whether the housing module can be considered as a 'part' of mobile phones.

5.17 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 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) ELT A48 (Supreme Court)].

5.19 In the present case, the product under consideration is a housing module which forms the physical framework of the mobile phone. The housing module provides protection of the internal components of the phone from physical damage, such as drops, impacts, and scratches. Further, without the housing module, the other integral parts of the mobile phone will be susceptible to damage from dust, abrasion, water etc. additionally, the housing module also contributes to the overall look and feel of the phone.

5.20 In view of the above facts, the housing module of the mobile phone appears to be an essential component of the mobile phone which allows a proper ecosystem for all other components of the mobile phone to function in an efficient manner along with providing a structural framework to the mobile phone. Considering that the housing module is essential for a mobile phone to function effectively, the housing module should be considered as a "part" of the mobile phone.

5.21 Further, classification of 'parts' under Chapter 84 and Chapter 85 is governed in terms of rules provided in Section Note 2 of Section XVI. Section Note 2 is sub-divided in 3 sub-rules. Each of the sub-rule must be sequentially applied. For ease of reference, Section Note 2 has been extracted as follows

"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 pads 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."

5.22 Upon perusal of the aforementioned note, the classification of 'parts' under Chapter 84 and Chapter 85 is to be done in the following manner:

i. As per Section Note 2 (a), the parts for which there is a specific entry under Chapter 84 or 85 [other than a few entries listed in Section Note 2 (a)] have to be classified in their respective headings;

ii. As per Section Note 2 (b), all parts other than those covered in Section Note 2 (a), which are suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading 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;

iii. Lastly, all the other parts which are not covered in Section Note 2 (a) and Section Note 2 (b) above, 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.

5.23 Upon sequential application of the rules provided in Section Note 2 in the present case, the Applicant submits that since there is no specific entry at four-dash level, under Chapter 84 or Chapter 85 which specifically cover housing modules, the housing module are excluded from the purview of  Section Note 2 (a) Therefore, reference must be made to Section Note 2 (b) which covers other parts which are suitable for use solely or principally with a particular machine.

5.24 In the present case, the housing module exported by the Applicant has been specifically cut, designed and tailor made for the manufacture of mobile phones and therefore capable of use solely and principally with mobile phones. Hence it is submitted that the housing module fulfills the condition of sole and principal test as enunciated in Section Note 2 (b). Accordingly, the housing module is covered under Section Note 2 (b) and is to be classified under CTH 8517 along with mobile phone.

5.25 Further, presence of components such as buttons, haptics module, speaker, dock flex, pressure sensor, microphone, sim card module and upper antenna flex also suggests that the housing module is a tailor-made product for use with mobile phones. In view of the above discussion, as the housing module is a 'part' of mobile phone and is solely and principally used with a mobile phone, it is to be classified under CTH 8517, in terms of GIR 1 read with Section Note 2 (b) to Section Note XVI.

The housing module merits classification under CTH 8517 even in terms of GIR 3 (c)

5.26 Coming to classification at eight-digit level under CTH 8517, as the housing module is not covered under any specific entry at eight-digit level, it will be classified under the residuary entry under CTH 8517, i.e., under CTH 8517 79 90 which reads as "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- Parts—Other—Other'':

5.27 The Applicant will be exporting the housing modules to the third-party manufacturers of mobile phones and accordingly wished 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:

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.

5.28 In view of the above, considering that the housing module 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 Applicant submits that the benefit of concessional rate of duty under Sr. No. 6J should be available at the time the import of housing module, subject to compliance with IGCR Rules, 2022.

5.29 The Port Commissionerate has supported the classification with the view that item "Housing Module" ('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.

5.30 M/s Apple Operations International Limited through letter dated 15.01.2025 has submitted additional points with reiterating the earlier submitted arguments.

6. The questions are answered accordingly:

a. Whether the Housing Module exported by the Applicant merits classification under CTH 8517 79 90 of the First Schedule of the Customs Tariff?

Answer: Yes, the Housing Module exported by the Applicant merits classification under CTH 8517 79 90 of the First Schedule of the Customs Tariff

b. Whether benefit of concessional rate of BCD under Sr. No. 6J of the Notification No. 57/2017 is available for import of such Housing Module?

Answer: Yes, the benefit of concessional rate of BCD under Sr. No. 6J of the Notification No. 57/2017 is available for import of such Housing Module.

7.I, rule accordingly

(Samar Nanda)
Customs Authority for Advance Rulings

F. No. VIII/CAAR/Delhi/Apple Operations (Bengaluru)/159/2024            Date: 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. K

7. Webmaster

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