2025(01)LCX0412(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-20250174OR000000D67F

Present

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

F. No. VIII/CAAR/Delhi/Apple Operations (Bengaluru)/158/2024

The day of 23^rd January, 2025

Ruling No. CAAR/Del/Apple/11/2025/2452 to 2458/23/01/2025

In application No. 139/2024 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 consumer electronics goods under the brand name of 'Apple'. The Applicant in furtherance of its business activities amongst others, will be exporting mobile phone parts, namely. Cover Glass Module, housing modules etc. In this regard, the Applicant's request is to obtain clarity from the Hon'ble CAAR for classification of "Cover Glass Module" ('product'), which shall be exported by the Applicant to various importers based in India.

I. Overview of the Cover Glass Module exported by the Applicant

1.1. The term "Cover Glass Module" refers to the complete unit or module which includes the sub-components such as top module, display flex and sensor flex. In the present case, the Cover Glass Module exported by the Applicant comprises of the following sub-components

a. Top Module - it comprises of a metal frame which houses the display and touch layer of the mobile phone. The display shows the user interface, images and videos to the user while the touch functionality enables the user to interact with the mobile phones. In the present case, the display of the mobile phone is made up of Organic Light Emitting Diodes ('OLEDs').

b. Display Flex - The Cover Glass Module also comprises of display flex or flexible printed circuits that connect the top module i.e., Display of the Cover Glass Module to the phone's motherboard/ main logic board ('MLB'). The display flex transmits power data signals, and control signals between the display (and touch) of the Cover Glass Module with the rest of the phone. However, this transmission and reception capability is operationalized only after carrying out the post-importation activities on the Cover Glass Module and after integration of the Cover Glass Module with other components of mobile phones.

c Sensor Flex - Lastly, in addition the Top Module and Display Flex, the Cover Glass Module also comprises of a sensor flex. Sensor Flex is assembled onto the display, i.e., top module through an advanced adhesive application. This sensor flex in turn consists of the following components -

i. Ambient Light Sensor ('ALS') - The Ambient Light Sensor of the mobile phone detects different colours as well as brightness of ambient light to display parameters for seamless customer experience. ALS are usually photodiodes or phototransistors which generate electrical currents when exposed to light. These electric currents are proportional to the intensity of the light. The current generated by the ALS are then converted into a digital signal that can be processed by the mobile phone's software. This allows the mobile phone to determine the level of ambient light present. Based on the ambient light level detected, the mobile's software adjusts the brightness of the mobile phone accordingly.

ii. Magnetic Compass - The Cover Glass Module also comprises of a magnetic compass sensor which detects and measures the earth's magnetic field around the mobile phone. This functionality helps the sensor in determining phone's orientation (portrait or landscape) by detecting the Earth's magnetic field in relation to the phone's position. Additionally, the magnetic compass, which is hardwired into the Cover Glass Module, once connected with the MLB, gets integrated with other software and provides directional information thereby aiding in navigation applications.

d. Driver IC- The Cover Glass Module exported by the Applicant comprises of driver ICs which play significant role in controlling and driving the display of the mobile phone. These driver ICs are integrated into the display layer of the Cover Glass Module during manufacturing and are tailored to work seamlessly with specific display technologies and resolutions.

1.2. Post importation of the Cover Glass Module, the same is integrated into the mobile phone and display flex is connected to the motherboard to operationalize the Cover Glass Module.

1.3. Here it is also pertinent to mention that the Cover Glass 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.

1.4. Therefore, the Cover Glass Module exported by the Applicant carries out varied functions, such as, firstly, the Cover Glass Module provides the display (and touch) functionality of the phone. Secondly, it provides spatial orientation information using magnetic compass and lastly it also manages the flow of light / brightness of the mobile phone. Thus, it is stated that the Cover Glass Module performs multiple functions by integrating various components within itself.

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

1.5. 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;"

1.6. As discussed earlier, the Applicant will be exporting the inputs and parts of mobile phone(Cover Glass Module) to various importers based 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

1.7. 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"

1.8. 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 28 H(2)(d) of the Customs Act.

1.9. 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.

1.10. 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."

1.11. 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.

1.12. 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.

1.13. 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.

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

a. Whether the Cover Glass 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 Cover Glass Module to third-party manufacturers engaged in manufacture of mobile phones in India?

QUESTION 1: CLASSIFICATION OF COVER GLASS MODULE

1.15. For the Cover Glass Module to be exported by the Applicant, the proposed classification and Applicant's interpretation to reach to the proposed classification is discussed as under.

1.16. 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.

1.17. 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.

1.18. 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.

1.19. 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.

1.20. 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 ..."

1.21. 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

1.22. 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.

1.23. 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.

1.24. 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.)].

1.25. 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.

1.26. In the light of above facts, 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.

1.27. Hence, upon application of GIR 1, since the Cover Glass Module is used in mobile phone, the Applicant submits that the most specific entry at the four-digit level under which the Cover Glass 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".

1.28. However, before proceeding to analyze classification of the Cover Glass Module under CTH 8517, it is pertinent to discuss classification of the product under CTH 8524 which covers similar items viz. display modules. Accordingly, to justify its stand that the product merits classification under CTH 8517, the Applicant makes the following submissions for classification of the Cover Glass Module exported by it.

A. The Cover Glass Module is for specific use with mobile phone

1.29. At the outset, the Applicant submits that the Cover Glass 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 Cover Glass Module is a product which is tailor made for use in the mobile phone.

B. The Cover Glass Module is not classifiable under any specific heading at four-digit level in the Customs Tariff-

The Cover Glass Module is not a mere 'flat panel display module' in terms of Chapter Note 7 to Chapter 85

1.30. Considering the fact that the Cover Glass Module comprises of the display assembly of the mobile phone, one may consider it to be covered under CTH 8524 which covers "Flat panel display modules, whether or not incorporating touch-sensitive screens".

1.31. However, in order to classify any goods under CTH 8524, it should comply with the definition of 'flat panel display modules' provided in Chapter Note 7 to Chapter 85, which for the sake of convenience has been extracted as follows:

"7 For the purposes of heading 8524, flat panel display modules' refer to devices or apparatus for the display of information, equipped at a minimum with a display screen, which are designed to be incorporated into articles of other headings prior to use. Display screens for flat panel display modules include, but are not limited to, those which are flat, curved, flexible, foldable or stretchable in form Flat panel display modules may incorporate additional elements, including those necessary for receiving video signals and the allocation of those signals to pixels on the display. However, heading 8524 does not include display modules which are equipped with components for converting video signals (e.g., a scaler IC, decoder IC or application processer) or have otherwise assumed the character of goods of other headings.

For the classification of flat panel display modules defined in this Note, heading 8524 shall take precedence over any other heading in the Nomenclature."

1.32. In view of the above, for a product to be identified as a "flat panel display module", the product
needs to fulfill the definition mentioned in Chapter Note 7 of Chapter 85.

1.33. As per the Chapter Note 7 of Chapter 85 the following pre-requisite conditions need to be met for a product to be covered under CTH 8524 as "flat panel display module":

a. The product must be a device or apparatus for the display of information.

b. The product must be equipped at a minimum with a display screen (LCD/ OLED/ LED).

c. The product must be designed to be incorporated into articles of other headings prior to use (such as mobile phones, laptops, etc.)

d. The display screens of the product may be flat, curved, flexible, foldable or stretchable in form.

e. The product may incorporate additional elements, including those necessary for receiving video signals and the allocation of those signals to pixels on the display.

f. The product must not be equipped with components for converting video signals (e.g., a scaler IC, decoder IC or application processer).

g. The product must not have otherwise assumed the character of goods of other headings.

1.34. In view of the above, the Applicant submits the following with respect to different conditions mandated in Chapter Note 7 of Chapter 85, to Cover Glass Module exported by the Applicant to India:

1.35. In view of the last condition mentioned in the above table, as the Cover Glass Module is hit by the exclusion mentioned in Chapter Note 7 to Chapter 85, the product is not a "flat panel display module" as defined under Chapter Note 7 to Chapter 85. Hence, the Cover Glass Module is excluded from the scope of CTH 8524 as it has assumed the character of goods of other heading by presence of sensor flex (containing ALS and magnetic compass).

1.36. In order to buttress its stand, the Applicant places reliance on the case of Samsung India Electronics Pvt. Ltd. Vs. Principal Commissioner of Customs, Air Cargo Complex (Import), New Delhi, [2023 (12) TM11155 - 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 Hon'ble Tribunal in the said matter passed the judgment in the favour of the importer holding the correct classification of mobile phone covers under CTH 8517. The 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.

1.37. Here it is pertinent to mention that the entry CTH 3920 is analogous to CTH 8524 to the extent that this entry excludes plates, sheets and strips of plastic which have been subject to further working upon. Similarly, as per Chapter Note 7 to Chapter 85, CTH 8524 excludes those goods which have assumed the character of goods of other headings. In essence, both - CTH 3920 and CTH 8524 excludes all those products which make the product to be something over and above those items which are covered under the said heading for the reason that they have a specific differentiating characteristic.

1.38. 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.

1.39. 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. 50226-50232/2024].

1.40. Thus, in view of the above, as explained above, as the Cover Glass Module has multiple independent functions, owing to the presence of additional components such as ALS and magnetic compass, the product does not remain to be in the nature of a simpliciter display assembly as encompassed under CTH 8524. Accordingly, it can be said that the Cover Glass Module exported by the Applicant has assumed the characteristics of goods covered under any other heading.

1.41. Therefore, as the Cover Glass Module is not in the nature of a simpliciter display module, it will not be covered under CTH 8524.

C. The Cover Glass Module is a 'part' of mobile phone in terms of Section Note 2 (b) to Section XVI

1.42. In the present case, as the Cover Glass Module is used to manufacture the mobile phones which are classified under CTH 8517, it becomes pertinent to analyze the classification of the Cover Glass Module under CTH 8517.

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

1.44. 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".

1.45. 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)].

1.46. In the present case, as stated in the facts in Annexure-I, the product under consideration is a Cover Glass Module which provides the display (and touch) functionality of the mobile phone. Additionally, it also comprises of ALS and magnetic compass which assist in management of light within the mobile phone and provides for spatial orientation information for navigation purposes.

1.47. Further, the Cover Glass Module acts as an interface between the users and the mobile phone enabling the users to touch and view the information displayed on the mobile. Further, the magnetic compass when it connected with the MLB, gets integrated with other software and provides directional information thereby aiding in navigation applications. Hence, the magnetic compass is required for effective functioning of other applications in the mobile phone.

1.48. In view of the above facts, the Applicant submits that the Cover Glass Module of the mobile phone is an essential component of the mobile phone which acts as a user interface and enables effective functioning of other applications. Considering that the Cover Glass Module is essential for a mobile phone to function effectively, the Applicant submits that the Cover Glass Module should be considered as a "part" of the mobile phone.

1.49. 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."

1.50. 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.

1.51. 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 Cover Glass Module, the Cover Glass 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.

1.52. In the present case, the Cover Glass Module exported by the Applicant is a 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 Cover Glass Module fulfills the condition of sole and principal test as enunciated in Section Note 2 (b). Accordingly, the Cover Glass Module is covered under Section Note 2 (b) and is to be classified under CTH 8517 along with mobile phone.

1.53. In view of the above discussion, as the Cover Glass 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.

1.54. Coming to classification at eight-digit level under CTH 8517, as the Cover Glass 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 NOTIFICATION NO. 57/2017

1.55. The Applicant will be exporting the Cover Glass Module 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.

1.56. 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.

1.57. 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:

1.58. 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.

1.59. In view of the above, considering that the Cover Glass 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 Cover Glass Module, subject to compliance with IGCR Rules, 2022.

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

A. The Cover Glass Modules to be exported by the Applicant to India are correctly classifiable under CTH 8517 79 90 of the Customs Tariff.

B. The Cover Glass Modules exported by the Applicant are eligible to avail the concessional BCD vide Sr. No. 6J of Notification No. 57/2017.

1.61. 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.

1.62. 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(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;
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. Para 3(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 "Cover Glass Module" ('product)" as per the submissions given by the applicant is a structural and functional component of a mobile phone consisting of top module, display flex and sensor flex which enables display (and touch) functionality, orientation information using magnetic compass and manages the flow of light/brightness of the mobile phone. The housing of the Cover Glass Module comprises of the following components -

1. Top Module (consisting of a metal frame which houses the display and touch layer of the mobile phone)

2. Display Flex (Flexible printed circuits that connect the top module to the main logic board (MLB))

3. Sensor Flex (consisting of Ambient Light Sensor (ALS) which detects different colours and brightness of ambient light; and Magnetic Compass which detects and measures the earth's magnetic field around the mobile phone.)

4. Driver ICs

2.7. The Top Module, Display Flex, Sensor Flex and ICs are connected together to form the Cover Glass Module. After importation, Cover Glass module is integrated into the MLB of the mobile phone through the Display Flex. Therefore, it can be said that the Cover Glass module carries out varied functions, such as providing the structural support to the phone; and enables display (and touch) functionality (top module), orientation information (using magnetic compass) and manages the flow of light/brightness of the mobile phone (ALS).

2.8 From the submissions given by the importer, the item "Cover Glass 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 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.

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 "Cover Glass 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.

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 Cover Glass Module is for specific use with mobile phone -

a. The Cover Glass Module is specifically designed for use in mobile phones. It is intended to integrate with other mobile phone components to form a functional device and cannot be used with any other device, making it tailor-made for mobile phones.

4.2. The Cover Glass Module is not classifiable under any specific heading at four-digit level in the Customs Tariff -

The Cover Glass Module is not a mere 'fiat panel display module' in terms of Chapter Note 7 to Chapter 85

a. To classify a product under CTH 8524 as a "flat panel display module," it must meet the criteria defined in Chapter Note 7 to Chapter 85. These criteria include:

• The product must be a device or apparatus for the display of information.
   

• The product must be equipped at a minimum with a display screen (LCD/ OLED/ LED).
   

• The product must be designed to be incorporated into articles of other headings prior to use (such as mobile phones, laptops, etc.)
   

• The display screens of the product may be flat, curved, flexible, foldable or stretchable in form,
   

• The product may incorporate additional elements, including those necessary for receiving video signals and the allocation of those signals to pixels on the display.
   

• The product must not be equipped with components for converting video signals (e.g., a scaler IC, decoder IC or application processer).
   

• The product must not have otherwise assumed the character of goods of other headings.

b. The Cover Glass Module exported by the Applicant fulfills several conditions for classification under customs tariff. It functions as a display module for mobile phones, satisfying the first condition by providing display and touch functionality. The second and third conditions are met as the module includes an OLED display assembly with a flat shape. The fourth condition is fulfilled due to the inclusion of driver ICs for controlling the display. The fifth condition is met because the module does not contain components like scaler ICs or application processors that convert video signals. Additionally, the module includes a sensor flex with an ALS (Ambient Light Sensor) and a magnetic compass. The ALS manages light flow, and the magnetic compass provides spatial orientation and navigation functionality. These features indicate that the module performs multiple independent functions beyond display, meaning it cannot be classified as a simple display module under tariff heading 8524 The presence of the ALS and magnetic sensors further excludes it from the definition in Chapter Note 7 of Chapter 85

c. Reference is made to Samsung India Electronics Pvt. Ltd. v. Principal Commissioner of Customs, where mobile phone covers made of plastic were excluded from classification under CTH 3920 due to further processing and were classified under CTH 8517. In this case, the Hon'ble CESTAT ruled that since the mobile phone covers underwent processing and were specifically used for protecting mobile phone components, they were classified under the tariff heading for mobile phone parts. The Applicant draws a parallel to the Cover Glass Module, noting that the presence of the ALS and magnetic compass functions makes it distinct from a simple display module. Hence, the Cover Glass Module should also be classified under CTH 8517.

4.3. The Cover Glass 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. As the Cover Glass Module is essential for mobile phone operation as it provides display, touch functionality, and additional features like ALS and magnetic compass, hence it is a "part" of mobile
phone.

c. Further, as the Cover Glass Module is tailor-made for mobile phones it satisfies the "sole and principal use" test. Further, as there is no specific entry for the Cover Glass 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. 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 Cover Glass 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 term "Cover Glass Module" refers to the complete unit or module which includes the sub-components such as top module, display flex and sensor flex. In the present case, the Cover Glass Module exported by the Applicant comprises of the following sub-components: a) Top Module; b) Display Flex; c) Sensor Flex, which consists of the components such as - i. Ambient Light Sensor; ii. Magnetic Compass ; d) Driver IC. Post importation of the Cover Glass Module, the same is integrated into the mobile phone and display flex is connected to the motherboard to operationalize the Cover Glass Module.

5.1 It is also pertinent to mention that the Cover Glass 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. However, these additional component or parts will not alter the principal function of the module. Therefore, the Cover Glass Module exported by the Applicant carries out varied functions, such as, firstly, the Cover Glass Module provides the display (and touch) functionality of the phone. Secondly, it provides spatial orientation information using magnetic compass and lastly it also manages the flow of light / brightness of the mobile phone. Thus, it is stated that the Cover Glass Module performs multiple functions by integrating various components within itself.

5.2 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 ..."

5.3 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 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.

5.6 Hence, upon application of GIR 1. since the Cover Glass Module is used in mobile phone, the most specific entry at the four-digit level under which the Cover Glass 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".

5.7 However, before proceeding to analyze classification of the Cover Glass Module under CTH 8517, it is pertinent to discuss classification of the product under CTH 8524 which covers similar items viz. display modules. Accordingly, to justify its stand that the product merits classification under CTH 8517, the Applicant has made the following submissions for classification of the Cover Glass Module exported by it.

The Cover Glass Module is for specific use with mobile phone

5 8 At the outset, as submitted by the applicant that the Cover Glass 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 Cover Glass Module is a product which is tailor made for use in the mobile phone.

5.9 The Cover Glass Module is not classifiable under any specific heading at four-digit level in the Customs Tariff -The Cover Glass Module is not a mere 'flat panel display module' in terms of Chapter Note 7 to Chapter 85

Considering the fact that the Cover Glass Module comprises of the display assembly of the mobile phone, one may consider it to be covered under CTH 8524 which covers "Flat panel display modules, whether or not incorporating touch-sensitive screens".

5.10 However, in order to classify any goods under CTH 8524, it should comply with the definition of 'flat panel display modules' provided in Chapter Note 7 to Chapter 85, which for the sake of convenience has been extracted as follows:

"7 For the purposes of heading 8524, "flat panel display modules" refer to devices or apparatus for the display of information, equipped at a minimum with a display screen, which are designed to be incorporated into articles of other headings prior to use. Display screens for flat panel display modules include, but are not limited to, those which are flat, curved, flexible, foldable or stretchable in form Flat panel display modules may incorporate additional elements, including those necessary for receiving video signals and the allocation of those signals to pixels on the display. However, heading 8524 does not include display modules which are equipped with components for converting video signals (e.g., a scaler IC, decoder IC or application processer) or have otherwise assumed the character of goods of other headings.

For the classification of flat panel display modules defined in this Note, heading 8524 shall take precedence over any other heading in the Nomenclature."

5.11 In view of the above, for a product to be identified as a "flat panel display module", the product needs to fulfill the definition mentioned in Chapter Note 7 of Chapter 85. As per the Chapter Note 7 of Chapter 85 the following pre-requisite conditions need to be met for a product to be covered under CTH 8524 as "flat panel display module":

a. The product must be a device or apparatus for the display of information.

b. The product must be equipped at a minimum with a display screen (LCD/ OLED/ LED).

c. The product must be designed to be incorporated into articles of other headings priorto use (such as mobile phones, laptops, etc.)

d. The display screens of the product may be flat, curved, flexible, foldable or stretchable in form.

e. The product may incorporate additional elements, including those necessary for receiving video signals and the allocation of those signals to pixels on the display.

f. The product must not be equipped with components for converting video signals (e.g., a scaler IC, decoder IC or application processer).

g. The product must not have otherwise assumed the character of goods of other headings.

5.12 In view of the above, the following with respect to different conditions mandated in Chapter Note 7 of Chapter 85, to Cover Glass Module exported by the Applicant to India:

In view of the last condition mentioned in the above table, as the Cover Glass Module is hit by the exclusion mentioned in Chapter Note 7 to Chapter 85, the product is not a "flat panel display module" as defined under Chapter Note 7 to Chapter 85. Hence, the Cover Glass Module is excluded from the scope of CTH 8524 as it has assumed the character of goods of other heading by presence of sensor flex (containing ALS and magnetic compass)

5.14 The applicant has placed 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 Hon'ble Tribunal in the said matter passed the judgment in the favour of the importer holding the correct classification of mobile phone covers under CTH 8517. The 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.

5.15 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. 50226-50232/2024].

5.16 Thus, in view of the above, as explained above, as the Cover Glass Module has multiple independent functions, owing to the presence of additional components such as ALS and magnetic compass, the product does not remain to be in the nature of a simpliciter display assembly as encompassed under CTH 8524. Accordingly, it can be said that the Cover Glass Module exported by the Applicant has assumed the characteristics of goods covered under any other heading.

The Cover Glass Module is a 'part' of mobile phone in terms of Section Note 2 (b) to Section XVI

5.17 In the present case, as the Cover Glass Module is used to manufacture the mobile phones which are classified under CTH 8517, it becomes pertinent to analyze the classification of the Cover Glass Module under CTH 8517, which, inter alia covers "smartphones and its parts". In view of the above, it becomes pertinent to analyze whether the Cover Glass Module 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". 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)].

5.18 In view of the above facts, it could be concluded that the Cover Glass Module of the mobile phone is an essential component of the mobile phone which acts as a user interface and enables effective functioning of other applications. Considering that the Cover Glass Module is essential for a mobile phone to function effectively, the Cover Glass Module should be considered as a "part" of the mobile phone.

5.19 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."
 

5.20 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.

5.21 Upon sequential application of the rules provided in Section Note 2 in the present case, since there is no specific entry at four-dash level, under Chapter 84 or Chapter 85 which specifically cover Cover Glass Module, the Cover Glass 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. In the present case, the Cover Glass Module exported by the Applicant is a 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 Cover Glass Module fulfills the condition of sole and principal test as enunciated in Section Note 2 (b). Accordingly, the Cover Glass Module is covered under Section Note 2 (b) and is to be classified under CTH 8517 along with mobile phone.

5.22 In view of the above discussion, as the Cover Glass 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. Coming to classification at eight-digit level under CTH 8517, as the Cover Glass 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".

5.23 The Applicant will be exporting the Cover Glass Module 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.

5.24 The Port Commissionerate has also recommended the item "Cover Glass Module" ('product')" to be 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.

5.25 M/s Apple Operations International Limited through letter dated 15.01.2025 has made some additional submissions including reiteration of earlier arguments:-

a. The Cover Glass Module exported by the Applicant fulfills several conditions for classification under customs tariff. It functions as a display module for mobile phones, satisfying the first condition by providing display and touch functionality. The second and third conditions are met as the module includes an OLED display assembly with a flat shape. The fourth condition is fulfilled due to the inclusion of driver ICs for controlling the display. The fifth condition is met because the module does not contain components like scaler ICs or application processors that convert video signals. Additionally, the module includes a sensor flex with an ALS (Ambient Light Sensor) and a magnetic compass. The ALS manages light flow, and the magnetic compass provides spatial orientation and navigation functionality. These features indicate that the module performs multiple independent functions beyond display, meaning it cannot be classified as a simple display module under tariff heading 8524. The presence of the ALS and magnetic sensors further excludes it from the definition in Chapter Note 7 of Chapter 85

5.26 In view of the above, considering that the Cover Glass 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, also the benefit of concessional rate of duty under Sr. No. 6J would be available at the time the import of Cover Glass Module, subject to compliance with IGCR Rules, 2022.

6. The questions are answered accordingly:

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

Answer: Yes, the Cover Glass 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 Cover Glass Module to third-party manufacturers engaged in manufacture of mobile phones in India?

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 Cover Glass Module to third-party manufacturers engaged in manufacture of mobile phones in India.

7 I, rule accordingly

(Samar Nanda)
Customs Authority for Advance Rulings
 

No. VIII/CAAR/Delhi/Apple Operations (Bengaluru)/158/2024             Dated: 23.01.2025

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