2025 (1) TMI 1761 - AAR - Customs

Classification of mobile phone housing module confirmed as part of tariff heading for mobile phones; concessional BCD relief allowed subject to compliance.

Classification turns on the General Rules of Interpretation: the housing module is a part tailor-made and solely and principally used with mobile phones, ... Classification of goods under the Customs Tariff - classification of parts of mobile phones - General Rules of Interpretation (GIR) - Section Note 2(b) to Section XVI - CTH 8517 79 90 - concessional basic customs duty under Sr. No. 6J of Notification No. 57/2017 - advance ruling provisions u/s 28H(2)(a),(b),(d) - definition of applicant u/s 28E(c) - charging section and duty levy u/s 12 - power to issue notifications u/s 25(1) - HELD THAT:- 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. 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. 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. 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. 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’). 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 SI.no. 6J (as amended) with effective rate of BCD being 10%, as claimed by the applicant. M/s Apple Operations International Limited through letter dated 15.01.2025 has submitted additional points with reiterating the earlier submitted arguments. Whether the Housing Module exported by the Applicant merits classification under CTH 8517 79 90 of the First Schedule of the Customs Tariff? - HELD THAT:- Yes, the Housing Module exported by the Applicant merits classification under CTH 8517 79 90 of the First Schedule of the Customs Tariff. 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? - HELD THAT:- 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. Issues: (i) Whether the housing module is classifiable under CTH 8517 79 90 of the First Schedule of the Customs Tariff; (ii) Whether the housing module is eligible for concessional basic customs duty under Sr. No. 6J of Notification No. 57/2017-Cus on import.Issue (i): Classification of the housing module under CTH 8517 79 90.Analysis: Application of the General Rules of Interpretation and relevant Section/Chapter Notes together with HSN Explanatory Notes shows the product is a metallic framework worked and shaped to house multiple integrated components (buttons, haptics, speaker, dock flex, pressure sensor, microphone, SIM module, antenna flex) and is tailor-made for a particular model of mobile phone. Chapter 76 headings for plates/sheets/strips apply only where the goods have not assumed the character of articles of other headings. Section Note 2(b) to Section XVI directs parts suitable solely or principally for a particular kind of machine to be classified with that machine. Where alternative headings equally merit consideration, GIR 3(c) points to the heading last in numerical order. The factual and technical features demonstrate the housing module is an essential part suitable solely/principally for mobile phones and not simpliciter aluminium plate/strip.Conclusion: The housing module is classifiable under CTH 8517 79 90 (parts of telephone sets) in favour of the applicant.Issue (ii): Eligibility for concessional BCD under Sr. No. 6J of Notification No. 57/2017-Cus.Analysis: Sr. No. 6J of Notification No. 57/2017-Cus applies to goods covered under CTH 8517 79 90 described as 'all goods for use in manufacture of cellular mobile phone' and is subject to compliance with the IGCR Rules (Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017, as amended). Given the classification under CTH 8517 79 90 and the housing module's use in manufacture of cellular mobile phones, the conditions for concessional treatment under Sr. No. 6J are met subject to procedural compliance.Conclusion: The concessional rate under Sr. No. 6J of Notification No. 57/2017-Cus is available for import of the housing module in favour of the applicant, subject to compliance with the IGCR Rules, 2017 (as amended).Final Conclusion: The ruling answers the questions raised: the housing module is classifiable under CTH 8517 79 90 and is eligible for the concessional BCD under Sr. No. 6J of Notification No. 57/2017-Cus, producing a favourable advance ruling for the applicant.Ratio Decidendi: A worked, shaped and component-integrated housing module that is suitable solely or principally for use in a particular class of cellular mobile phones qualifies as a 'part' under Section Note 2(b) to Section XVI and is to be classified with the machines of that kind (CTH 8517), thereby attracting any tariff notifications applicable to that heading.