Essential character principle requires SKD consignments presented together to be classified as complete air conditioners; separate presentation yields parts classification.

Rule 2(a) of the General Rules of Interpretation treats incompletely assembled air conditioners presented together as the finished article when, as presented, they possess the essential character of the finished machine, so SKD consignments under one invoice and single bill of entry classify under the applicable 8415 subheadings. Conversely, indoor or outdoor units imported and presented separately under different invoices and separate bills of entry do not meet the "as presented" condition and therefore fall to be classified as parts under CTH 8415 9000.

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Issues: (i) Whether all parts of an air conditioner imported together in SKD form under one invoice and presented for customs clearance under a single bill of entry can be classified as the complete air conditioner under CTIs 8415 1010 or 8415 8310 or 8415 8390; (ii) Whether indoor units (IDUs) or outdoor units (ODUs) imported separately in SKD or incomplete form under different invoices and presented under separate bills of entry can be classified under CTH 8415 9000 as parts of air conditioners.

Issue (i): Whether SKD parts imported together and presented under one invoice and single bill of entry fall to be classified as the complete air conditioner under the appropriate subheadings of 8415.

Analysis: Rule 2(a) of the General Rules of Interpretation to the Customs Tariff Act, 1975 provides that an article incomplete or unfinished, as presented, is to be treated as the complete article if it has the essential character of the finished article. The two operative conditions are (a) "as presented" (the manner of presentation to customs) and (b) attainment of the "essential character" of the finished article. Tariff Heading 8415 and its subheadings set out headings for complete air-conditioning machines and for parts (CTH 8415 90 00). Precedent and explanatory notes support classification of CKD/SKD consignments as finished articles when both conditions of Rule 2(a) are met.

Conclusion: All parts of an air conditioner imported together in SKD form under one invoice and presented for clearance under a single bill of entry, which together have the essential character of the finished air conditioner, are classifiable as the complete air conditioner under CTIs 8415 1010 or 8415 8310 or 8415 8390 as applicable.

Issue (ii): Whether IDUs or ODUs imported separately in SKD or incomplete form under different invoices and presented under separate bills of entry are classifiable under CTH 8415 9000 as parts of air conditioners.

Analysis: Where components are presented separately under different invoices and separate bills of entry, the "as presented" condition of Rule 2(a) is not satisfied and such separate presentation does not as a rule impart the essential character of the finished air conditioner to the separately presented units. Note 2(a) of Section XVI and Tariff Heading 8415 recognise parts of air-conditioning machines as classifiable under CTH 8415 90 00. The facts of separate invoicing and separate presentation align the goods with parts classification rather than classification as a finished machine.

Conclusion: Indoor units or outdoor units imported separately in SKD or incomplete form under different invoices and presented under separate bills of entry are classifiable under CTH 8415 9000 as parts of air conditioners.

Final Conclusion: Applying Rule 2(a) of the General Rules of Interpretation to the Customs Tariff Act, 1975 and the Section XVI notes, SKD consignments presented together under one invoice and single bill of entry that together possess the essential character of the finished air conditioner classify as the finished air conditioner under the appropriate 8415 subheadings; SKD or incomplete units presented separately under different invoices and bills of entry classify as parts under CTH 8415 9000.

Ratio Decidendi: Where incomplete or unassembled articles are presented for customs clearance together under one invoice and single bill of entry and, as presented, possess the essential character of the finished article, Rule 2(a) of the General Rules of Interpretation to the Customs Tariff Act, 1975 mandates classification under the heading for the finished article; separately presented SKD/incomplete units fall to be classified as parts under CTH 8415 9000.

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