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of <h1>Imported OLED display parts for laptop/tablet screens qualify for Sl. No. 39 customs exemption, AAR allows benefit with conditions.</h1> The dominant issue was whether imported inputs/parts, including OLED cells, used to manufacture OLED displays for laptops and tablets qualify for customs ... Benefit of exemption - SI. No. 39 of the NN 24/2005 - import of inputs or parts including OLED cells for the manufacture of OLED displays which in turn will be used for the manufacture of laptops and tablets - HELD THAT:- OLED displays are a critical and essential component of laptops and tablets, without which such devices cannot be commercially functional. Accordingly, the manufacturing of OLED displays, which are used solely or principally in laptops and tablets, forms an integral part of the overall manufacturing process of such final products - the recent ruling of the Hon'ble Authority in Re: Shriprop Aerospace Pvt. Ltd. [2024 (3) TMI 1515 - CUSTOMS AUTHORITY FOR ADVANCE RULINGS, NEW DELHI], has affirmed the applicability of exemption in similar circumstances, wherein parts of parts (turbo jet engine components) were held to be eligible for exemption as 'parts of aircraft' under Notification No. 50/2017-Customs. The subject Notification was issued in pursuance of India's obligations under the Information Technology Agreement (ITA), 1996, and is an ITA-bound notification. As per Attachment B of the ITA, flat panel displays and parts thereof for IT products such as laptops and tablets are covered within the scope of exemption. Though OLED technology is a recent advancement not expressly named in the original ITA text, Iit is found that the expression 'other technologies' is broad enough to include OLED flat panel displays and their parts. Accordingly, import of parts for OLED displays used in laptops and tablets is consistent with the policy intent and scope of the ITA. The Applicant is eligible to avail the benefit under Sr. No. 39 of Notification No. 24/2005- Customs dated 01.03.2005, as amended, in respect of import of inputs and parts including OLED cells, subject to the fulfilment of conditions imposed. Issues: Whether benefit of Sr. No. 39 of Notification No. 24/2005-Customs (as amended) is available on import of inputs and parts including OLED cells imported for manufacture of OLED displays which in turn will be used for the manufacture of laptops and tablets.Analysis: The question concerns an end-use conditional exemption under Notification No. 24/2005 (Sr. Nos. 8 and 39) and is governed by the Customs Act and the IGCR Rules, 2022. Sr. No. 39 extends exemption to goods (except specified exclusions) imported for manufacture of items covered by Sr. Nos. 138; Sr. No. 8 covers goods classified under heading 8471 (laptops and tablets). The Authority examined three cumulative conditions for Sr. No. 39: (i) goods not falling under Chapter 74 or excluded tempered glass; (ii) goods imported for manufacture of items listed in Sr. Nos. 138 (here, laptops/tablets); and (iii) compliance with procedural requirements under the IGCR Rules (including Rule 5). Factual submissions and supporting details showed the applicant will import components (AMOLED panels, DDI, FPCA, polarizers, adhesives, etc.) not classifiable under Chapter 74 and intended solely or principally for manufacture of OLED displays. The Authority applied the legal tests including the Supreme Courts approach to whether an input is 'in the manufacture of' a finished product (i.e., essentiality to the production) and the doctrine that a part of a part is part of the whole. The Authority also relied on CBIC Circular No. 26/2024 which clarified that intermediate/component manufacturers are eligible for IGCR-linked benefits where the imported goods are ultimately used in manufacture of final products, and noted ITA Attachment Bs coverage of flat panel displays and parts. The jurisdictional Commissionerate raised no objection to procedural compliance. On these bases the Authority found all three conditions satisfied and accepted the applicants undertaking to comply with IGCR procedural requirements and to restrict exemption to qualifying end-use.Conclusion: The applicant is eligible to avail the benefit under Sr. No. 39 of Notification No. 24/2005-Customs in respect of imports of inputs and parts including OLED cells for manufacture of OLED displays that are in turn supplied for manufacture of laptops and tablets, subject to (i) the imported goods not being classified under Chapter 74 or being excluded tempered glass, (ii) the goods being used for manufacture of OLED displays supplied for manufacture of laptops/tablets (Sr. No. 8), (iii) full compliance with the IGCR Rules, 2022 (including Rule 5), and (iv) no diversion to non-qualifying end-uses.
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