FTA benefit for a sub part imported

[Abhijeet Mane]

• ABC in India got order to supply certain Final Units to XYZ In India. ABC shall be importing two parts namely (a) Unit-1 (2) Unit-02 from its affiliated companies, located outside India.

• Unit-1 will be imported from Korea and Unit-2 will be imported from Vietnaam.

• The components shall be assembled at XYZ location to form a Final Unit. The Company classified the said parts in the heading appropriate to the function being performed by Final Unit and the HSN for the same is 851762.

• However, if each part were to be imported individually, not for the purpose of assembly into a Final Unit, they would be classified under different HSN codes: 851779 for the Unit-1 and 851779 for the Unit-2.

• ABC is currently meeting the FTA conditions under India Korea CEPA for Unit-1 and not for Unit-2. Whether the Company can claim exemption under the said FTA for Unit-1. Is there is any risk in this transaction

[Shilpi Jain]

It looks that the parts are imported from different exporters. In such case as per your explanation will that not fall under HSN 851779 as being imported individually?

[Narayana Chambers]

The NN 152/2009, Customs, dated 31-12-2009, prescribes the exemption to goods imported from Republic of Korea into India, under the India-Korea CEPA. Based on your query, we understand that the goods to be imported would be classified under HSN: 8517 79.

In this regard, as per the NN 152/2009, the goods falling under Heading 8517 are not covered. The relevant portion of NN is quoted as under: 

SNo.	Chapter, Heading	Description of Goods	Rate
821	851690	All Goods	0.00
822	851821	All Goods	0.00

Therefore, we conclude that goods falling under Heading 8517 are NOT eligible for exemption under India-Korea CEPA.

You may proceed accordingly. 

[Abhijeet Mane]

Dear Narayana Chambers, Thank you for your detailed comments and time invested in the query, can we take benefit of Notification No Notification No. 151/2009-Customs New Delhi. In the said notification HSN 8517 All Goods are covered

[Narayana Chambers]

Dear Abhijeet-ji, 

Your understanding is correct. 

The goods classified under Heading 8517, would be exempt upon import into India, under India-Korea CEPA, (Entry no. 59, NN: 151/2009, Customs (Tariff), dated 31-12-2009).

Our earlier opinion stands amended. 

The part imported in India from Republic of Korea, classifiable under Heading 8517, would be EXEMPT.   

AI Summary

ABC Can Claim FTA Benefit for Unit-1 from Korea Under NN 151/2009, Despite Initial Confusion with HSN Codes ABC in India plans to import two parts, Unit-1 from Korea and Unit-2 from Vietnam, to assemble them into a Final Unit for XYZ in India. Initially, there was confusion about whether these parts could benefit from the India-Korea CEPA due to their classification under HSN codes. Narayana Chambers clarified that parts under Heading 8517 are not eligible for exemption under NN 152/2009. However, upon further review, it was confirmed that under NN 151/2009, parts classified under Heading 8517 are exempt, allowing ABC to claim the FTA benefit for Unit-1 imported from Korea.