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

AI Summary

FTA benefit for Korean-origin parts: the part qualifies for exemption while other imported parts may not.
Entry no. 59 of Notification No. 151/2009 (Customs (Tariff)) covers the relevant tariff heading, making the part imported from the Republic of Korea eligible for exemption under the India Korea CEPA, while the part from Vietnam is not covered. Classification differences between parts and the assembled final unit, and origin and documentation issues arising from parts imported separately from different exporters, create practical risks to claiming the preferential benefit.