AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2021 (8) TMI 317
X X X X Extracts X X X X
X X X X Extracts X X X X
....stion No. 1 : Whether the drones proposed to be imported are classifiable under the heading 88.02 of the first schedule to the Customs Tariff Act, 1975; * Question No. 2: If the answer to the above question is in the negative, then what would be the correct classification of the drones; * Question No. 3: What would be the rate of duty applicable on the import of the drones? 2. The applicant proposes to import three types of drones, as follows: - * Tello drones with or without camera said to be for entertainment & learning purpose, * AGRAS T16 drone stated to be for agricultural spaying, * Mavie 2 drone for digital video transmission. The applicant contends that all the above-mentioned types of drones merit classification under tariff entry 88.02 attracting basic customs duty @ 3%, social welfare surcharge @ 10%, IGST @ 5%, and compensation cess @ 3%. The applicant has described in detail as to why the drones proposed to be imported merit classification under tariff entry 88.02 and not under contending entries 85.25 or 95.03. These averments shall be discussed later in this ruling. 3. The applicant indicated that they propose to import the subject goods through the Air ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d avoid such tactics which would only result in delay. However, in the present proceedings, considering the fact that this is a transferred application, J am not pursuing this any further. 4. The matter was listed for final hearing on 08.06.2021. Sri T. Viswanathan and others represented the applicant. The learned counsel explained the features and specifications of each of the three types of drones proposed for import, pointed out that by virtue of Section 104 of the Finance Act, 2021 a new tariff entry 88.06 would be inserted in the customs tariff w.e.f. 01.01.2022 to specifically include drones, which in turn is based on the June, 2019 amendments to the International Convention on the Harmonised Commodity Description and Coding System of World Customs Organisation. The 2018 order on civil aviation requirements for operation of civil remotely piloted aircraft system was also discussed. The purpose of the Id. Counsel was to drive home the point that drones merit classification under heading 88.02 of the customs tariff. The Id. counsel also requested that rulings may also be given keeping in view the changes in tariff which would come into force w.e.f. 01.01.2022. Sri Leo John Ila....
X X X X Extracts X X X X
X X X X Extracts X X X X
....category of 'Micro'. All the aforementioned drones are equipped with re-chargeable batteries and have built in sensors which alert the user about any obstacles which may be present in the flight path. These miniature flying machines can take flight and land vertically and be controlled by smartphones or the remote control devices. 6. The term 'Drone', according to Wikipedia, refers to an unmanned aerial vehicle (UAV) or uncrewed aerial vehicle, which is an aircraft without any human pilot, crew or passengers on board. UAVs are a component of an unmanned aircraft system (UAS), which include additionally, a ground-based controller and a system of communication with the UAV. The flight of UAVs may operate under remote control by a human operator, as remotely-piloted aircraft (RPA), or with various degrees of autonomy, such as autopilot assistance, up to fully autonomous aircraft that have no provision for human intervention. (JAVs were originally developed through the twentieth century for military missions too "dull, dirty or dangerous" for humans. As control technologies improved and costs fell, their use in the twenty-first century is rapidly finding many more applications inclu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....6, to specifically include unmanned aircrafts. The new chapter note 1 to be inserted would read as, 'For the purposes of this chapter, the expression "unmanned aircraft" means any aircraft, other than those of heading 88.01, designed to be flown without a pilot on board. They may be designed to carry a payload or equipped with permanently integrated digital cameras or other equipment which would enable them to perform utilitarian functions during their flight. The expression "unmanned aircraft", however, does not cover [lying toys, designed solely for amusement purposes (heading 95.03).' India, being a member of the WCO and a signatory to the convention, has carried out the necessary changes vide section 104 of the Finance Act, 2021. '104. In the Customs Tariff Act, the First Schedule shall, - (i) be amended in the manner specified in the Second Schedule; (ii) with effect from the 1st April, 2021, be also amended in the manner specified in the Third Schedule; and (iii) with effect from the 1st January, 2022, be also amended in the manner specified in the Fourth Schedule. The relevant portions of the proposed changes as contained in the said fourth schedule are as under: -....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pplicant fairly concedes that there are 3 entries in Indian customs tariff where drones can possibly be classified. For ease of reference, the relevant portions of the contending entries are reproduced below: - (i) 8525 TRANSMISSION APPARATUS FOR RADIO-BROADCASTING OR TELEVISION, WHETHER OR NOT INCORPORATION RECEPTION APPARATUS OR SOUND RECORDING OR REPRODUCING APPARATUS; TELEVISION CAMERAS, DIGITAL CAMERAS AND VIDEO CAMERA RECORDERS 8525 80 - Television cameras, digital cameras and video camera recorders: 8525 80 10 - Television cameras 8525 80 20 --- Digital cameras 8525 80 30 --- video camera recorders 8525 80 90 -- Other (ii) 8802 OTHER AIRCRAFT (FOR EXAMPLE, HELICOPTERS, AEROPLANES); SPACECRAFT (INCLUDING SATELLITES) AND SUBORBITAL AND SPACECRAFT LAUNCH VEHICLES - Helicopters: 8802 11 00 -- Of an unladen weight not exceeding 2,000 kg. 8802 12 00 -- Of an unladen weight exceeding 2,000 kg. (iii) 9503 TRICYCLES, SCOOTERS, PEDAL CARS AND SIMILAR WHEELED TOYS; DOLLS' CARRIAGES; DOLLS; OTHER TOYS; REDUCED-SIZE ("SCALE") MODELS AND SIMILAR RECREATIONAL MODELS, WORKING OR NOT; PUZZLES OF ALL KINDS 9503 00 - Tricycles, scooters, pedal cars and similar wheeled ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....raft, trains, vehicles, etc.' In view of the aforesaid position, I hold that the product 'Tello drone' is rightly classifiable under the heading 9503 of the first schedule to the Customs Tariff Act, 1975. Even the applicant, in the paragraph 4.32 of their application, concede that Tello drones are rightly classified under heading 9503. The contrary' assertion in the very next paragraph of the application, therefore, doesn't appear to have any merit. Even the new chapter note which would come into force w.e.f. also supports this conclusion. (ii) AGRITAS T 16 drones are stated to be used for agricultural operations, namely, spraying. It has an unladen weight of 39.5 kgs. and is equipped with spray nozzle, flow meter etc. According to the explanatory notes, the heading 8802, inter alia, covers: - 'Heavier-than-air aircraft, which are mechanically propelled. This group includes aero planes (landplanes, seaplanes and amphibians), gyroplanes (equipped with one or more rotors rotating freely on vel tical axes), and helicopters (equipped with one or more mechanically driven rotors). Such aircraft may be used for military purposes, the transport of persons or goods or for such activit....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., in terms of Rule l, is to be decided on the basis of the terms of the headings and any relative section or chapter notes. In this ease, the heading 8802 includes within its ambit helicopters, and according to the explanatory notes to the HSN such helicopters are used for aerial photography amongst other uses. It is settled law that the explanatory notes have considerable persuasive value. Under such circumstances, the need for resorting to the Rule 3(b) doesn't seem to arise at all. Therefore, notwithstanding the WCO classification advice to the contrary, it is my considered opinion that Mavie 2 drones merit classification under sub-heading 88021 100 of the first schedule to the Customs Tariff Act, 1975. This conclusion is consistent with the new chapter note I, which would come into force w.e.f. as it states that the expression "unmanned aircraft" means any aircraft, other than those of heading 8801, designed to be flown without a pilot on board. They may be designed to carry a payload or equipped with permanently integrated digital cameras (emphasis supplied) or other equipment which would enable them to perform utilitarian functions during their flight. 10. In view of the for....