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2021 (8) TMI 317
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....drones proposed to be imported: - • Question 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 l....
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....would make it difficult to render advance rulings within the time prescribed in the statute. In my view, applicants should 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 ruli....
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....., can fly up to 3 1 minutes, and achieve a flight height of 6000 metres. Under CAR norms, these types of drones are said to be falling under the 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 da....
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....nex to the convention pursuant to the recommendations of 28.06.2019 Of the Customs Co-operation Council and such amendments are expected to come into force w.e.f. 01.01.2022. The accepted changes include a new heading in Chapter 88 of the tariff, i.e., 8806, 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 als....
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.... than 150 kg 8806 29 00 Other - Other: 8806 91 00 - - With maximum take-off weight not more than 250 g 8806 92 00 - - With maximum take-off weight more than 250 g but not more than 7 kg 8806 93 00 - - With maximum take-off weight more than 7 kg but not more than 25 kg 8806 94 00 - - With maximum take-off weight more than 25 kg but not more than 150 kg 8806 99 00 - - Other -Other 8. The applicant 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 EXA....
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....stem, the heading 88.02 excludes, among others: 'Toys or models for recreational purposes (heading 95.03)' On the other hand, as per the explanatory notes, the heading 9503 covers toys which, inter alia, include: - 'Those intended essentially for the amusement of persons (children or adults), e.g., toy vehicles, trains (whether or not electric), aircraft, boats, etc., and their accessories, as also reduced-size ("scale") models and similar recreational models. This includes models of a kind mainly used for recreational purposes, for example, working or scale models of boats, aircraft, 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 drone....
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....3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.' When confronted with the question as to whether an explanatory note has more persuasive value or a WCO classification advice has more persuasive value, I have reached the conclusion that unless otherwise warranted, the mandate of section/chapter/supplementary notes shouldn't be ignored/discarded and that reference to subsequent rules of GIR, as has obviously been made by the HS Committee, should be made only when the first rule is inapplicable. As already reproduced above, classification, 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 adv....