TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 897
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....Automation Systems and Material Handling Systems on re-export basis. 2. Submission by the Applicant: 2.1 The Applicant, situated at Gat No. 463/A/2/8 to 463/A/2/11, 463/A/2/15 & 463/A/2/16, Village Dhangarwadi, Taluka Khandala, Satara, Maharashtra, 412801 and having Import Export Code bearing No. AADCW2907L, is inter alia engaged in the business of providing comprehensive Global Automation Solution like Turnkey Automation Systems and developing world class solution using the most modern processes and product, providing end to end Industrial Automation solutions to manufacturing businesses enabling them to be efficient, automated, digitized, and smart while also providing services in powertrain and Electric Vehicle (EV) sectors. 2.2 The applicant submitted that they have witnessed a surge in demand for its solutions, particularly in the field of EV technologies, such as battery assembly, handling, testing, and automated car parking systems. As part of this growth, they are exploring a new avenue of business which would include import of various equipment, assemblies, sub-assemblies, parts & affiliated components & likewise items of this program in dismantled condition to In....
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....dance with Section 65 of the Customs Act, 1962, which pertains to the operation of bonded warehouses for specified purposes. The goods, after undergoing refurbishment, must be re-exported and not cleared for home consumption in India. The applicant further submitted that the NN 134/94 has been extended to 31st March, 2029 vide Notification No. 38/2024 dated 23rd July, 2024 which will be valid while they import the goods and export the same after re-furbishing them. 3.2 "The applicant submitted that the subject goods to be imported by them fall within the categories listed in the notification. They intend to import second-hand or used goods, which may either be items previously manufactured and exported by the Applicant or those produced by third parties of the foreign supplier. The specific purpose of each import will vary and could include trial and testing, refurbishing, reprocessing, remanufacturing, reconditioning, reassembling, or repairing. Upon completion of the intended purpose, the goods will be re-exported either as part of a new assembly line or system or separately in their value-added condition. 3.3 The applicant submitted that the NN 134/94 provides that the cus....
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....omplete and unassembled product) the first part provides for classification, as an entity, of articles presented incomplete or unfinished, while the second part provides for classification, as an entity, of certain collections of individual articles (commonly referred to as 'parts'). The second part also clarifies that in order to qualify for classification as an entity, the actual collection of 'parts' does not have to be sufficient to assemble a complete or finished articles, so long as the 'parts' can be assembled into an incomplete or unfinished article that has the essential character of a complete or finished article. The Explanatory Notes to the said Rule has been reproduced hereunder: "RULE 2(a) (Articles presented unassembled or disassembled) (V) The second part of Rule 2(a) provides that complete or finished articles presented unassembled or disassembled are to be classified in the same heading as the assembled article. When goods are so presented. it is usually for reasons such as requirements or convenience of packing, handling or transport. (VI) This Rule also applies to incomplete or unfinished articles prese....
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....them, and re-export them in their refurbished state with value addition. The goods will not be sold or cleared for home consumption in India. 3.9 The applicant submitted that the notification has been extended until March 31, 2029, vide Notification No. 38/2024, which is well within the period that the applicant is planning to import, refurbish and re-export. Furthermore, the goods, even if imported in an unassembled or disassembled state, will be considered eligible for exemption as per Rule 2(a) of the General Rules for the Interpretation of Tariff, which allows the classification of unassembled goods as finished goods if they retain the essential character of a complete article. Accordingly, the applicant qualifies for the customs duty exemption. B. Goods . Imported to a Warehouse in DTA Unit for Repair/Refurbishment and Subsequent Re-Export: 3.10 The applicant submitted that Section 65 of the Customs Act allows for manufacturing processes or other operations to be carried out on warehoused goods, provided the owner obtains prior approval from the Principal Commissioner or Commissioner of Customs, and complies with the conditions set out in Section 65A. This provision i....
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.... Rules, 2022, and work with authorized recyclers to ensure safe recycling or disposal. This includes following Extended Producer Responsibility (EPR) obligations, which place the responsibility for proper disposal on the handler or user of the batteries. Any plastic waste, including discarded components or packaging, will be managed in accordance with the Plastic Waste Management Rules, 2016 for recyclable and non-recyclable plastics to be sent to authorized disposal facilities. Additionally, the Applicant will manage non-hazardous solid waste, such as metal scraps or general debris generated during repairs, in compliance with the Solid Waste Management Rules, 2016. The waste will be segregated, and recyclable materials will be sent to authorized recyclers, while non-recyclable waste will be disposed of in approved facilities. The Applicant submitted that it will be ensured that all waste generated during the refurbishment process is disposed of responsibly and would seek guidance on the waste management process mentioned above. 4. Port of Import and reply from Jurisdictional Commissionerate 4.1 The applicant in their CAAR-1 indicated that they intend to avail the notificatio....
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....he Customs Act, 1962. * Query 3. Necessary compliance requirements for handling waste generated during the various processes, undertaken by the applicant, are governed by the relevant provision of the State Pollution Control Board Rules and Regulations and Handling of Hazardous Waste Management Act and adherence to prescribed environmental and safety standards / laws. * Query 4. The list of eligible imported goods for claiming customs duty exemption under provisions of Notification No. 134/94 is already Annexed in The TABLE annexed to the said Notification. The condition mentioned at Sr. No. 10 in the said table, is applicable to the goods imported into a DTA Unit for repair/ refurbishment and not cleared for domestic consumption. * Query 5. As per Notification NO.134/-94 Customs dated 22.06.1994 as amended, the condition is that the repairs, reconditioning, reengineering, testing, calibration or maintenance (including services) as the case may be, is undertaken in accordance with the provisions of section 65 of the Customs Act, 1962. As per section 65(27 of the Customs Act, 1962, if the resulting goods are exported then import duty shall be remitted on t....
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....cess of few examples that will be undertaken after importation of the goods. i. PROCESS UNDERTAKEN IN RESPECT OF ROBOTS * Importation: Robots are imported as base industrial units from the OEM, without any end-use specific customizations. The serial number and manufacturing identity remain unaltered. (Refer image 1 below) * Value Addition: The imported robots undergo specific modifications including: * Installation of End-of-Arm Tools (Grippers) (Refer Image 2 below); * Integration/ mounting of dress packs comprising cables and harnesses; * Uploading of customized, project-specific software; and * in certain cases, pedestals are added for mounting purposes. (Refer Image 2 below) * Integration and Testing: Post value addition (Refer image 2 below), the robot is subjected to integration and functionality testing as part of the export project assembly line. No structural alteration or change in essential character is made. * Re-export: Upon successful testing and validation, the robot which is now enhanced with specific functionality but retaining its original hardware and identity is re- exported to the ....
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....rt, the same is as under: 1. Control Panel Assembly 2. Pro-racks and Pneumatic Assembly for Control Panel Assembly 3. Cables for Control Panel Assembly 4. Miscellaneous Control Materials 5. Gantry System 6. Conveyor System 7. Automation System 8. Other Machinery, including lifting, handling, loading, or unloading equipment 9. Skid Storage System or Equipment 10. Module Storage Racks 11. Nut Runner Set or Tightening Tools 12. Servo Presses 13. Robots and Controllers 14. Trays for Tooling Validation 15. Prototype Parts for Tooling Validation 16. Integrated Pedestal Robotic Cell 7. Discussions and Findings 7.1 I have considered all the materials placed before me in respect of the classification of subject goods. I have gone through the submissions made by the applicant during the personal hearing, additional submissions made by the applicant as well as the comments received from the concerned jurisdictional Commissionerate. Therefore, I proceed to pronounce a ruling on the basis of information available on record as well as existing lega....
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....he purpose of refurbishment, re-engineering, testing or integration at their DTA facility at Satara. The refurbished goods will thereafter be re- exported, either as complete systems or as parts thereof. The applicant has undertaken not to sell or clear the goods for home consumption. 7.5 The applicant has sought ruling in respect of six questions as mentioned in para 7.2 above. Before proceeding with these questions for deliberation and discussion for arriving at a conclusion, I find it prudent to first discuss the relevant legal framework provided under Customs Act, 1962, Foreign Trade Policy 2023, Handbook of Procedures and relevant Notifications, circulars etc. The applicant is seeking duty exemption for import of various second hand or used goods under Notification No. 134/94-Cus dated 22.06.1994. The import policy for Second Hand Goods is given under Para 2.31 of the Foreign Trade Policy, 2023, the same is as under: * Import Policy for Second Hand Goods: 2.31 Second Hand Goods SI. No. Categories of Second-Hand Goods Import Policy Conditions, if any I. Second Hand Capital Goods I(a) i. Desktop Computers; ii. Refurbished....
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....e, process or bring into existence, by hand or by machine, a new product having a distinctive name, character or use and shall include processes such as refrigeration, re-packing, polishing, labelling, Re- conditioning repair, remaking, refurbishing, testing, alibration re-engineering. Manufacture, for the purpose of FTP, shall also include agriculture; aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture, viticulture and mining. ... 11.48 "Restricted" is a term indicating the import or export policy of an item, which can be imported into the country or exported outside, only after obtaining an Authorisation from the offices of DGFT. 7:7 The relevant excerpts of the Notification No. 134/94-cus. dated 22.06.1994 as amended are as under: Notification No. 134/94-Customs dated 22nd June, 1994 Exemption to goods imported for carrying out repairs, reconditioning or reengineering In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962. (52 of 1962) and in supersession of the notification of the Government of India in the Ministry of Finance, Department of Revenue ....
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....until goods are cleared for home consumption (or get remission if exported). It is a flexible bonded-manufacturing /bonded-warehouse regime for manufacturing/processing. The relevant excerpts of the Notification No. 69/2019-Cus. (N.T.) dated 01.10.2019 which defines scope and eligibility are as under: "3. Scope. - These regulations shall apply to such units that operate under section 65 of the Act or to the units applying for permission to operate under section 65 of the Act. 4. Eligibility for application for operating under these regulations. - (1) The following persons shall be eligible to apply for operating under these regulations, - (i) a person who has been granted a licence for a warehouse under section 58 of the Act, in accordance with Private Warehouse Licensing Regulations, 2016. (ii) a person who applies for a licence for a warehouse under section 58 of the Act. along with permission for undertaking manufacturing or other operations in the warehouse under section 65 of the Act. (2) An application for operating under these regulations shall be made to the Principal Commissioner of Customs or the Commissioner of Custom....
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....rpose of repair, reconditioning, reengineering, testing, caliberation or maintenance (including service) for export after such operations under Notification No. 134/94-Customs dated 22.06.1994 and MOOWR regulations, 2019 operates under enabling provisions of Section 65 of the Customs Act, 1962. However, these schemes are not same or similar in nature. The differences between both the schemes i.e. duty exemption under Notification No. 134/94-Customs dated 22.06.1994 and MOOWR regulations, 2019 are as under: Sr. No. Notification No. 134/94-Cus. dated 22.06.1994 MOOWR scheme 1. issued under sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962) issued under section 157, 143AA read with section 65 of the Customs Act, 1962 (52 of 1962). 2. Duty Exemption Scheme Duty Deferment Scheme 3. applies only to the goods/processes covered by the notification as mentioned in the table only for the purpose of repair, reconditioning, reengineering, testing, caliberation or maintenance (including service) Capital goods + inputs for manufacturing in licensed warehouses 4. Goods must be re-exported No mandatory export obligation - finished goods....
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....ication. 7.12.2 The second part of the question deals with the list of activities the applicant intends to carry on the imported second-hand goods i.e. refurbishment/re-processing/re-conditioning/re-designing/re- manufacturing/re-assembling/re-tooling/re-pair/Software or * Programming Uploading/ Integration/Testing/ tooling validation and other related activities. However, the import policy mentions only repair/refurbishing / reconditioning or re-engineering. Further, the notification No. 134/94-cus. dated 22.06.1994 mentions repair, reconditioning, reengineering, testing, caliberation or maintenance (including service). None of these terms have been defined either in Foreign Trade Policy, 2023 or in the Customs Act, 1962. Therefore, these terms need to be understood in their general meaning. The same is as under: Term Meaning Repair Restoration of a defective article to working condition by replacing or fixing parts. Refurbishment Overhaul or renewal that improves performance and extends life. Re- conditioning Restoration of worn-out or used product to as-good-as-new condition. Re-engineering Modification of design, material, or configuration to im....
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....ts that operate under section 65 of the Act or to the units applying for permission to operate under section 65 of the Act. Only those persons who either have a private bonded warehouse under Section 58 of the Customs Act, 1962 or are applying for such a license for private bonded warehouse under Section 58 of the Customs Act, 1962 are eligible for applying for operating under MOOWR regulations. 7.16 As already discussed in Para 7.7 to 7.10 above, it is evident that the notification 134/94-cus. dated 22.06.1994 and MOOWR scheme operates in two different domains and therefore, their benefits cannot be availed simultaneously. However, the duty exemption for second hand goods imported for the purpose of repair, reconditioning, reengineering, testing, caliberation or maintenance (including service) can be availed by the applicant under Notification No. 134/94-Customs dated 22.06.1994 as amended subject to satisfying the conditions (including re-export within three years from the date of importation) mentioned therein i.e. the repair / refurbishment / re-conditioning / re- engineering activities should be carried out in accordance with Section 65 of the Customs Act, 1962 after obtain....
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....ng the refurbishment/re-processing/re-conditioning/re-designing/re-manufacturing/re- assembling/re-tooling/re-pair/Software or Programming Uploading/ Integration/Testing/ tooling validation and other related activities? 7.19 As per Notification NO.134/-94 Customs dated 22.06.1994 as amended, the condition is that the repairs, reconditioning, reengineering, testing, calibration or maintenance (including services) as the case may be, is undertaken in accordance with the provisions of section 65 of the Customs Act, 1962. Sub-section (2) of Section 65 governs waste/refuse arising from operations on warehoused goods: * if resultant goods are exported, duty on waste is remitted provided waste is destroyed or duty paid thereon; " * if resultant goods are cleared for home consumption, duty is leviable on the portion of imported goods contained in such waste. The same principle applies to waste generated under Notification 134/94: since operations are "in accordance with Section 65," waste must either be destroyed under customs supervision or cleared on payment of applicable duties. Hence the import duty would be payable on the waste generated during the various proc....
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.... Ans. They can either claim the benefit of duty exemption under Notification No. 134/94- Cus. dated 22.06.1994 or avail the benefits under MOOWR scheme however, both cannot be used simultaneously. c. Necessary compliance requirements for handling waste generated during the refurbishment/re-processing/rc-conditioning/re-designing/re-manufacturing/re- assembling/re-tooling/re-pair/Software or Programming Uploading/ Integration/Testing/ tooling validation and other related activities and ensuring adherence to environmental and safety standards/laws. Ans. The applicant must comply with E-Waste (Management) Rules 2016, Battery Waste Management Rules 2022, Plastic Waste Management Rules 2016, and Solid Waste Management Rules 2016, and any other rules and regulations issued by the concerned state pollution control board and other regulatory bodies ensuring authorised disposal through registered recyclers. d. Whether goods imported into a DTA unit for repair/refurbishment and not cleared for domestic consumption are exempted from duty payment and if the exemption be claimed under NN134/94 and its conditions? Ans. I answer in affirmative subject to ....