TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 953
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.... Tariff Area ("DTA") units. The Imported products i.e., Heatsinks are used in the manufacture of data-center switches and up-link cards in DTA Unit. 2.2 The Applicant specializes in complex high-technology products in market segments including Communications Networks, Automotive, Industrial & Semiconductor, Medical, Defense & Aerospace, Multimedia, Clean Tech and Computing & Storage. The Applicant offers complex PCBA, system integration, Build-to-Order (BTO), Configure-to-Order (CTO) and test services for a variety of products: from state-of-the-art telecommunications equipment to life saving medical equipment modules to blood glucose meters and Automotive products and also provides customers with engineering expertise for product design, technology and test system development. 2.3 The applicant is proposing to import "Heat sinks" (hereinafter referred to as "the heat sinks/ the subject goods"). The Applicant has already been importing goods. Heat sinks are passive thermal management devices engineered to facilitate the dissipation of heat generated by electronic components, thereby ensuring these components function within prescribed thermal limits. The structural design of ....
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....rements of the electronic component on which they are mounted. Applicant's interpretation of Law/Facts Classification of Heat sinks used in the PCBA of data-center switches and up-link cards 3.1 Chapter 85 of the First Schedule to the Customs Tariff Act, 1975 covers goods, described as "Electrical Machinery and Equipment and Parts thereof; Sound Recorders and Reproducers, Television Image and Sound Recorders and Reproducers and Parts and Accessories of Such Articles". 3.2 The chapter falls under Section XVI, titled "Machinery and Mechanical Appliances, Electrical Equipment; Parts Thereof; Sound Recorders and Reproducers. Television Image and Sound Recorders and Reproducers; and Parts and Accessories of such articles". 3.3 Chapters 84 and 85 fall under Section XVI of the First Schedule to the Customs Tariff Act. Therefore, in view of GIR 1, it is necessary to refer to the Notes to Section XVI. 3.4 It is relevant to refer Note 2, which is the principal authority for classification of parts of the goods of Section XVI and the first rule is that a part which is covered as goods in any of the headings of Chapter 84 or Chapter 85, should in all cases be classified u....
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.... heading 8524 are to be classified in heading 8529; (c) all other parts are to be classified in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate or, failing that, in heading 8485 or 8548." 3.7.1 In terms of Section note 2(a), it is clearly brought out that 'parts' included in any of the headings of Chapter 84 & 85 are in all cases to be classified under the same heading. In the instant case, heat sinks are not covered by any specific heading of Chapter 84 & 85 to warrant a straight- forward classification under Note 2(a). Hence note 2(a) is not relevant. 3.7.2 As per Section note 2(b), 'other parts' (implying the 'parts' other than the ones covered under note 2(a)) which are used solely or principally with a particular machine are to be classified with the machines of that kind. Section note 2(b), further provides that 'parts' which are suitable for use principally with the goods of heading 8517 are to be classified in heading 8517. 3.7.3 Therefore, 'parts' of a machine which are used solely or principally with that machine can only be classified as 'parts' of that machine. 'Parts'....
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....rhaps the classification under a single CTH would have served that purpose, but since one size does not fit all, different classifications are provided. The classification thus depends on, inter alia, functionality as well" 3.7.7 Further, Reliance can also be placed on the decision of the Hon'ble Supreme Court in the case of Commissioner v. Insulation Electrical Private Limited [2008 (224) E.L.T. 512 (S.C.)] wherein it was held that a 'part' is an essential component of the whole without which the whole cannot function. This position has been consistently followed and reiterated in a catena of decisions including the decision of the Hon'ble Supreme Court in the case of CTO, Anti Evasion, Circle III, Jaipur v. Prasoon Enterprises [2019 (23) G.S.T.L. 441 (S.C.)/ wherein it was held that the test for a product to be a part of the other is to see if the other is incomplete without the product or if the other cannot function without it. The complexity or lack of complexity will not be a detriment to the question of identifiable nature of the part. 3.7.8 Applying the above judgments in the instant case, parts of telecom equipment i.e., heat sinks (made up of alumini....
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....ication of Note 2 to Section XVI. Further, Note 9(d) to Section XV defining the terms Plates, sheets, strip, and foil provide that these could remain under Section XV only when these do not assume the character of articles or products of other headings, as shown below: (d) Plates, sheets, strip, and foil Flat-surfaced products (other than the unwrought products) coiled or not, of solid rectangular (other than square) cross-section with or without rounded comers (including "modified rectangles of which opposite sides. are convex. arcs, the other two sides being straight, of equal length and parallel) of a uniform thickness, which are: - of rectangular (including square) shape with a thickness not exceeding one- tenth of the width. - of a shape other than rectangular or square, of any size, provided that they do not assume the character of articles or products of other headings Headings for plates, sheets, strip, and foil apply, inter alia, to plates, sheets, strip, and foil with patterns (for example, grooves, ribs, chequers, tears, buttons, lozenges) and to such products which have been perforated, corrugated, polished or coated, provide....
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....f the equipment. Therefore, HSN 7616 9990 and 7326 9099 (as the case maybe) being a generic residuary heading covering "Other Articles of Aluminium, Iron or Steel" would not warrant classification of present items. 3.9 As already discussed above, the Heat sinks in question are specifically designed in terms of its size, dimensions, and technical features, etc. for being fitted on a PCBA of data-center switches and up-link cards, and without the Heat sinks in question the respective PCBAs cannot be regarded as complete. 3.10 Further, Note 1 to Section XVI or Note 1 to Chapter 85 also do not exclude the Heat sinks from Section XVI or Chapter 85. For all these reasons, the Heat sink could be regarded only as an identifiable part of a PCBA of the data-center switches and up-link cards. These being the facts, the classification of a Heat Sink under CTH 85177990 will be more specific in terms of Note 2(b) to Section XVI. 3.11 Therefore, classification under CTH 7323/7616 as an article of Iron & Steel/Aluminium can be legally ruled out. There will no change in the conclusion, even granting that the manufacturing operation of Heat sinks do not involve any complexity. The complexit....
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....-Cus dated 30.08.2025 refers in this connection. Port of Import and reply from concerned jurisdictional Commissionerate 5. The applicant in their CAAR-1 indicated that they intend to import the subject goods i.e. Heatsink for PCBAs of data center switches and up-link cards at the jurisdiction of Office of the Commissioner of Customs, Chennai. The application was forwarded to the Office of the Commissioner of Customs, Chennai-I (Import Commissionerate), Chennai for their comments on 30.07.2025, reminder-I dated 22.08.2025 and reminder-II dated 16.09.2025. 5.1 Comments were offered by the jurisdictional commissionerate vide letter F.No. ACC/2559/2025-Gr. VA-O/o Pr. Commr-Cus-ACC-Chennai dated 29.09.2025 wherein following comments were submitted: * The goods under import are heatsinks, made primarily of aluminium and copper alloys with additional design features such as fins, base plates, slug plates, and in certain models, copper heat pipes. These are passive thermal management components used for dissipating heat from integrated circuits and processors mounted on Printed Circuit Board Assemblies (PCBAs). * The goods are manufactured to drawings and exhibit....
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....BASE METAL Notes: 1. This Section does not cover (f) articles of Section XVI (machinery, mechanical appliances and electrical goods);" Thus, even though the items are of base metal, their classification must be tested under Section XVI first. The Explanatory Note to Heading 7616 reinforces this point: This heading covers all articles of aluminium other than those covered by the preceding headings of this Chapter, or by Note 1 to Section XV, or articles specified or included in Chapter 82 or 83, or more specifically covered elsewhere in the Nomenclature. Heading 7326-"Other Articles of Iron or Steel" This is a heading which covers iron or steel articles not specified elsewhere in Chapter 73 or in other Chapters of the Tariff. While it is true that certain heatsinks may be manufactured from steel, it is significant to note that Section XV Note 1(f) categorically excludes from Section XV "articles of Section XVI (machinery, mechanical appliances and electrical goods, and parts thereof)". Since the subject heatsinks are parts suitable for use solely or principally with telecommunication/networking equipment of Chapter 85, t....
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.... 8529, 8538 and 8548) are in all cases to be classified in their respective headings; (b) other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 8479 or 8543) are to be classified with the machines of that kind or in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate. However, parts which are equally suitable for use principally with the goods of headings 8517 and 8525 to 8528 are to be classified in heading 8517, and parts which are suitable for use solely or principally with the goods of heading 8524 are to be classified in heading 8529: (c) all other parts are to be classified in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate or, failing that, in heading 8487 or 8548." This Note mandates that parts solely or principally used with data-centre switches/uplink cards (Heading 8517) are to be classified as parts under that heading. Additionally, the Explanatory Notes to Section XVI clarify material irrelevance: "In general, the goods of this Section may be of ....
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....under CTI 85177990. In support of their claim they showed and explained the functioning through the representative samples and relied upon Note 2(b) of section XVI. They argued that the subject goods are not included in the parts of general use in terms of section XV; note 1 and note2. They also contended that there is no any specific heading/classification is available in the CTH, hence GRI rule 3(a) is squarely applicable for classification of the subject goods. They also relied upon CAAR, Mumbai ruling no. 215/2024- 25 dated 20.03.2025, Quantum High Tech Merchandising Vs CC Mumbai, Nhava Sheva (Delhi- Tribunal) and Circular No. 36/2005 dated 30.08.2005 in support of their claim. 6.2 Nobody appeared on behalf of the Department for hearing. Discussion and findings 7.1 I have considered all the materials placed before me in respect of the subject goods. I have gone through the submissions made by the applicant during the personal hearing and comments received from the concerned Commissionerate. I proceed to pronounce a ruling on the basis of information available on record as well as existing legal framework. 7.2 At the outset, I find that the issue raised in the questi....
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....link cards and data center switches) are a second category item (falling under single dash entry other apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network) as indicated above). 8. In the case of M/s. Ingram Micro India Pvt.Ltd (2023) 5 Centax 4 (A.A.R. - Cus. - Mum.), CAAR Mumbai had held that data center switch (DCS), a network device for use solely or principally to interconnect automatic data processing machines and units, are classifiable under tariff item 8517 62 90. 8.1 Further, in the case of M/s. Ingram Micro India Pvt.Ltd (2023) 4 Centax 432 (A.A.R. - Cus. - Mum.), CAAR Mumbai ruled that data center switches which perform both switching and routing functions are classifiable under sub-heading 8517 62 90. 8.2 I further, observe that there are no other contrary views available on record regarding classification of the data center switches. Accordingly, I find no ground to take any different view as far as the classification of data centre switches are concerned. 8.3 From the above facts and records of the case, it is evident that the ....
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....ings 8517 as regards parts falling thereon, stipulates that classification of parts of machines of heading 8517 are: "Subject to the general provisions regarding the classification of parts (see the General Explanatory Note to Section XVI), parts of the apparatus of this heading are also classified here ". 9.4 Further, it would also be useful to refer to Note 2 of Section XVI of the Customs Tariff Act, 1975 which provides for rules to be followed while classifying 'parts of machines' falling under Chapters 84 and 85. The relevant part of the Section Note 2 is reproduced below: "2 .- Subject to Note 1 to this Section, Note 1 to Chapter 84 and Note 1 to Chapter 85, parts of machines (not being parts of the articles of heading 84.84, 85.44, 85.45, 85.46 or 85.47) are to be classified according to the following rules: (a) Parts which are goods included in any of the headings of Chapter 84 or 85 (other than headings 84.09, 84.31, 84.48, 84.66, 84.73, 84.87, 85.03, 85.22, 85.29, 85.38 and 85.48) are in all cases to be classified in their respective headings;" (b) other parts, if suitable for use solely or principally with a particular kind of machine....
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....ds, namely, "heat sinks". serve the purpose of dissipating heat within the data-center switches and up-link cards and function as its components, and since the data-center switches and up-link cards are classified under Chapter Heading 8517, it is appropriate to classify the heat sink under the same heading. in accordance with the provisions of Note 2(b) of Section XVI. 9.7 From the drawings and diagrams of heat sinks it can be noticed that it is a tailor-made for specific use and only for specific model of up-link card and data center switches. Each telecommunication equipment has a different model and shape and size. This requires customization for each customer. Therefore, this can only be used for particular customer who has ordered the finished goods. The Applicant submits that even the applicant can't use the imported item for any other customer. Therefore, the imported product qualifies the test of sole and principal use 9.8 Further, I find that the heat sinks are specifically customized and designed parts that are key integral components in the manufacture of up-link cards and data center switches classifiable under heading 8517. In the absence of the imported hea....