AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 1019
X X X X Extracts X X X X
X X X X Extracts X X X X
....cation equipment. 2. The Applicant vide their application dated 16.06.2025 has submitted as follows: 2.1 The Applicant operates from both Special Economic Zone ("SEZ") as well as Domestic Tariff Area ("DTA") units. The Imported products Inductors, Chip Inductors, Shielded Power Inductors, Power Inductors, Shielded SMD/SMT Power Inductor and Molded Power Inductors are used in the manufacture of telecommunication equipment in DTA Unit. 2.2 The Applicant specializes in complex high-technology products in market segments including Communications Networks, Automotive, Industrial & Semiconductor, Medical, Defence & 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 "Inductors, Chip Inductors, Shielded Power Inductors, Power Inductors....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f inductors in telecommunication apparatus: * Impedance Matching: Impedance matching is critical in RF circuits to ensure maximum power transfer between components, such as antennas, transmission lines, and receivers. When impedances are mismatched, a portion of the signal is reflected back, reducing the efficiency of the system. Inductors are used in conjunction with capacitors to form matching networks that adjust the impedance seen by different components. These networks can transform impedances from one level to another, allowing for optimal power transfer and minimizing reflection. Without inductors for impedance matching, there could be significant signal reflection at interfaces (such as between antennas and receivers or transmitters). This reflection leads to reduced signal power reaching the intended destination, resulting in weaker signals, decreased range, and lower data throughput. * Filtering: RF circuits need to filter out unwanted frequencies and noise to prevent interference and ensure clear signal transmission. This is especially important in crowded frequency bands like those used for Wi-Fi, where multiple devices operate simultaneously. Inductor....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., telecommunication signals might suffer from increased noise and distortion, leading to data corruption and unreliable connections, especially in environments with many electronic devices. Applicant's interpretation of Law/Facts 3. Classification of Inductors, Chip Inductors, Shielded Power Inductors, Power Inductors, Shielded SMD/SMT Power Inductor and Molded Power Inductors 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". 3.1 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". 3.2 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. 3.3 It is relevant to refer Note 2, which is the principal authority for classification....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Applicant has discussed the section XVI and chapter notes of chapter 85. Section XVI - 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 3.7.1 Note 2 of section XVI provide for classification of 'parts' of machines or articles falling under Chapters 84 & 85. Note 2 to Section XVI is reproduced hereunder for ease of reference :- "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 8484, 8544, 8545, 8546 or 8547) 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 8409, 8431, 8448, 8466, 8473, 8485, 8503, 8522, 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 classifi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct, 1985 being specifically included therein. Note 2(a) to Section XVI of Central Excise Tariff specifies the criteria for classification of parts of machinery which fall for classification in any of the chapters of that Section. Clause (a) of this note provides that parts which are goods included in any of the headings of Chapter 84 or Chapter 85 other than those of headings which are specified therein are in all cases to be classified in their respective headings. Heading 84.83 is not among the headings which are excluded in the note. This heading includes within its scope transmission shafts, crank shafts, bearing housing, gears and gear rings and pulleys. Therefore, the goods under consideration, being included in these headings would rightly be classified in that heading. In the case of Subros Ltd v. Commissioner of Customs, New Delhi 2018 (363) E.L.T. 849 (Tri. - Del.), it was held that Thermistors and sub-assemblies thereof imported by the assessee for use in automobiles, find a specific mention under tariff item 8533 40 30 and shall be classifiable therein based on Note 2(a) to Section XVI. In the case of M/s. Ford India Pvt Ltd. v Commissioner of Customs, Ch....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nesh Kumar- Sr. Manager Trade Compliance of Sanmina have appeared for the hearing and reiterated the contention submitted with the application. They submitted that the subject goods are "Inductors" which are specifically covered under CTI 850450 more specifically under CTI 85045090 (other). That the GRI-Rule 1 is applicable for classification of the Inductors. As the device is to be used in telecommunication/PCBA therefore GRI rule 3(a) - most specific description is also applicable for classification of the subject goods. They also relied upon Filtronics Ltd. Vs Collector of C.Ex 1989 (43) E.L.T. 457 (Tribunal), Socomec Innovative Power Solutions Pvt. Ltd. Vs CC, Chennai (Tribunal Madras) and Socomec India Pvt. Ltd. (A.A.R .- Cus .- Delhi) in support of their claim. 5.1 Further, the applicant made an additional submission on 03.10.2025 wherein it was contended that notification No. 25/2005-Customs dated March 01, 2005 (hereinafter referred to as "the notification"), provides "Nil" rate of Basic Customs Duty in relation to "Other inductors for power supplies for automatic data processing machines and units thereof, and telecommunication apparatus" classifiable under heading 8504....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... maintain records in relation to quantity of the goods imported, consumed, remaining in stock etc. and shall submit a quarterly statement on the common portal in Form IGCR-3. The applicant wishes to submit that they would squarely comply with all the provisions of the IGCR Rules, 2022 in this regard for availing the benefit of SI. No.5 of Notification No. 25/2005-Customs and for ensuring that the imported goods are utilized only for the specified end use of manufacturing telecommunication apparatus. Considering the applicability of IGCR rules, the imported goods will be used only for specified purposes (i.e., telecommunication apparatus). 5.2 Nobody appeared on behalf of the Department for hearing. Discussion and findings 6. 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. 6.1 At the outset, I find that the issue raised in the question in the Form CAAR-1 is squarely covered ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ative Section notes or Chapter notes and thus, gives precedence to this while classifying a product. Rules 2 to 6 provide the general guidelines for classification of goods under the appropriate sub-heading. In the event the goods cannot be classified solely on the basis of Rule 1, and if the headings and section or chapter notes do not otherwise require, the remaining Rules 2 to 6 may then be applied in sequential order. Application of Chapter 85 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 8504 ELECTRICAL TRANSFORMERS, STATIC CONVERTERS (FOR EXAMPLE, RECTIFIERS) 8504 10 AND INDUCTORS Ballasts for discharge lamps or tubes : 8504 10 10 Conventional type u 8504 10 20 For compact fluorescent lamps u 8504 10 90 Other u Liquid dielectric transformers: 8504 21 00 Having a power handling capacity not exceeding 650 kVA u 8504 22 00 Having a power handling ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....chines (not being parts of the articles of heading 8484, 8544, 8545, 8546 or 8547) 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 8409, 8431, 8448, 8466, 8473, 8485, 8503, 8522, 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 8485 or 8548." 6.7 In terms of note 2(a) to se....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ading 8504 50 for power supplies for automatic data processing machines and units thereof, and telecommunication apparatus are eligible for "nil" rate of customs duty. I find that the imported goods are to be used in the PCBA of the telecommunication devices as claimed by the applicant whereas the notification benefit is available to the other inductors used for power supply for ADPM and units thereof, and telecommunication devices. Power supply is used to provide stable and uninterruptible power to the telecommunication apparatus. There are various technologies that are used in power supply i.e. UPS, DC-DC Converter, Inverters, Rectifiers etc. whereas the subject goods are to be used in manufacturing of telecommunication devices as claimed by the applicant. As it can be seen that the wordings used in the 3rd column pertaining to the description of goods is phrased as per follows "Other inductors for power supply for automatic data processing machines and units thereof, and telecommunication apparatus". The "comma" separates the two groups while "and" joins those two large groups under same description/sense. On careful reading of the phrase, it can be safely interpreted to mean....