TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 1681
X X X X Extracts X X X X
X X X X Extracts X X X X
.... A. STATEMENT OF RELEVANT FACTS HAVING A BEARING ON THE QUESTION (S) ON WHICH ADVANCE RULING IS REQUIRED 1.2 The application is being preferred by M/s. Samsung Display Noida Private Limited ('Applicant') a company incorporated in India under the provisions of the Companies Act, 2017 and having its registered head office located at Noida. 1.3 The Applicant is presently engaged in the business of manufacturing of display assemblies used in the manufacturing of mobile phones at its manufacturing facility at Noida. For manufacturing of display assemblies, the Applicant imports various inputs and parts. 1.4 Now, the Applicant is planning to expand its business and venture in manufacturing of OLED displays which in turn will be used in manufacture of laptops and tablets. In this regard, it wishes to import inputs and parts including OLED cells for the manufacture of OLED displays which in turn will be supplied to the manufacturers engaged in the manufacturing of laptops and tablets. These OLED displays manufactured by the Applicant will be sold by it to the contract manufacturers of tablets and laptops. Further, the inputs and parts including OLED cells intended t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 1.9 The Applicant for the purpose of manufacturing of OLED displays will import various inputs and parts. These inputs and parts will be put on the manufacturing line where these are put through various assembly and testing processes. The final product produced from the manufacturing line will be the OLED display for the manufacture of tablets and laptops. Below is the typical list of inputs and parts which will be imported for manufacturing of OLED displays: S. No. Description of goods Inputs and parts 1. AMOLED Panel (OLED Cells) 2. Anisotropic Conductive Film (ACF) 3. Adhesive and Resins 4. Polarizer 5. Display driver integrated circuit (DDI) 6. Flexible printed circuit assembly (FPCA) 7. Cover Tape 8. Window Glass 9. Cover tape with copper 10. Polyethylene Bag 11. Packing Tray 1.10 In India, the various inputs and parts mentioned above will be used by the Applicant for the proposed activity as captured below: a) Polarizer Attachment - Polarizer is attached to the OLED cell which helps manage light reflection and improve display contrast. b) Chip On Glass (COG) - This involves affixin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the Customs Act, 1962 ('Customs Act') 1.13 Section 28E(c) of the Customs Act reads as under: "(c). "applicant" means any person - (i) holding a valid Importer-exporter Code Number granted under section 7 of the Foreign Trade (Development and Regulation) Act, 1992; or (ii) exporting any goods to India; or (iii) with a justifiable cause to the satisfaction of the Authority, who makes an application for advance ruling under section 28H;" 1.14 The Applicant is a company registered in India and is holding a valid Importer-Exporter Code ('IEC') Number ABCCS3215K. Thus, the Applicant is rightly covered under the definition of 'applicant' as provided under Section 28E(c)(i) of the Customs Act for making this application. Question raised in the application for advance ruling by the Applicant squarely falls within the ambit of Section 28H(2)(a) of the Customs Act 1.15 Section 28H of the Customs Act provides for the questions in respect of which an advance ruling may be sought by an applicant. Section 28H of the Customs Act reads as under: "28H. Application for advance ruling - (1) An ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion: Provided that the Authority shall not allow the application where the question raised in the application is - (a) already pending in the applicant's case before any officer of customs, the Appellate Tribunal or any Court, (b) the same as in a matter already decided by the Appellate Tribunal or any Court." (Emphasis supplied) 1.19 The Applicant submits that question raised in the Application (as in Annexure II) is not already pending before any officer of Customs, the Appellate Tribunal, or any court in relation to the Applicant. Further, the question raised in the present case, have not already been decided by the Appellate Tribunal or any court in the Applicant's case. 1.20 Accordingly, the present application should not be considered as pending before any Court as neither the show cause notice has been issued nor the bill of entries has been provisionally assessed. 1.21 Thus, relying on the above the facts of the current case, Applicant submits that in its case, the application shall be accepted for hearing on merits by the Hon'ble CAAR. 1.22 The Applicant wishes to obtain the advance ruling on the question listed d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....evied on all goods imported into India or exported out of India at such rates as may be specified under the Customs Tariff Act, 1975 ('Tariff Act'). 1.30 Section 25 of the Customs Act contains provisions regarding power to grant exemption from duty. Section 25 (1) of the Customs Act reads as under: "(1) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette, exempt generally either absolutely or subject to such conditions (to be fulfilled before or after clearance) as may be specified in the notification goods of any specified description from the whole or any part of duty of customs leviable thereon." 1.31 In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, Central Government vide NN 24/ 2005 provides exemption from duty of Customs on import of certain goods, as mentioned therein, subject to the conditions specified in the said notification. 1.32 Relevant SI. No. 39 of the NN 24/ 2005 reads as under: S. Heading or Sub- heading or tariff Description of goods 39 Any Chapter except Chapter 74 All goods except solar temp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing of OLED displays: S. No. Description of goods Inputs and parts 1 AMOLED Panel (OLED Cells) 2 Anisotropic Conductive Film (ACF) 3 Adhesive and Resins 4 Polarizer 5 Display driver integrated circuit (DDI) 6 Flexible printed circuit assembly (FPCA) 7 Cover Tape 8 Window Glass 9 Cover tape with copper 10 Polyethylene Bag 11 Packing Tray 1.39 None of the above-mentioned inputs and parts either fall within Chapter 74 of the Tariff Act or qualifies as solar tempered glass or solar tempered (anti-reflective coated) glass. Since the benefit under SI. No. NN 24/ 2005 is available to all goods except those falling under Chapter 74 and / or solar tempered glass or solar tempered (anti-reflective coated) glass, the Applicant fulfils the first condition. 1.40 Further, the Applicant understands that it will not be able to avail benefit of Sl. No. 39 in case it imports items falling under Chapter 74 or solar tempered glass or solar tempered (anti- reflective coated) glass for the manufacture OLED displays. Thus, the Applicant shall only be availing the benefit under SI. No. 39 of the NN 24/2005 in relation to the pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on of being used in the manufacture of laptops and tablets. 1.46 Reliance is placed on the judgement of the Hon'ble Supreme Court which while examining the phrase 'in the manufacture of goods' in light of Section 8(3)(b) of the Central Sales Tax, 1956 in the case of J. K. Cotton Spinning & Weaving Mills Co. Ltd. v. The Sales Tax Officer, Kanpur and Anr. - 1965 AIR SC 1310 held that the test to ascertain whether a particular item is for the manufacture of finished goods is to check if the production of finished goods is possible without it. Hence the expression 'in the manufacture of goods' would include all such items without which the production of the finished goods would be difficult. The relevant extract of the judgement is also reproduced hereunder: "The expression "in the manufacture of goods" should normally encompass the entire process carried on by the dealer of converting raw materials into finished goods. Where any particular process is so integrally connected with the ultimate production of goods that any particular but for that process, manufacture or processing of goods would be commercially inexpedient, goods required in that process w....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the Department to equate the parts as being the same as nozzle and nozzle holders. He contends that ultimately these parts be it a part of nozzle or nozzle holders or not would become a part of the ultimate product that is the internal combustion engine, therefore, it would become a part of the engine and not part of nozzle or nozzle holder on the principle "a part of a part is a part of the whole". That apart, learned counsel pointed out to us that the Department itself has subsequently accepted the verdict of the tribunal without any reservation as could be seen from the application made to the Collector of Appeals under Section 35E(4) of the Central Excises & Salt Act, 1944 by the Assistant Collector concerned on 24-9-1994. Learned counsel for the respondent pointed out that based on this application the Collector of Central Excise & Customs (Appeals), Pune, allowed the prayer of the said Assistant Collector and following the judgment of this Court in the case of Kamlakshi Finance Corpn. Ltd. [1991 (55) E.L.T. 433 (S.C.)] held in favour of the respondent by holding that parts of the nozzle and nozzle holders are eligible for the benefit of exemption under Notification ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....193) E.L.T. 334 (Tri. - Mumbai) 1.52 Further, the Applicant also places reliance on In Re: Shriprop Aerospace Pvt. Ltd. [(2024) 18 Centax 44 (A.A.R. - Cus. - Del.)/ issued by CAAR, Delhi wherein the issue was whether the parts of turbo jet engines are eligible to avail exemption benefit as parts of an aircraft under SI. No. 545 of the Notification No. 50/2017-Customs dated 30.06.2017 which provides exemption to parts of an aircraft. In this case, it was held that "in light of the catena of judgments by a number of Hon'ble Tribunals and Courts that part of part is part of the whole, it leaves no doubt on admissibility of the said serial number of the notification". In view thereof the parts of turbo jet engine were also provided exemption as parts of aircraft under the specified serial number of the exemption notification. 1.53 On application of the foregoing principle, judicial precedents and CBEC Circular, the Applicant submits that inputs and parts including OLED cells being 'part' of OLED displays of laptops and tablets are thereby a 'part' of laptops and tablets. Such inputs and parts become part of the ultimate product i.e., laptops and tablets and he....
X X X X Extracts X X X X
X X X X Extracts X X X X
....7 - as long as the end use condition is met. It is pertinent to note that SI. No. 5C to 5E of NN 57/ 2017 provide end-use based exemptions which are subject to IGCR, which is similar to SI. No. 39 of NN 24/ 2005. 1.58 The instant case of the Applicant is squarely covered by the above rationale of the CBIC. In the instant case also, the Applicant is manufacturing OLED displays for sale to the contract manufacturers of tablets and laptops. The Applicant is an intermediate goods manufacturer which is engaged in manufacturing parts/ components of the finished goods viz. OLED displays for laptops and tablets. Drawing inference from the CBIC Circular, it is not necessary that the importer should be the one manufacturing the laptops and tablets, however the condition important to be fulfilled is that the imported goods should ultimately be utilized for the manufacture of laptops and displays, Hence, in view of the clarification issued by the CBIC Circular, the Applicant should be eligible to claim exemption benefit under SI. No. 39 of NN 24/ 2005. 1.59 It is pertinent to mention here that the Company shall not avail any exemption benefit under S. No. 39 of the NN 24/2005 on inputs a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ablets and laptops are covered by the scope of ITA and will subsequently find coverage under the ITA bound NN 24/2005. 1.64 To summarize, basis the above submissions put forth in this application, the Applicant fulfils the second condition envisaged under SI. No. 39 of NN 24/ 2005 which requires goods to be imported for the manufacture of laptops and tablets. Thus, it is clear that the Applicant is eligible to claim exemption benefit under SI. No. 39 of NN 24/ 2005 for imports of inputs and parts for manufacturing of OLED displays which finally used in manufacturing of tablets and laptops. Condition 3: The Applicant shall follow the procedure outline in the IGCR 1.65 Rule 5 of the IGCR 2022 provides for the procedure to be followed.by the importer who intends to avail the specified end use based exemption benefit. The procedure specified in Rule 5 is furnished below for ease of reference: (1) "The importer who intends to avail the benefit of a notification shall be required to mention the IIN (referred to in sub-rule (2) of Rule 4) and continuity bond number and details while filing the Bill of Entry. (2) The Deputy Commissioner of Customs or, as the case....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ure of activity, i.e. it is ongoing/proposed is correct: As per available records the applicant have imported the tear LFD Cell before under 85177090 However, this office cannot confirm that the goods imported will be used m manufacturing of OLED displays to be supplied to the manufacturers engaged in the manufacturing of laptops and tablets. (iv) Comments on merit of the question raised in the application, along with all materials in support thereof: Nature of activity proposed to be undertaken. Import of inputs or parts including Organic Light Emitting Diode ('OLED, cells for use in manufacturing of OLED displays which in turn will be supplied to the manufacturers engaged in the manufacturing of laptops and tablets. Question of law on fact whether benefit of SI No 39 of the notification no 24/2005- Customs dated March 1, 2005 as amended) (NN-24/2005) shall be available in case of import of inputs and parts including OLED cells for the manufacturer of OLED displays which to turn will be used for the manufacturing of laptops and tablets. Comment: SI. No. 39 of the notification no 24/2005-Customs dated March 1. 2005 is applicable for ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nes. For manufacturing display assemblies, the Applicant imports various inputs and parts ('current activity'). 4.3 Now, the Applicant is planning to expand its business and venture in manufacturing of OLED displays which in turn will be used in manufacture of laptops and tablets. In this regard, it wishes to import inputs and parts including OLED cells for the manufacture of OLED displays which in turn will be supplied to the manufacturers engaged in the manufacturing of laptops and tablets ('proposed activity'). In view of the proposed activity, the Applicant has submitted the application to seek clarity on the following issue : "Whether benefit of Sl. No. 39 of the Notification No. 24/ 2005-Customs dated March 1, 2005 (as amended) ('NN 24/ 2005') shall be available in case of import of inputs or parts including Organic Light Emitting Diode ('OLED') cells for the manufacture of OLED displays which in turn will be used for the manufacture of laptops and tablets?" 4.4 Relevant entry of the exemption notification is furnished below for ease of reference: S. No. Heading or Sub- heading or tariff item Description of goods 8. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....FPCA + ACF + Cover Tapes + Window Glass (Cover Glass) + Optically Clear Adhesive Tape ('OCA') 4.8 In light of the above facts, it is submitted that Applicant satisfy the three-fold condition provided under S. No. 39 of NN 24/ 2005 which is as under: * Condition 1 - Goods should not be classified under Chapter 74 of the Tariff Act or qualify as solar tempered glass or solar tempered (anti-reflective coated) glass. * Condition 2 - Goods should be imported for the manufacture of goods covered by SI. No. 1 to Sl. No. 38 of NN 24/ 2005. * Condition 3 - The importer should follow the procedure outlined in the IGCR 2022 4.9 Accordingly, the Applicant prays before CAAR, New Delhi that it is eligible to avail exemption under S. No. 39 of the NN 24/2005 on import of inputs and parts for the manufacture of OLED display which in turn will be used for the manufacture of laptops and tablets. The Applicant requests CAAR, New Delhi to take the above information on record and oblige. Exhibit A - Inputs and Parts to be imported for the manufacture of OLED displays for laptops and tablets S. No. Description of Goods Inputs Parts Picture ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....70 Cover Glass is the top most outer layer of display unit Its main function is to protect internal panel and polarizer from external force and pressure. 9 Cover tape with copper Cover Panel with Copper Chapter 85 it is used for impact resistance to product attached to the back of OLED panel and for grounding for FPCA 10 Polyethylene Bag EPE Sheet Chapter 39 It is a packaging material used to provide cushion (impact resistance) & prevent scratches on the displays. Shielding Bag Chapter 39 It is a packaging material for the final product and is made of electrostatic discharge material. It prevents the OLED displays from electrostatic charges 11 Packing Tray Plastic Packing Tray Chapter 39 It is a tray used for packaging or holding the OLED displays 5. Findings, Discussion and Conclusion: 5.1 After finding that the application is valid in terms of the provisions of the Customs Act, 1962 and the CAAR Regulations, 2021, having gone through CAAR-1 application, reply from jurisdictional Commissionerate, oral submissions made during the hearing, synopsis of arguments after hearing and the legal framework governing Notification....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Rules, 2017 5.4 I find that Sr. No. 8 of the said Notification covers "All goods" under tariff heading 8471, which refers to Automatic Data Processing Machines and Units thereof, and encompasses laptops and tablets. Therefore, as per the structure of the Notification, Sr. No. 39 operates as a residuary entry and extends exemption to all goods (except those expressly excluded) that are imported for the purpose of manufacture of items listed at Sr. Nos. 1 to 38, which includes laptops and tablets under Sr. No. 8. I observe that the scope of Sr. No. 39 is clearly end-use based and the benefit thereunder is conditional upon fulfilment of the following three cumulative conditions :- (i) The imported goods should not be classified under Chapter 74; (ii) The imported goods should be used for the manufacture of goods falling under Sr. No. 1 to 38 of the Notification; (iii) The importer must comply with the procedural requirements prescribed under the Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022 (IGCR 2022). 5.4.1 I now examine whether the Applicant satisfies the above three conditions. I note that the Applican....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Customs. 5.4.4 Additionally, I take note of CBIC Circular No. 26/2024-Customs dated 21.11.2024, wherein the CBIC has clarified that intermediate manufacturers or component manufacturers who are not themselves the manufacturers of the final product, are still eligible to claim concessional customs duty exemption, provided the imported goods are used in the manufacturing of final goods such as mobile phones and subject to fulfilment of IGCR condition. I find that the principle laid down therein is squarely applicable to the present case, mutatis mutandis, in respect of laptops and tablets under Notification No. 24/2005. In view of the foregoing discussion, I find and hold that the Applicant satisfies Condition (ii), as the inputs and parts are imported for the manufacture of OLED displays, which are ultimately used in the manufacture of laptops and tablets, goods covered under Sr. No. 8 of the subject Notification. 5.4.5 I note that the benefit under Sr. No. 39 of Notification No. 24/2005-Customs is expressly subject to compliance with the Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022 (IGCR Rules). I find that vide notification No. ....