TaxTMI 
TaxTMI 
2025 (1) TMI 1760
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.... for classification of "Rear Camera Integrated Module Subassembly" ('product'), which shall be exported by the Applicant to the various importers based in India. I. Overview of the Rear Camera Integrated Module Subassembly exported by the Applicant. 1.2. The term "Rear Camera Integrated Module Subassembly" refers to the component responsible for capturing photos and videos from the back end of the mobile phone. The subassembly allows for capturing photos and videos, making it integral to communication. In the present case, the subassembly exported by the Applicant consists of one or more cameras which are housed in a metal enclosure. 1.3. This subassembly may comprise of a fixed-focus ultra-wide camera and/or a sensor-shift wide camera and/or a telephoto camera, depending on the mobile phone model. A brief understanding of the cameras mentioned above is captured hereunder - a. A fixed-focus ultra-wide camera has a wide-angle lens with a pre-set focal length, optimized for capturing expansive scenes without adjustable focus. b. A sensor-shift wide camera uses a mechanism that physically moves the image sensor to reduce motion blur and improve image stabili....
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.... 1.10. Thus, to summarize, the Rear Camera Integrated Module Subassembly is a specific part of mobile phone which is integrated within the body of mobile phone and is used to capture photos and videos. This subassembly comprises of various types of cameras which enable the subassembly to capture high quality photos and videos. II. The Applicant qualifies as an 'applicant' under Section 28E(c) of the Customs Act, 1962 ('Customs Act'). 1.12. 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;" 1.13. As discussed earlier, the Applicant will be exporting the inputs and parts of mobile phone (Rear Camera Integrated Module Subassembly) to various importers in India. Thus, the Applicant is rightly covered under the definition of 'applicant' as provided under Section 28E(c)(ii) of the Customs Act ....
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....ication, no application for advance ruling will be accepted if the question raised in the application is already pending before any forum. Relevant extracts of the provision are reproduced below: "28I. Procedure on receipt of application. - (1)...... (2) The Authority may, after examining the application and the records called for, by order, either allow or reject the application: 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." 1.18. The Applicant submits that questions raised in the application (as in Annexure II) are not already pending before any officer of Customs, the Appellate Tribunal or any Court, to the best of our knowledge. Further, the questions raised in the present case, have not already been decided by the Appellate Tribunal or any court in the Applicant's case. 1.19. Accordingly, the present application should not be considered as pending before any Cou....
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.... the Sub-headings of a Heading. 1.27. GIR 1 stipulates that the goods under consideration should be classified in accordance with the terms of the Headings and any relevant Section or Chapter Notes. These Section or Chapter Notes and Sub-Notes give detailed explanation as to the scope and ambit of the respective Sections and Chapters. These Notes have been given statutory backing and have been incorporated at the beginning of each Section/ Chapter. For ready reference, Rule 1 is extracted herein below: "Classification of goods in this Schedule shall be governed by the following principles: 1. The titles of Sections, Chapters and Sub-Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions..." 1.28. The Larger Bench of the Hon'ble Tribunal in the matter of Saurashtra Chemical, Porbandar Vs. Collector of Customs, [1986 (23) E.L.T. 283 (Tri. - LB)] had held that the tariffs must be interpreted in the light of relevant Section and Chapt....
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.... the classification of a good, in addition to the GRI and corresponding Chapter Notes and Section Notes. 1.33. In the light of above facts, to analyze the classification of above product following needs to be kept in mind: a. General Rules of Interpretation (GIR). b. Heading/sub-heading of the First Schedule in conjunction with Section/Chapter/Explanatory notes. c. Principal function of the subject good. 1.34. Hence, upon application of GIR 1, since the Rear Camera Integrated Module Subassembly is used in mobile phone, the Applicant submits that the most specific entry at the four-digit level under which the Rear Camera Integrated Module Subassembly may be classified is CTH 8517 which covers "Telephone sets, including telephones for cellular networks or for other wireless networks; 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), other than transmission or reception apparatus of heading 8443, 8525, 8527 or 8528". 1.35. However, before proceeding to analyze classification of the Rear Camera Integrated Module....
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.... Generally, the cameras of this group are equipped with an optical viewfinder or a liquid crystal display (LCD), or both. Many cameras equipped with an LCD can employ the display both as a viewfinder when capturing images and as a screen for displaying images received from other sources or for reproducing images already recorded." 1.38. Thus, upon perusal of the above extract, it is clear that a digital camera is one which in addition to the camera lenses, inter alia comprises of the following: a. Internal storage device for recording and storing of the images and videos; b. May include Analogue/ digital converter (ADC); c. May include Output terminal to send images and/or video to units of automatic data processing machines, printers, televisions or other viewing machines; d. Optical viewfinder or a liquid crystal display (LCD), or both. 1.39. In the present case, as discussed in the facts in Annexure I above, the product is a subassembly which comprises of different kinds of cameras to enable capturing of photos and videos from the back end of the mobile phone. The subassembly in its as imported condition does not comprise of features s....
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.... held the correct classification of the web cam to be under CTH 8473 as parts of automatic data processing machine. 1.43. A similar view was taken by the Hon'ble CESTAT Bangalore in the case of M/s. Xiaomi Technology India Ltd. Vs. Commissioner of Customs Inland Container depot, Whitefield, Bangalore, [2023 (12) TMI 447 - CESTAT BANGALORE] wherein the web cam was classified under CTH 8473 as parts of automatic data processing machine as against CTH 8525 as digital camera. 1.44. Applying the ratio of the aforementioned judgments in the present case, since in the present case as well, the subassembly does not comprise of features such as storage, optical viewfinder, output terminal, LCD etc., the subassembly cannot be considered to be covered within the scope of "digital camera" under CTH 8525. Further, as discussed above, since the subassembly is incapable of independent function and is used solely and principally with mobile phone, it can be considered as parts of mobile phone (as was done in the aforementioned judgments, i.e., the web cams were considered to be parts of automatic data processing machines), and hence are more appropriately classifiable under CTH 8517 as parts....
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....ts, the Applicant submits that the Rear Camera Integrated Module Subassembly of the mobile phone is an essential component of the modern-day mobile phone which enhances the functionality and user experience of a mobile phone. Hence, the Applicant submits that the Rear Camera Integrated Module Subassembly should be considered as a "part" of the mobile phone. 1.52. Further, classification of 'parts' under Chapter 84 and Chapter 85 is governed in terms of rules provided in Section Note 2 of Section XVI. Section Note 2 is sub-divided in 3 sub-rules. Each of the sub-rule must be sequentially applied. For ease of reference, Section Note 2 has been extracted as follows: "2. Subject to Note 1 to this Section, Note 1 to Chapter 84 and to 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....
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.... Applicant is a tailor made for the manufacture of mobile phones and therefore capable of use solely and principally with mobile phones. Further, the subassembly is incapable of standalone function and required connection with other components of the mobile phone to fully operative. Hence it is submitted that the Rear Camera Integrated Module Subassembly fulfills the condition of sole and principal test as enunciated in Section Note 2 (b). Accordingly, the Rear Camera Integrated Module Subassembly is covered under Section Note 2 (b) and is to be classified under CTH 8517 along with mobile phone. II Rear Camera Integrated Module Subassembly satisfies the twin test of what is considered to be a "part" 1.56. In order to buttress its stand, the Applicant places reliance on the judgment of the Hon'ble CESTAT Delhi in the matter of M/s. Vodafone Idea Limited Vs. Principal Commissioner of Customs (Imports), Final Order No. 50874 / 2022 dated 20.09.2022 wherein the Hon'ble bench held that an item will not be considered as a 'part' if, on a standalone basis, it can be considered as an article classifiable under its own appropriate heading. To this effect, it laid down the twin test fo....
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....r the residuary entry under CTH 8517, i.e., under CTH 8517 79 90 which reads as "Telephone sets, including telephones for cellular networks or for other wireless networks; 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), other than transmission or reception apparatus of heading 8443, 8525, 8527 or 8528- Parts-Other --- Other". QUESTION 2: APPLICABILITY OF EXEMPTION UNDER S. NO. 6J OF THE NOTIFICATION NO. 57/2017 1.61. The Applicant will be exporting the Rear Camera Integrated Module Subassembly to the third- party manufacturers of mobile phones and accordingly wishes to seek clarity on eligibility of availing exemption benefit under Sr. No. 6J of Notification No. 57/2017. 1.62. The Central Government in terms of Section 25(1) of the Customs Act has issued Notification No. 57/2017 which intends to provide concessional exemption benefit to the import of machinery items, electrical appliances and its parts and accessories covered in the notification. 1.63. In this regard, Notification No. 57/2017 vide its Sr. No. 6J provides exemptio....
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.... further additional documents in support of its submissions at the time of hearing and before conclusion of the proceedings. Comments of the Port Commissionerate 2. As per the provision of CAAR Regulation, 2021, the complete application of the applicant was provided to the concerned Custom Port, and requested to furnish the requisite comments in the instant matter. The port authority furnished its comments as follows :- 2.1. Para 3(i) Eligibility in terms of Section 28E(c) of the Customs Act, 1962: Eligible; 2.2. Para 3(ii) Proviso (1)(a) of Section 28I (2) of the Customs Act, 1962: No application from the Applicant pending before this office; Proviso (1)(b) of Section 28I (2) of the Customs Act, 1962: No. 2.3. Para 3(iii) Claim of the applicant regarding the nature of their activity: Correct. 2.4. Para 3(iv) Comments on the merits of the question raised: As in the succeeding paras; Comments on the merits of the question raised 2.5. The item "Rear Camera Integrated Module Subassembly" ('product')" as per the submissions given by the applicant refers to the component responsible for capturing photos and videos from the back end of the mobile ph....
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....tification no. 57/2017-cus dated 30.06.2017 Sl.no. 6J (as amended), for reference the same is reproduced below for reference: Sr.no. Chapter or Heading or Sub- heading or tariff item Description of goods Standard rate Condition No. 6J 8517 79 90 All goods for use in manufacture of cellular mobile phone 10% 1 2.10. As the item under consideration is a part of cellular mobile phone and is used in the manufacturing of the cellular mobile phone, the subject notification benefit is applicable for the item under consideration on fulfilment of condition no. 1 given to the Notification no. 57/2017-cus. 2.11. In light of the above, the item "Rear Camera Integrated Module Subassembly" ('product')"is appropriately classifiable under the tariff item 8517 7990 and is eligible for the benefit of notification no. 57/2017-cus dated 30.06.2017 SI.no. 6J (as amended) with effective rate of BCD being 10%. Personal Hearing 3. The personal hearing in the matter was conducted on 16.01.2025 wherein the port authorities and the authorized representative of the applicant attended the same. During the personal hearing, the authorized representative reaffirmed the po....
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....case of M/s. Hi-Tech Computers Vs. Commissioner of Customs, Bangalore, where the classification of a webcam was in question. Here the Supreme Court, ruled that the webcam did not qualify as a "digital camera" under CTH 8525 because it lacked essential features like optical viewfinders and storage. It could only function as part of a computer, so it was classified under CTH 8473 as a part of an automatic data processing machine. Similarly, in M/s. Xiaomi Technology India Ltd. Vs. Commissioner of Customs, the webcam was classified as a part of an automatic data processing machine rather than a digital camera. e. Applying this reasoning, the subassembly in question, which lacks critical features of a digital camera and cannot function independently, is more accurately classified as a part of a mobile phone under CTH 8517, rather than as a "digital camera" under CTH 8525. 4.3. The Rear Camera Integrated Module Subassembly qualifies as a 'part' of mobile phone in terms of Section Note 2 (b) to Section XVI - The Rear Camera Integrated Module Subassembly is a "part" of mobile phone a. The term "parts" has been defined as essential components without which the....
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....ssential part of a mobile phone, it should qualify for the concessional rate of duty under Sr. No. 6J of the notification, provided the necessary compliance with the IGCR Rules, 2022 is met during its import. Analysis and Conclusion 5. The term "Rear Camera Integrated Module Subassembly" refers to the component responsible for capturing photos and videos from the back end of the mobile phone. The subassembly allows for capturing photos and videos, making it integral to communication. In the present case, the subassembly exported by the Applicant consists of one or more cameras which are housed in a metal enclosure. This subassembly may comprise of a fixed-focus ultra-wide camera and/or a sensor-shift wide camera and/or a telephoto camera, depending on the mobile phone model. Thus, combination of the aforementioned different types of cameras in the mobile phone provides a versatile and enhanced photography experience to the user. 5.1 Further, the wide camera of the subassembly incorporates a Voice Coil Motor ('VCM') which uses electromagnetism to adjust focus and image stability using the optical sensor. Thus, the VCM assists in adjusting the camera lens to achieve proper f....
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....lassification of goods in the Sub-headings of a Heading. GIR 1 stipulates that the goods under consideration should be classified in accordance with the terms of the Headings and any relevant Section or Chapter Notes. These Section or Chapter Notes and Sub-Notes give detailed explanation as to the scope and ambit of the respective Sections and Chapters. These Notes have been given statutory backing and have been incorporated at the beginning of each Section/ Chapter. For ready reference, Rule 1 is extracted herein below: "Classification of goods in this Schedule shall be governed by the following principles: 3. The titles of Sections, Chapters and Sub-Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions..." 5.5 The Larger Bench of the Hon'ble Tribunal in the matter of Saurashtra Chemical, Porbandar Vs. Collector of Customs, [1986 (23) E.L.T. 283 (Tri. - LB)] had held that the tariffs must be interpreted in the light of relevant Sec....
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....h as a local or wide area network), other than transmission or reception apparatus of heading 8443, 8525, 8527 or 8528". 5.8.1 However, before proceeding to analyze classification of the Rear Camera Integrated Module Subassembly under CTH 8517, it is pertinent to discuss classification of the product under CTH 8525 which covers similar items viz. digital cameras. Accordingly, in order to justify its stand that the product merits classification under CTH 8517. The Rear Camera Integrated Module Subassembly is for specific use with mobile phone. 5.9 At the outset, the Rear Camera Integrated Module Subassembly exported are specific for use with mobile phone. The product is specifically designed for integration with other parts of mobile phone in order to constitute a functional mobile phone. This product is not capable of functioning with any other device other than the specific model of mobile phone for which it is built. Hence, it is submitted that the Rear Camera Integrated Module Subassembly is a product which is tailor made for use in the mobile phone, more so for a specific model of the mobile phone. The Rear Camera Integrated Module Subassembly is not classifiable un....
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....as internal storage, analogue/ digital converter (ADC), output terminal, optical viewfinder and or a liquid crystal display (LCD). Thus, the subassembly is not capable of independent functioning. Since, the subassembly in its as imported condition does not have a storage, therefore, the images captured by the subassembly have to be stored within the mobile phone's internal storage. Similarly, to display the images or video captured by the subassembly, the subassembly has to interact with the display module of the mobile phone. Thus, for the subassembly to function effectively i.e., from capturing images and videos to processing and storing them, it needs to work in conjunction with other components of the mobile phone. 5.13 Thus, it is submitted that the subassembly is merely an integration of different types of cameras which are solely and principally used in a mobile phone and are only operational and functional when the subassembly is attached onto the MLB and is able to interact with several internal components of the mobile phone. Hence, in view of the above, it is submitted that the subassembly is not a product which capable of independent function as it does not comprises....
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....t is submitted that the Rear Camera Integrated Module Subassembly is not covered within the scope of CTH 8525 as "digital camera". The Rear Camera Integrated Module Subassembly is a "part" of mobile phone in terms of Section Note 2 (b) to Section XVI- The Rear Camera Integrated Module Subassembly is a "part" of mobile phone 5.18 In the present case, as the Rear Camera Integrated Module Subassembly is used to manufacture the mobile phones which are classified under CTH 8517, it becomes pertinent to analyze the classification of the Rear Camera Integrated Module Subassembly under CTH 8517, which, inter alia covers "smartphones and its parts". In view of the above, it becomes pertinent to analyze whether the Rear Camera Integrated Module Subassembly can be considered as a 'parts' of mobile phones. 5.19 The term "parts" has not been defined in the HSN Explanatory Notes or the Customs Tariff. Hence, reliance must be made to the Hon'ble Supreme Court's Ruling in the case of CCE, Delhi Vs. Insulation Electrical (P) Ltd., [ 2008 (224) E.L.T. 512 (S.C.)]. In this case, the Apex Court while relying on various other earlier rulings has defined the term "parts" as "an essential compon....
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....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." 5.23 Upon perusal of the aforementioned note, the classification of 'parts' under Chapter 84 and Chapter 85 is to be done in the following manner: i. As per Section Note 2 (a), the parts for which there is a specific entry under Chapter 84 or 85 [other than a few entries listed in Section Note 2 (a)] have to be classified in their respective headings; ii. As per Section Note 2 (b), all parts other than those covered in Section Note 2 (a), which are suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading are to be classified with the machines of that kind or in heading 8409, 8431, 8448, 8466, 8473, 8503,....
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....fy both the conditions of the twin test, it cannot be classified under a separate heading as an apparatus falling under its own appropriate heading and the same shall merit classification as parts of the main machine. 5.27 In view of the twin test laid above, it is concluded that even though the subassembly has a separate identifiable function of capturing images and vides, as the Rear Camera Integrated Module Subassembly in its as imported condition does not essential features such as internal storage, analogue/digital converter (ADC), output terminal, etc. which are required for a camera module to function independently on its own, it cannot be said to be a standalone device. Further, the images captured by the subassembly have to be stored within the mobile phone's internal storage. Similarly, to display the images or video captured by the subassembly, the subassembly has to interact with the display module of the mobile phone. Thus, for the subassembly to function effectively i.e., from capturing images and videos to processing and storing them, it needs to work in conjunction with other components of the mobile phone. Hence, it is submitted that the subassembly is not capab....