TaxTMI 
TaxTMI 
2025 (1) TMI 1759
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.... of "Cover Glass Module" ('product'), which shall be exported by the Applicant to various importers based in India. I. Overview of the Cover Glass Module exported by the Applicant 1.1. The term "Cover Glass Module" refers to the complete unit or module which includes the sub- components such as top module, display flex and sensor flex. In the present case, the Cover Glass Module exported by the Applicant comprises of the following sub-components: a. Top Module - It comprises of a metal frame which houses the display and touch layer of the mobile phone. The display shows the user interface, images and videos to the user while the touch functionality enables the user to interact with the mobile phones. In the present case, the display of the mobile phone is made up of Organic Light Emitting Diodes ('OLEDs'). b. Display Flex - The Cover Glass Module also comprises of display flex or flexible printed circuits that connect the top module i.e., Display of the Cover Glass Module to the phone's motherboard/ main logic board ('MLB'). The display flex transmits power, data signals, and control signals between the display (and touch) of the ....
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....x is connected to the motherboard to operationalize the Cover Glass Module. 1.3. Here it is also pertinent to mention that the Cover Glass module may comprise of additional parts which may be added to provide structural integrity to the module and will assist in the integration of the module in the mobile phone or maybe used as a placeholder for other parts of mobile phone. Thus, these additional component or parts will not alter the principal function of the module. 1.4. Therefore, the Cover Glass Module exported by the Applicant carries out varied functions, such as, firstly, the Cover Glass Module provides the display (and touch) functionality of the phone. Secondly, it provides spatial orientation information using magnetic compass and lastly it also manages the flow of light / brightness of the mobile phone. Thus, it is stated that the Cover Glass Module performs multiple functions by integrating various components within itself. II. The Applicant qualifies as an 'applicant' under Section 28E(c) of the Customs Act, 1962 ("Customs Act") 1.5. Section 28E(c) of the Customs Act reads as under: "(c). "applicant" means any person - (i) holding a....
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....mption notification under Section 25(1) of Customs Act as detailed out in Annexure Il. Therefore, the questions raised by the Applicant falls within the purview of the provisions of Section 28H(2)(a), 28H(2)(b) and 28 H(2)(d) of the Customs Act. 1.9. Hence, the application for advance ruling is being filed in conformity with the provisions of Section 28H of the Customs Act. IV. Question raised under the present advance ruling application is not before any officer of customs, the Appellate Tribunal or any Court. 1.10. As per Section 28I (2)(a) of the Customs Act with regard to procedure on advance ruling application, 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 ....
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.... export of goods. 1.18. To determine the said rates of BCD applicable on the imported good it is important to identify the tariff heading in which the good would fall under the First Schedule of the Customs Tariff. 1.19. Classification of goods covered under the Customs Tariff is done as per the General Rules of Interpretation ('GIR'). GIR 1 to 5 lay down the principles for determining classification of goods under a specific Heading whereas GIR 6 is applicable if the objective is to determine the classification of goods in the Sub-headings of a Heading. 1.20. 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....
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....ally accepted nomenclature emerging from HSN Explanatory Notes is a safe guide. Further, HSN Explanatory Notes are also dependable guide for interpretation of Customs Tariff. Some other judicial pronouncements wherein this proposition was also affirmed, upheld and followed have been enumerated below: i. CC Vs. Gujarat Perstorp Electronics Ltd., [(2005)7 SCC 118, (2005) 186 E.L.T. 532 (3- member S.C. bench)]; ii. CCE Vs. Phil. Corporation Ltd, [(2008) 223 E.L.T. 9 (S.C.)]. 1.25. Therefore, the HSN Explanatory Notes are an important aid for ascertaining the classification of a good, in addition to the GRI and corresponding Chapter Notes and Section Notes. 1.26. 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. 1.27. Hence, upon application of GIR 1, since the Cover Glass Module is used in mobile phone, the Applicant submits that the most specific entry at the four-digit level under which ....
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....r flat panel display modules include, but are not limited to, those which are flat, curved, flexible, foldable or stretchable in form. Flat panel display modules may incorporate additional elements, including those necessary for receiving video signals and the allocation of those signals to pixels on the display. However, heading 8524 does not include display modules which are equipped with components for converting video signals (e.g., a scaler IC, decoder IC or application processer) or have otherwise assumed the character of goods of other headings. For the classification of flat panel display modules defined in this Note, heading 8524 shall take precedence over any other heading in the Nomenclature." 1.32. In view of the above, for a product to be identified as a "flat panel display module", the product needs to fulfill the definition mentioned in Chapter Note 7 of Chapter 85. 1.33. As per the Chapter Note 7 of Chapter 85 the following pre-requisite conditions need to be met for a product to be covered under CTH 8524 as "flat panel display module": a. The product must be a device or apparatus for the display of information. b. The product must b....
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.... not be equipped with components for converting video signals (e.g., a scaler IC, decoder IC or application processer). * The Cover Glass Module does not comprise of components which are capable of converting video signals such as a scaler IC, decoder IC or application processer. The product must not have otherwise assumed the character of goods of other headings. * The Cover Glass Module comprises of various components viz. top module, display flex, driver IC, and sensor flex (containing ALS and magnetic compass). * The top module along with the display flex and driver IC, provides the display (and touch) functionality of the mobile phones. While sensor flex which contains ALS manages the flow of light / brightness into the mobile phone and magnetic compass provides for spatial orientation information. Further, the magnetic compass, once connected with the MLB, gets integrated with other software and provides directional information thereby aiding in navigation applications. * In view of the above, it is submitted that the Cover Glass Module performs multiple independent functions (such as provision of spatial orientation of the mobile phone, management of flow of l....
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....des plates, sheets and strips of plastic which have been subject to further working upon. Similarly, as per Chapter Note 7 to Chapter 85, CTH 8524 excludes those goods which have assumed the character of goods of other headings. In essence, both - CTH 3920 and CTH 8524 excludes all those products which make the product to be something over and above those items which are covered under the said heading for the reason that they have a specific differentiating characteristic. 1.38. In the case of Samsung (supra), the Hon'ble CESTAT, New Delhi held that since the mobile phone covers underwent processes such as milling, thermoforming etc. they were considered to be "further worked upon" and were therefore excluded from the coverage under CTH 3920. Further, as the phone covers were being solely and principally used with mobile phones for the purpose of protection of other component of mobile phones from heat, dust, etc., the mobile phone covers were classifiable under CTH 8517. 1.39. A similar ruling has been provided by the Hon'ble CESTAT, New Delhi in the case of M/s. Vivo Mobile India Pvt. Ltd. Vs. Principal Commissioner of Customs, Air Cargo Complex, New Delhi, [Final O....
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....on displayed on the mobile. Further, the magnetic compass when it connected with the MLB, gets integrated with other software and provides directional information thereby aiding in navigation applications. Hence, the magnetic compass is required for effective functioning of other applications in the mobile phone. 1.48. In view of the above facts, the Applicant submits that the Cover Glass Module of the mobile phone is an essential component of the mobile phone which acts as a user interface and enables effective functioning of other applications. Considering that the Cover Glass Module is essential for a mobile phone to function effectively, the Applicant submits that the Cover Glass Module should be considered as a "part" of the mobile phone. 1.49. Further, classification of 'parts' under Chapter 84 and Chapter 85 is governed in terms of rule" 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....
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....er Cover Glass Module, the Cover Glass Module are excluded from the purview of Section Note 2 (a). Therefore, reference must be made to Section Note 2 (b) which covers other parts which are suitable for use solely or principally with a particular machine. 1.52. In the present case, the Cover Glass Module exported by the Applicant is a tailor made for the manufacture of mobile phones and therefore capable of use solely and principally with mobile phones. Hence it is submitted that the Cover Glass Module fulfills the condition of sole and principal test as enunciated in Section Note 2 (b). Accordingly, the Cover Glass Module is covered under Section Note 2 (b) and is to be classified under CTH 8517 along with mobile phone. 1.53. In view of the above discussion, as the Cover Glass Module is a 'part' of mobile phone and is solely and principally used with a mobile phone, it is to be classified under CTH 8517, in terms of GIR 1 read with Section Note 2 (b) to Section Note XVI. 1.54. Coming to classification at eight-digit level under CTH 8517, as the Cover Glass Module is not covered under any specific entry at eight-digit level, it will be classified under the residuar....
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....should be available at the time the import of Cover Glass Module, subject to compliance with IGCR Rules, 2022. 1.60. In the light of the above, a ruling is sought from the Hon'ble CAAR as follows: A. The Cover Glass Modules to be exported by the Applicant to India are correctly classifiable under CTH 8517 79 90 of the Customs Tariff. B. The Cover Glass Modules exported by the Applicant are eligible to avail the concessional BCD vide Sr. No. 6J of Notification No. 57/2017. 1.61. The Applicant craves leave to alter, amend, or modify any of the aforesaid grounds or submissions made herein this application and make such additional submissions without prejudice to the submissions made herein, at the time of hearing of the said application. 1.62. The Applicant also craves leave to produce and provide any such 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 t....
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....missions given by the importer, the item "Cover Glass Module" has varied components with different/dedicated functions. As such, based on its components and functions, the item has assumed the characteristic of a part of a Cell phone. To be classified under a specific heading or tariff item, the item as a whole does not have a singular function, but has multiple functions. The item does not appear to be covered under any specific entry under Chapter 84 or 85. Furthermore, these are specifically manufactured to work with a particular model number of cellular mobile phone and not with any other model of cellular mobile phone manufactured by the same company. 2.9. As per the note 2(b) to Section XVI the "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 84.79 or 85.43) are to be classified with the machines of that kind or in heading 84.09, 84.31, 84.48, 84.66, 84.73, 85.03, 85.22, 85.29 or 85.38 as appropriate". Therefore, in the instant case, the item, being suitable for use solely with mobile phone falling under CTH 8517, is appropriately classifiable under the head....
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....el display module' in terms of Chapter Note 7 to Chapter 85 a. To classify a product under CTH 8524 as a "flat panel display module," it must meet the criteria defined in Chapter Note 7 to Chapter 85. These criteria include: * The product must be a device or apparatus for the display of information. * The product must be equipped at a minimum with a display screen (LCD/ OLED/ LED). * The product must be designed to be incorporated into articles of other headings prior to use (such as mobile phones, laptops, etc.) * The display screens of the product may be flat, curved, flexible, foldable or stretchable in form. * The product may incorporate additional elements, including those necessary for receiving video signals and the allocation of those signals to pixels on the display. * The product must not be equipped with components for converting video signals (e.g., a scaler IC, decoder IC or application processer). * The product must not have otherwise assumed the character of goods of other headings. b. The Cover Glass Module exported by the Applicant fulfills several conditions for classification und....
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.... Further, as there is no specific entry for the Cover Glass Module in Chapter 84 or 85, it falls under CTH 8517 as "parts" of mobile phone in terms of Section Note 2(b). 4.4. Applicability of concessional BCD under S. No. 6J of Notification No. 57/2017 - a. S. No. 6J of Notification No. 57/2017 provides for concessional BCD at 10% for goods used in the manufacture of cellular mobile phones, classified under CTH 8517 79 90. As the Cover Glass Module is classified under CTH 8517 79 90 and is an essential 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 "Cover Glass Module" refers to the complete unit or module which includes the sub- components such as top module, display flex and sensor flex. In the present case, the Cover Glass Module exported by the Applicant comprises of the following sub-components: a) Top Module; b) Display Flex; c) Sensor Flex, which consists of the components such as - i. Ambient Light Sensor; ii. Magneti....
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....bunal 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 Chapter Notes which are statutorily binding like the Headings themselves. Thus, the Section and Chapter Notes have an overriding force on the respective Headings. This judgment was approved by the Hon'ble Supreme Court of India in the case of Saurashtra Chemicals Vs. Collector of Customs, [1997 (95) E.L.T. 455 (S.C.)]. 5.4 In the case of O. K. Play (India) Ltd. vs. C.C.E. Delhi III, 2005 (180) E.L.T. 300 (S.C.), a 3-member bench of the Hon'ble Supreme Court of India made the following observations: (a) There cannot be a static parameter for correct classification. (b) HSN along with the explanatory notes provide a safe guide for interpretation of an Entry. (c) Functional utility, design, shape and predominant usage have also got to be taken into account while determining the classification of an item. (d) Aforementioned aids and assistance are more important than the names used in the trade or common parlance in the matter of correct classif....
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....le phone. 5.9 The Cover Glass Module is not classifiable under any specific heading at four-digit level in the Customs Tariff -The Cover Glass Module is not a mere 'flat panel display module' in terms of Chapter Note 7 to Chapter 85 Considering the fact that the Cover Glass Module comprises of the display assembly of the mobile phone, one may consider it to be covered under CTH 8524 which covers "Flat panel display modules, whether or not incorporating touch-sensitive screens". 5.10 However, in order to classify any goods under CTH 8524, it should comply with the definition of 'flat panel display modules' provided in Chapter Note 7 to Chapter 85, which for the sake of convenience has been extracted as follows: "7. For the purposes of heading 8524, "flat panel display modules" refer to devices or apparatus for the display of information, equipped at a minimum with a display screen, which are designed to be incorporated into articles of other headings prior to use. Display screens for flat panel display modules include, but are not limited to, those which are flat, curved, flexible, foldable or stretchable in form. Flat panel display modules may inco....
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....rt from display functionality, the Cover Glass Module also has separate independent functions such as provision of spatial orientation information and management of the flow of light / brightness of the mobile phone, owing to the presence of sensor flex. The product must be equipped at a minimum with a display screen (LCD/OLED/LED). * The Cover Glass Module which is exported by the Applicant is made up of OLED display assembly. The display screens of the product may be flat, curved, flexible, foldable or stretchable in form. * The Cover Glass Module which is exported by the Applicant has a flat shaped display assembly. The product may incorporate additional elements, including those necessary for receiving video signals and the allocation of those signals to pixels on the display. * The Cover Glass Module exported by the Applicant comprises of Driver ICs which are used for the purposes of controlling and driving the display of the mobile phones. The product must not be equipped with components for converting video signals (e.g., a scaler IC, decoder IC or application processer). * The Cover Glass Module does not comprise of components which are capable of co....
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....e question before the Hon'ble Tribunal was in relation to classification of mobile phone covers (front cover, middle cover and back cover) which were made up of plastic material. As per the department, the mobile phone covers were classifiable under CTH 3920 which covers plates, sheets, strips, etc. of plastic, whereas, as per the Appellant, the product was classifiable under CTH 8517 as parts of mobile phone. The Hon'ble Tribunal in the said matter passed the judgment in the favour of the importer holding the correct classification of mobile phone covers under CTH 8517. The judgment was appealed before the Hon'ble Supreme Court by the Revenue authorities in [TS-290-SC-2024-CUST], however, the same was dismissed by the Hon'ble Supreme Court and accordingly the order of the Hon'ble Tribunal was maintained. 5.15 A similar ruling has been provided by the Hon'ble CESTAT, New Delhi in the case of M/s. Vivo Mobile India Pvt. Ltd. Vs. Principal Commissioner of Customs, Air Cargo Complex, New Delhi, [Final Order Nos. 50226-50232 /2024]. 5.16 Thus, in view of the above, as explained above, as the Cover Glass Module has multiple independent functions, owing to t....
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.... 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." 5.20 Upon perusal of the aforementioned note, the c....
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...."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". 5.23 The Applicant will be exporting the Cover Glass Module to the third-party manufacturers of mobile phones and accordingly wished to seek clarity on eligibility of availing exemption benefit under Sr. No. 6J of Notification No. 57/2017. 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. In this regard, Notification No. 57/2017 vide its Sr. No. 6J provides exemption from BCD to "all goods for use in manufacture of cellular mobile phone" which are covered under CTH 8517 79 90. This exemption is available subject to compliance with the procedure set out in the Customs (Import....