TaxTMI 
TaxTMI 
TaxTMI 
2025 (1) TMI 1761
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....e exported by the Applicant to the various importers based in India. I. Overview of the housing modules exported by the Applicant 1.1. The housing module of a mobile phone is the body or the casing of the mobile phone. It is essentially the physical framework of the phone that provides structural integrity, durability, and houses various other components of mobile phone 1.2. The housing module in a mobile phone serves several important purposes: a. Protection: The housing module provides protection of the internal components of the phone from physical damage, such as drops, impacts, and scratches. It also prevents foreign materials from entering the mobile phone body. b. Physical framework and support: The housing module provides a physical framework of the mobile phone. c. Functionality: It houses various external components such as buttons, haptics module, speaker, dock flex, pressure sensor, microphone, sim card module, etc. d. Aesthetic Appeal: The housing module contributes to the overall look and feel of the phone. 1.3. In the present case, the housing module for which the Applicant is seeking the advance ruling are composed of ....
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....he manufacturing process. II. The Applicant qualifies as an 'applicant' under Section 28E(c) of the Customs Act, 1962 ("Customs Act") 1.7. 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;" 1.8. As discussed earlier, the Applicant will be exporting the inputs and parts of mobile phones 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 for making this application. III. 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 1.9. 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 A....
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.... 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." 1.13. 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. 1.14. 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. 1.15. 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. 1.16. The questions in respect of which an advance ruling....
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.... 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 ..." 1.23. 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 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.). Harmonized System of Nomenclature 1.24. The Customs Tariff in India is based on Harmonized Commodity Description and Coding System, generally referred to as ....
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....IR 1, the most specific entry at the four-digit level under which the housing module 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". Therefore, it is pertinent to analyze classification of housing module under the said entry. ANALYSIS OF CTH 8517: A. The housing module is for specific use with mobile phone 1.30. At the outset, the Applicant submits that the housing module 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 does is not capable of functioning with any other device Hence, it is submitted that the housing module is a product which is tailor made for use in the mobile phone. B. The housing module is not classifiable under any specific heading at four....
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....ded at the edges) provided that they do not thereby assume the character of articles or products of other headings ...." 1.34. Upon application of the aforementioned Chapter Note and the HSN Explanatory Notes in the present case, the Applicant submits that as the housing module exported by the Applicant have been tailor made for sole use with mobile phones and comprise of additional components such as buttons, haptics module, speaker, dock flex, pressure sensor, microphone, sim card module and upper antenna flex, accordingly, the housing module exported by the Applicant is not in the nature of a simpliciter plate, sheet or strip of aluminium as defined in Chapter Note 9 (d). The housing module has thus acquired the character of a specific part of mobile phone. Hence, the Applicant submits that the housing module is excluded from the scope of CTH 7606. 1.35. The Applicant in this regard places reliance on the case of Samsung India Electronics Pvt. Ltd. Vs. Principal Commissioner of Customs, Air Cargo Complex (Import), New Delhi, [2023 (12) TMI 1155 - CESTAT NEW DELHI], wherein the question before the Hon'ble Tribunal was in relation to classification of mobile phone covers (fr....
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...., the Applicant submits that the housing module is excluded from the scope of Chapter 76, more specifically under CTH 7606, in terms of GIR 1 read with the Chapter Note to Chapter 76 and the HSN Explanatory Notes. C. The housing module is a "part" of mobile phone in terms of Section Note 2 (b) to Section XVI 1.40. In the present case, as the housing module is used to manufacture the mobile phones which are classified under CTH 8517, it becomes pertinent to analyze the classification of the housing module under CTH 8517. 1.41. CTH 8517 inter alia covers "smartphones and its parts". In view of the above, it becomes pertinent to analyze whether the housing module can be considered as a 'part' of mobile phones. 1.42. 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 component of the whole without which the whole cannot function". 1.43. A similar ruling ....
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....8 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." 1.49. 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, 8522, 8529 or 8538 as....
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....esent case, even if it is assumed that the product equally merits classification under CTH 7606 and CTH 8517, then also the product will merit classification under CTH 8517 as the same occurs last in the numerical order. 1.55. Coming to classification at eight-digit level under CTH 8517, as the housing module is not covered under any specific entry at eight-digit level, it will be classified under 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 NN 57/2017 1.56. The Applicant will be exporting the housing modules 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. 1.57. T....
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....plication and make such additional submissions without prejudice to the submissions made herein, at the time of hearing of the said application. 1.64. 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. 1.65. The Applicant further prays for an opportunity of being heard in person 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 vide letter dated 19.12.2024 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: Not known. 2.3. Para 3(iii) Claim of the applicant regarding the nature of their activity: Correct. 2.4. Para 3(iv) Comments on the....
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....lly 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 heading 8517 as parts of cellular mobile phone. Under the heading 8517, the item is appropriately classifiable under the tariff item 8517 7990 which provide for other parts. 2.10. With regard to the applicability of benefit of notification 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 2.11. 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 t....
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....ored design for mobile phones, the housing module has acquired the character of a specific mobile phone part, and therefore, should be excluded from classification under CTH 7606. b. Reliance is placed on the case of Samsung India Electronics Pvt. Ltd. vs. Principal Commissioner of Customs & M/s. Vivo Mobile India Pvt. Ltd. Vs. Principal Commissioner of Customs, Air Cargo Complex, New Delhi, where the issue was the classification of mobile phone covers made of plastic. The department classified them under CTH 3920 (plastic plates, sheets, and strips), but the appellant argued they should be classified under CTH 8517 as mobile phone parts. The Supreme Court upheld the CESTAT's decision, agreeing the covers were parts of mobile phones as the phone covers were extensively processed, acquiring characteristics that differentiate them from basic plates, sheets, or strips. c. Similarly, as the housing module has undergone various manufacturing steps and consisting of multiple components specifically designed for a particular mobile phone model, it should be classified as "parts" of mobile phone under CTH 8517. 4.3. The housing module is a "part" of mobile phone in ter....
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...., durability, and houses various other components of mobile phone. The housing module in a mobile phone serves several important purposes: a. Protection: The housing module provides protection of the internal components of the phone from physical damage, such as drops, impacts, and scratches. It also prevents foreign materials from entering the mobile phone body. b. Physical framework and support: The housing module provides a physical framework of the mobile phone. c. Functionality: Il houses various external components such as buttons, haptics module, speaker, dock flex, pressure sensor, microphone, sim card module, etc. d. Aesthetic Appeal: The housing module contributes to the overall look and feel of the phone. 5.1 In the present case, the housing module for which the Applicant is seeking the advance ruling are composed of aluminium or aluminium and titanium alloy wherein aluminium forms the base metal. The housing module which is being exported by the Applicant is a metallic framework which has been specifically designed and shaped for use in mobile phones. The product has specific cuts and grooves to accommodate and house other componen....
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....n 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 5.4 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 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.). 5.5 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 para....
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....s a product which is tailor made for use in the mobile phone. The housing module is not classifiable under any specific heading at four-digit level- The housing module is more specifically covered under CTH 8517 5.9 It is submitted that since the housing module is essentially made up of aluminium, reference may also be made to Chapter 76 which covers Aluminium and its articles, viz. CTH 7606 which covers "Aluminium plates, sheets and strip, of a thickness exceeding 0.2 mm". Chapter Note 9 (d) to Chapter 76, provides the meaning of the term "Plates, sheets, strip and foil" as follows, "9. For the purposes of Chapters 74 to 76 and 78 to 81, the following expressions shall have the meanings hereby assigned to them: ......... (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 corners (including "modified rectangles" of which two 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) sha....
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.... DELHI], wherein the 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 aforementioned 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. 5.13 Here it is pertinent to mention that the entry CTH 3920 is analogous to CTH 7606 to the extent that this entry covers plates, sheets and strips of plastic which have been cut to shape and surface worked such as polishing, coating etc. but have not been subject to further working upon. Similarly, CTH 7606 covers plates, sheets and strips of aluminium which have been worked upon such as perforated, corrugated, polished or coated, provided that they do not thereby assume the character of articles classi....
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....component of the whole without which the whole cannot function". 5.18 A similar ruling has been made in the case of Electrosteel Castings Vs. CCE, [1989 (43) E.L.T. 305 (Tribunal)] which has been maintained by the Hon'ble Supreme Court in [1996 (83) ELT A48 (Supreme Court)]. 5.19 In the present case, the product under consideration is a housing module which forms the physical framework of the mobile phone. The housing module provides protection of the internal components of the phone from physical damage, such as drops, impacts, and scratches. Further, without the housing module, the other integral parts of the mobile phone will be susceptible to damage from dust, abrasion, water etc. additionally, the housing module also contributes to the overall look and feel of the phone. 5.20 In view of the above facts, the housing module of the mobile phone appears to be an essential component of the mobile phone which allows a proper ecosystem for all other components of the mobile phone to function in an efficient manner along with providing a structural framework to the mobile phone. Considering that the housing module is essential for a mobile phone to function effectively, the h....
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.... iii. Lastly, all the other parts which are not covered in Section Note 2 (a) and Section Note 2 (b) above, 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 sequential application of the rules provided in Section Note 2 in the present case, the Applicant submits that since there is no specific entry at four-dash level, under Chapter 84 or Chapter 85 which specifically cover housing modules, the housing 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. 5.24 In the present case, the housing module exported by the Applicant has been specifically cut, designed and 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 housing module fulfills the condition of sole and principal test as enunciated in Section Note 2 (b). Accordingly, the housing module is covered under Section Note 2 (b) and is to be classified....