TaxTMI 
TaxTMI 
TaxTMI 
2024 (8) TMI 1685
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....d for Customs clearance under a single Bill of Entry, whether all such SKD parts can be classified as 'Air Conditioner' under 8415 1010 or 8415 8310 or 8415 8390 or under other headings? (2) If Indoor Units (IDUs) or Outdoor Units (ODUs) are imported separately in SKD form or in unfurnished or incomplete form under different invoices and presented separately for Customs clearance under separate Bills of Entry, whether the same can be classified under CTH 8415 9000 as parts of Air Conditioner? 2. Applicant has submitted as follows: 2.1 The FGI is engaged in the import and trading of different kinds of Air Conditioners (hereinafter referred to as "AC") and its parts & accessories. At present, the Air conditioning (AC) machines, viz Window air conditioners, Room Air Conditioners (RAC)-Non-ductable type, Ductable type, Cassette type Air conditioners and VRF model air-conditioners are being imported from our overseas group companies /Overseas vendors especially from Thailand, China and also from Japan for selling to customers in India. The window type air conditioners of all tonnages are classified under CTSH- 84151090. The HSN classification currently adopted by ....
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....ts of AC 8415 9000 15 Cartons 4819 1010 2.2 FGI is availing FTA benefits under the Indo-Thailand (ITFTA) & Indo-ASEAN (AIFTA) in the form of basic customs duty exemptions (BCD) granted under Notification 46/2011-Cus dated 01.06.2011, as amended (or) under Notification 84/2004-Cus dated 31.08.2004, as amended, as the case may be. In tune with the 'make in India' concept, FGI and their affiliated companies now propose to import split system air-conditioners viz outdoor units (ODUs) and Indoor unit (IDUs) in SKD form from Thailand and China and take up the manufacturing /assembling of ACs in India. In this process, FGI wishes to import air conditioners as SKD Parts in full set and complete the assembly process of the air conditioners (Finished Goods) through a job worker located in India. The job worker unit is skilled to assemble the Window, RAC, Ductable, Cassettes & VRF Air-conditioners. The job worker will assemble and supply the fully assembled air conditioners back to FGI for onward sale to dealers/customers. The SKD parts of split system of air conditioners proposed to be imported are: (a) SKD of Indoor Unit-IDU [in unassembled/disassembled form]....
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....r 'unfinished', and goods, which are presented 'unassembled' or 'disassembled', which are extracted as under: "Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented; the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled" The Section or Chapter notes or Chapter sub-notes give a detailed explanation as to the scope and ambit of the respective sections and chapters. The Section Notes to Section XVI include the following notes, which are critical for the classification of the subject goods: Note 1(g): this Section does not cover parts of general use, as defined in Note 2 to Section XV [of base metal] or similar goods of plastic covered under Chapter 39 of the Customs Tariff. Note 2(a): parts, which are goods, included in any of the headings of Chapter 84 or 85 (other than headings 8409, 8431, 8448....
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.... - Other : 8415 81 -- Incorporating a refrigerating unit and a valve for reversal of the cooling or heat cycle (reversible heat pumps): 8415 81 10 --- Split air-conditioner two tonnes and above u 20% - 8415 81 90 --- Other u 20% - 8415 82 -- Other, incorporating a refrigerating unit: 8415 82 10 --- Split air-conditioner two tonnes and above u 20% - 8415 82 90 --- Other u 20% - 8415 83 -- Not incorporating a refrigerating unit : 8415 83 10 --- Split air-conditioner two tonnes and above u 20% - 8415 83 90 --- Other u 20% - 8415 90 00 - Parts kg. 20% - 2.4 The General Explanatory Notes to the GRI further provide that: "The description of an article or group of articles under a heading is preceded by "-", the said article or group of articles shall be taken to be a sub-classification of the article or group of articles covered by the said heading. Where, however, the description of....
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....eated as complete cars. However, if the parts missing are essential, the CKD pack cannot constitute a complete article. The Tribunal in the case of Wipro Ge Medical vs. CC, - 2006 (202) E.L.T. 141 (Tri.) held that the CKD pack does not constitute a complete scanning machine because it did not contain parts like probes, monitor and keyboard assemblies. Simply the essential parts do not make a complete article. A CKD pack containing all the parts to make a car will be classified as a car for basic customs duty under the Schedule as held by Hon'ble supreme court in the case of CC vs. Maestro Motors Ltd. 2004(174) ELT289 (SC). The Advance Ruling authority, New Delhi in the recent case of Mitsubishi Electric India Ltd, vide its ruling dated 30.08.2022 had dealt with similar issue of importation of SKD/CKD parts of air conditioners and ruled its classification under the heading relevant to the air conditioners as claimed by the applicant. 2.6 The applicant can thus import all the parts of Air conditioners and utilize them in the assembly process of a finished Air conditioners in India. Therefore, the air conditioners proposed to be imported in SKD form will be classifiable under C....
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....ristics of the finished goods of heading 84.11 whereas the department assessed it under CTH 73.06/07. After elaborate discussions, the hon'ble bench had held that the goods had attained the essential characteristics of a machinery and therefore need to be classified under CTH 84.11. The Hon'ble Supreme Court in the case of COMMISSIONER OF CUSTOMS, NEW DELHI vs SONY INDIA LTD 2008(231) E.L.T.385(SC), had also held that Rule 2(a) of Rules for interpretation of Tariff applicable only if all components intended to make final product presented at same time for customs clearance- the Rule 2(a) applicable when imported goods presented unassembled or dis assembled can be put together by means of simple fixing device or by riveting or welding etc., therefore, the ODU, imported and presented in unassembled or dis assembled SKD form for customs clearance and assembled as ODU by using simple process of welding, wiring, bolting/nutting, will be rightly classifiable under CTSH 8415 9000 as unassembled or disassembled ODU- which is parts of the air-conditioner, by virtue of rule 2(a) of GRI, read with HSN explanatory notes. 3. Chennai Customs Commissionerate has responded to the subjec....
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....nded that the SKD parts of the air-conditioners proposed to be imported under one invoice and to be cleared under one Bill of entry will be appropriately classified under Tariff heading 8415 more particularly under 8415 1010 or 8415 8310 or 8415 8390 as applicable. They further submitted that the department has also concurred the view expressed by them that the SKD part of IDU/ODU fall under 8415 90 as part of air-conditioner. Thery relied upon a number of case laws referred in the written application and submitted that the CAAR, Delhi in a ruling passed in the matter of Mitsubishi Electric India Ltd, 2023 (383) E.L.T. 224 (AAR- CUS), Delhi has taken the same view. Initially, the applicant asked three questions in the instant advance ruling application, however, during the personal hearing, they submitted that they would like to restrict their application for advance rulings only on the first two questions (reproduced supra in para 1). Nobody appeared for personal hearing from department side either in person or online. 5. I have taken into consideration all the materials placed on record in respect of the subject goods. I have gone through the response receive....
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....ir Conditioner either completely or incompletely, however, having the essential characteristics of Air Conditioner, in terms of Rule 2(a) of GRI, then the said parts could be classified under the heading appropriate to classify the finished Air Conditioner. At the same time, it is also observed that if any essential part/parts of the Air Conditioner, which renders the essential character to an Air Conditioner, are not presented in the said imported parts of Air Conditioner, then the said imported parts altogether, shall not be considered a finished Air Conditioner, and the same cannot be classified under the heading of the finished Air Conditioner. Further, the HSN proposed by the applicant to classify the parts of the Air Conditioners are 8415 1010 or 8415 8310 or 8415 8390, in this regard, it is observed that all the said imported parts can be classified under the CTIs as proposed by the applicant, if such parts altogether have the character of the Air Conditioners of such headings. The field formation, however, may verify that such imported parts altogether constitute an entire Air Conditioner either completely or incompletely, have attained the essential characteristics of Air ....