TaxTMI 
TaxTMI 
2026 (3) TMI 1382
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....plicant proposed to import of Side Key FPCB and requested for rulings for classification of the goods in question Whether "Side Key FPCB" (hereinafter referred to as 'subject product') is classifiable under Customs Tariff Item ('CTI') 8517.79.10 of the First Schedule to the Customs Tariff Act, 1975 (hereinafter referred to as the 'Tariff Act')? The applicant in their application submitted as under : 1.1 Samsung India Electronics Pvt. Ltd. (hereinafter referred to as the "Applicant") is a private limited company inter-alia, engaged in the manufacture, import, marketing and sale of various electronic and electrical appliances such as smartphones, tablets, televisions, digital appliances - air conditioners, refrigerators, microwaves and medical equipment, etc. 1.2 One of the various product categories dealt with by the Applicant are 'Smartphones', which are both imported and locally manufactured by the Applicant for sale in India. The parts and components which are used in the domestic manufacturing of Smartphones are also sourced domestically and imported. One such component imported by the Applicant is the Side Key FPCB (Flexible Printed C....
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....nsulating substrate. FPCB allows for complex circuitry to be incorporated along with ease being shaped into the desired shape for its use. In the instant case, it carries the electrical signal given by the user through external buttons of the smartphone. Additionally, FPCB has capacitor and inductor which are mounted on FPCB at a later stage. The capacitor and inductor help to regulate volage and electrical currents during its functioning. Basically it acts as the base structure which provides electrical pathways for signals from side keys to the mainboard. II. TACT SWITCH: The subject product comprises of three Tact switches which are mounted on the FPCB. Each switch contains a plunger, a contact dome (often metallic), and base contacts. Pressing the plunger collapses the dome, closes the circuit, and causes a 'click' (tactile/audible feedback to the user). When the switch is pushed, a temporary bridge is created between the stationary contacts on the FPCB, closing the circuit and registering an input. These switches are small, mechanical devices that complete an electrical circuit when depressed and return to their original position when released. They are common....
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....CB and provides an interface for electrical connection and signal transfer. 1.9 The manufacturing process of the subject product is divided into two phases. A brief of the manufacturing process of the subject product is provided hereunder: a. Surface Mounted Device Production Process: 1. Input Raw Material: Verification of item code and quantity. 2. Inspection : Microscopic inspection (15x) of raw materials. 3. Storage: Materials moved to warehouse after verification. 4. PCB Baking: 140°℃ for 60 minutes to remove moisture. 5. Solder Paste Preparation: Stirred at 1100 rpm for 30 seconds after 2 hours at room temperature. 6. FPCB Supply: Manual placement on carrier and conveyor. 7. Screen Printing : Solder paste applied using metal mask and cream shoulder. 8. Chip Mounting Process: At the next stage a mounting machine places electronic and non-electrical components such as chip, ant clip, tact switch, capacitor and inductor on FPCB, where already prepared solder cream exists. 9. Reflow Heating: Heating to 235-245℃; oxygen control (1000-3000 ppm). 10. Automated Optical....
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....he subject product. d. Page 2 of the PAIS corroborates the part list used for the manufacture of the subject product. e. Page 5 and 6 of the PAIS elaborates on the entire manufacture process of the Subject product. 1.11 The engineering drawing and the dimension of the subject product is provided hereunder for a ready reference and better understanding of the product: Image's not showing in Original PDF a. The subject goods are a printed circuit board wherein electronic components such as Surface- mounted components like resistors etc., and Ant Clip are mounted on it. In addition to this, passive elements like capacitor and inductor are also present. The SMD switch is used to provide tactile feedback when pressed and Ant Clip is used in proper receiving of signals. b. The subject product integrates tactile switches, rubber domes, and conductive elements to detect and transmit user input from side buttons like power button and volume button. When a user presses a button, the rubber dome compresses and applies force to the tactile switch, which momentarily closes an electrical circuit, sending a signal to the mainboard. The FPCB provides the s....
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....he Customs Act defines 'advance ruling' as: (b) "advance ruling" means a written decision on any of the questions referred to in section 28H raised by the applicant in his application in respect of any goods prior to its importation or exportation; (v) The questions on which an application for an advance ruling can be made have been provided under Section 28H of the Customs Act. As per the said Section 28H (2) of the Customs Act, an applicant may make an application for advance ruling in respect of questions relating to: (a) Classification of goods under the Customs Tariff Act, 1975; (b) applicability of a notification issued under sub-section (1) of section 25, having a bearing on the rate of duty; (c) the principles to be adopted for the purposes of determination of value of the goods under the provisions of this Act. (d) applicability of notifications issued in respect of tax or duties under this Act or the Customs Tariff Act, 1975 (51 of 1975) or any tax or duty chargeable under any other law for the time being in force in the same manner as duty of customs leviable under this Act or the Customs Tariff Act;] (e) d....
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....of customs, the Appellate Tribunal, or any Court; (b) the question raised in the present application regarding the classification of the subject product is not a matter already decided by the Appellate Tribunal or any Court. 1.17 Therefore, it flows that in the present case, the Applicant satisfies all the criteria required for the filing of the application for advance ruling, namely: (a) The Applicant has been granted a valid Importer-Exporter Code Number (IEC) under section 7 of the Foreign Trade (Development and Regulation) Act, 1992; (b) The Applicant is filing the Application in respect of subject product prior to its importation into India; (c) The application for advance ruling is in relation to clause (a) of Section 28H (2) of the Customs Act, 1962; and (d) The application is not barred under Section 28I of the Customs Act, 1962. 1.18 Thus, the present application must be allowed to be proceeded with. CLASSIFICATION OF THE SUBJECT PRODUCT UNDER THE FIRST SCHEDULE TO THE CUSTOMS TARIFF ACT, 1975 1.19 The import and export of goods to and from India are governed by the provisions of the Customs Act. Section 12 of the Cu....
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.... significant to note that the Tariff Act is based on the Harmonised Commodity Description and Coding System (hereinafter referred to as 'HSN') published by the World customs Organisation and Explanatory notes to HSN have long been recognised by the courts as a safe guide to interpret the Customs Tariff. Reliance in this regard is being placed on the following judicial decisions: * CCE vs. Wood Craft Products Ltd., (1995) 77 E.L.T. 23 * CC vs. Business Forms, 2002 (142) E.L.T. 18 (S.C. 3-member bench); * O.K. Play (India) vs. CCE, AIR 2005 SC 1023, (2005) 180 E.L.T. 300; * CC vs. Gujarat Perstorp Electronics Ltd., (2005) 7 SCC 118. 1.23 Furthermore, it is equally settled principle of law that classification of the goods mentioned in the Tariff Act is governed by the General Rules for Interpretation (hereinafter referred to as 'GRI'). The GRIs have been adopted from the General Rules for the Interpretation of the Harmonized System. 1.24 As per Rule 1 of GRI, the subject product under consideration should be classified in accordance with the terms of the heading or relevant Section or Chapter Notes. Therefore, the Section Notes....
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.... the scope of the expression "parts" and prescribed a set of twin conditions. The said conditions, if satisfied, would merit the classification of the goods under consideration as "parts". The relevant para of the said case law is extracted hereunder for ready reference: 22. It, therefore, transpires that the true test for determining whether an item is classifiable as parts/components is as follows: (i) Whether the item has a separate identifiable/individual function of its own, when compared to the main machine; and (ii) Whether the item is capable of operating independently of the main-machine on its own. 23. If the answer to both the aforesaid questions is in the negative, the item would be classifiable as parts and in that case the item will not be classifiable as an apparatus falling under its own appropriate heading. 1.29 The above extracted portion provides two tests to classify an article as a 'part', namely: i. Whether the item has a separate identifiable/individual function of its own? ii. Whether the item is capable of operating independently? 1.30 It is submitted that the subject product does not have ....
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....ng 8524 are to be classified in heading 8529. 1.34 The subject product is a sub-assembly of different components of mobile phone that gets incorporated into the side of frame of smartphone. The subject product is used in receiving the mechanical commands given by the user through the keys present on the body of smartphone. The subject product is placed in the smartphone sub assembly in such a way that the act of pressing the keys by the user is detected by the tactical keys present on subject product. It is not specifically mentioned by name or by function in any of the Tariff Headings of Chapter 84 or 85 of the first schedule to the Tariff Act. Hence, Section Note 2(a) to Section XVI is not applicable in the present case and shall be classified in accordance with Section Note 2(b) to Section XVI which deals with 'other parts'. 1.35 Section Note 2(b) prescribes that parts of machines other than those which are covered under the scope of Section Note 2(a) to Section XVI shall be classified with the machines they form a part of, if the said parts are for use solely or principally with that machine. In the present case, the subject products are specifically designed for ....
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....d with specific models. Additionally, the authority applied the twin test as determined in Vodafone decision supra in determining the classification of the products as 'Parts' and are to be classified in accordance with the Section Note 2(b). 1.38 Thus, the instant case being similar in nature as the subject product is solely and principally designed to be incorporated in mobile phones the above-mentioned rulings are applicable in the present case while determining the appropriate classification of the subject product. Copies of these Advance rulings are being collectively enclosed with application. 1.39 As already discussed above, it is evident that the subject product is a FPCB populated with both electrical and non-electrical components. These components are surface-mounted onto a pre- fabricated PPCB, Torming a functional sub-assembly. This is clearly referenced in Step 4 of the manufacturing process, where the rubber domes are manually attached to the FPCB, indicating the integration of mechanical components. Furthermore, the PAIS explicitly mentions the presence of Surface Mounted Devices (SMDs), confirming that the product, in its imported form, qualifies as a ....
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.... Question 2: If the subject product is not classifiable under the CTI mentioned above, what would be the correct classification of the subject product under the first schedule to the Tariff Act? 2.2 Comment: (i) Subject product The Item "Side Key FPCB" (hereinafter called as subject product) as per the submissions given by the applicant, in its "as in imported condition" is a sub-assembly of a smartphone which is incorporated in smartphones during their manufacturing process. An image of the subject product is also as in its "imported condition" is extracted in their application for ready reference. (ii) Functionality of the subject product The subject product is a printed circuit board encased in a steel bracket that act as internal portions of the side buttons (like power, volume up/down) of the smartphones The subject product also connects these buttons to the smartphone's mainboard. It includes tactile switches that detect physical presses and convert them into electrical signals. (iii) Use of the subject product The subject product is used in receiving the mechanical commands given by the user through the keys present on the body of smartphone. T....
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....ircuit board. Ant clip also serves as to receive signals such as Wi-Fi, Cellular, Bluetooth, etc. The ANT CLIP may be used to connect the side key module to the phone's antenna system. It helps in grounding or shielding the circuit to reduce electromagnetic interference. D. CONDUCTOR: A conductor is a material that allows electric current to flow easily through it due to the presence of free electrons, the Side Key-FPCB, conductors form the electrical pathways that connect switches and components to the mainboard. E. INDUCTOR: An inductor is a passive electronic component that stores energy in a magnetic field when electric current flows through-it. In smartphones, inductors help in signal conditioning, noise filtering, and power regulation. F. CREAM SOLDER: It is used to solder the electrical components unto the desired place on the FPCB. G. RUBBER - Rubber is placed over the tact switch which functions as a protective layer and provide an insulating capsule to separate the electrical current from the smartphone's circuity and sus-bracket. Additionally, it prevents wear and tear of the mechanical and electrical components of the smartpho....
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.... are GH59- 15760A. At the time of import, the applicant describes the goods as "Side Key-FPCB for smartphones & incorporates specific SKU number corresponding to the mobile phone model. So, the subject product is designed solely for use in Smartphones to act as a connector between the various assemblies/sub- assemblies/PCB in a smartphone. 2.4 Analysis/Findings: (i) The subject product is manufactured corresponding to mobile phone model wise with specific SKU number by M/s. Korea Temple Co. Ltd. and same is designed to be solely and principally used with mobile phones and are integral part of the mobile phones. SEC code for the subject product is GH59- 15760A. (ii) Further, without the subject product, the phone cannot function effectively. (iii) Moreover, the applicant manufactures smartphones of various specifications, it imports different varieties of the subject product. The variations are minor in nature to account for the different size and form factors of the smartphones. The manner of manufacture and the components used are identical. At the time of import the applicant describes the goods as "Side Key-FPCB for smartphones (specific SKU number ....
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....0 00 (Printed Circuits). "printed circuits" are circuits obtained by forming on an insulating base, by any printing process (for example, embossing, plating-up, etching) or by the "film circuit" technique, conductor elements, contacts or other printed components (for example, inductances, resistors, capacitors) alone or interconnected according to a pre-established pattern, other than elements which can produce, rectify, modulate or amplify an electrical signal (for example, semi-conductor elements). The expression "printed circuits" does not cover circuits combined with elements other than those obtained during the printing process, nor does it cover individual, discreet resistors, capacitors or inductances. Printed circuits may, however, be fitted with non-printed connecting elements. Thin- or thick-film circuits comprising passive and active elements obtained during the same technological process are to be classified in heading 8542. (viii) Moreover, CTH 8517: TELEPHONE SETS, INCLUDING TELEPHONES FOR CELLULAR NETWORKS OR FOR OTHER WIRELESS NETWORKS OTHER APPARATUS FOR THE TRANSMISSION OR RECEPTION OF VICE, IMAGES OR OTHER DATA, INCLUD....
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....e during the personal hearing by the applicant, I proceed to decide the present application regarding classification of 'Side key FPCB ' (hereafter referred to as the 'Subject Product') on the basis of the information on record as well as the existing legal framework having bearing on the classification of the subject goods under the first schedule of the Customs Tariff Act, 1975. Product description: 4.2 On perusal of the instant application for advance ruling, I observe that the applicant has given detailed submissions regarding features and functioning of the goods in question and has inter-alia stated that the subject product is a printed circuit board encased in a steel bracket that act as internal portions of the side buttons (like power, volume up/down) of the smartphones. The subject product also connects these buttons to the smartphone's mainboard. It includes tactile switches that detect physical presses and convert them into electrical signals. The subject product is used in receiving the mechanical commands given by the user through the keys present on the body of smartphone. The subject product is placed in the smartphone sub assembly in such ....
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....es, 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." 4.5 Further, GRI 3(a) of the Harmonized System of Nomenclature provides that when goods are, prima facie, classifiable under two or more headings, classification shall be determined by the heading that offers the most specific description. Rule 3(a) of GRI is as under: "Rule 3: When by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be affected as follows: a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods." 4.6 Rule 1 of the GRI man....
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....be a fully functional mobile phone. Thus, the subject product is in the nature of a part of mobile phone. 4.8 Further, I observe that the classification of the subject-product is determined by GRI I read with Section Note 2(b) to Section XVI, which is reproduced below: "2.- Subject to Note I to this Section, Note 1 to Chapter 84 and Note 1 to Chapter 85, parts of machines (not being parts of the articles of heading 84.84, 85.44, 85.45, 85.46 or 85.47) 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 84.09, 84.31, 84.48, 84.66, 84.73, 84.87, 85.03, 85.22, 85.29, 85.38 and 85.48) 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 8....
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....loaded or stuffed printed circuit board". 4.11 I further observe that the subject goods are a printed circuit board wherein electronic components such as Surface-mounted components like resistors etc., and Ant Clip are mounted on it. In addition to this, passive elements like capacitor and inductor are also present. Therefore, the apt classification for the subject product is 85177910. 4.12 Further, the Chapter Notes of heading 8534 00 00 (Printed Circuits) are reproduced as below: "printed circuits" are circuits obtained by forming on an insulating base, by any printing process (for example, embossing, plating-up, etching) or by the "film circuit" technique, conductor elements, contacts or other printed components (for example, inductances, resistors, capacitors) alone or interconnected according to a pre-established pattern, other than elements which can produce, rectify, modulate or amplify an electrical signal (for example, semi-conductor elements). The expression "printed circuits" does not cover circuits combined with elements other than those obtained during the printing process, nor does it cover individual, discreet resistors, capacitors or inductan....