In re ATL Battery Technology (India) Private Limited (CAAR Delhi)
The Authority examined the application for advance ruling relating to the classification of four items proposed to be imported for use in the manufacture of lithium-ion cells. After reviewing the submissions of the applicant, comments of the jurisdictional Customs authorities, the personal hearing, and relevant tariff provisions, the Authority proceeded to classify each product strictly based on the information presented.
The applicant described four proposed imports: (i) cathode-coated foils consisting of aluminium current-collector foils coated with an active cathode material, supplied in slit or rolled form and used directly in lithium-ion cells; (ii) anode-coated foils consisting of copper current-collector foils coated with graphite or other carbon-based active material, also imported in rolled form and slit before integration into cells; (iii) separators, which are microporous polymeric films (PP/PE/tri-layer) placed between the anode and cathode to prevent short-circuiting while allowing ion conduction; and (iv) LC breakers, described as electrical protective devices capable of interrupting current under over-current or abnormal thermal conditions, used as part of safety circuitry for lithium-ion cells.
The applicant submitted that the imported items are purpose-built parts directly incorporated into lithium-ion cell manufacturing. The Authority considered the relevant headings 8507, 8536 and 8545 of the First Schedule of the Customs Tariff Act, 1975, and examined Section Note 2 to Section XVI, which lays down the hierarchy for classification of parts of machines. Under Note 2(a), parts that are classifiable under a specific tariff heading within Chapters 84 or 85 must be classified in that heading. If not covered by such a heading, Note 2(b) requires that parts suitable for use solely or principally with a particular machine be classified along with that machine. Only when neither clause applies does Note 2(c) direct classification under residual parts headings.
For the cathode-coated foil, the Authority noted that the product is engineered to precise specifications and functions as a cathode during the charging and discharging cycle of a lithium-ion cell. As there is no specific heading for such coated electrode films, Note 2(a) does not apply. Since the product is suitable solely for use with lithium-ion accumulators, Note 2(b) applies, making Heading 8507 the correct classification. As it is not covered under any specific sub-heading, it falls under tariff item 8507 90 90.
For the anode-coated foil, the applicant proposed classification under 8545, arguing that the product is predominantly graphite and resembles articles of carbon used for electrical purposes. However, the Authority observed that Heading 8545 covers generic carbon articles such as furnace electrodes, carbon brushes, lamp carbons, and battery carbons, and not specialised copper foils coated with anode-active material engineered exclusively for lithium-ion cells. Since the product is designed solely for use as an anode in accumulators, Note 2(b) directs classification under Heading 8507. The correct classification is therefore 8507 90 90.
For the separator film, the Authority noted that the product is a microporous membrane imported in roll form and slit to size before use. The applicant demonstrated that the film is essential to cell functioning, preventing direct contact between the electrodes while allowing ion movement. Since separators are specifically recognised under Heading 8507, and Note 2(b) applies, the product falls under sub-heading 8507 90 10. The Authority held that the sub-heading covers separators generally and is not restricted to any particular material.
For the LC breaker, the Authority found that the device is an electrical apparatus designed to interrupt current under abnormal conditions. It is not an integral electrochemical component of an accumulator and therefore does not fall under Heading 8507. Instead, Heading 8536 covers electrical apparatus for switching or protecting electrical circuits up to 1,000 volts. Relying on the tariff description and HSN explanatory notes, the Authority held that the LC breaker is classifiable under 8536 30 00.
The Authority then examined the applicability of exemption under Serial No. 314 of Notification No. 45/2025-Customs dated 24.10.2025, which supersedes the earlier exemption under Serial No. 523A of Notification No. 50/2017-Cus. The new entry grants a Basic Customs Duty rate of NIL for “parts, sub-parts, inputs or raw materials for use in the manufacture of lithium-ion cells” of tariff item 8507 60 00, subject to compliance with the Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022 (IGCR Rules). The benefit is chapter-neutral and carries a sunset clause ending on 31 March 2026.
Based on the functional role of the four items—three being electrochemical components and the fourth being a protective device integrated into cell production—the Authority held that all four products qualify for the exemption, subject to compliance with the IGCR Rules and verification of end-use in the manufacture of lithium-ion cells.
The Authority ruled: (a) cathode-coated foils are classifiable under 8507 90 90; (b) anode-coated foils under 8507 90 90; (c) separators under 8507 90 10; (d) LC breakers under 8536 30 00; and (e) all four items are eligible for the exemption under Serial No. 314 of Notification No. 45/2025-Customs, subject to conditions, with the benefit expiring on 31 March 2026.
FULL TEXT OF THE ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, DELHI
