In re Sanmina SCI India Private Ltd. (CAAR Mumbai)
The Customs Authority for Advance Rulings, Mumbai examined an application seeking clarity on the classification and customs duty exemption applicable to various AC-DC power modules and DC-DC converter power modules imported for use in telecommunication equipment. The application concerned multiple models of power modules used in the manufacture of Wi-Fi receivers, Wi-Fi transmitters, data-centre switches, uplink cards, and other telecommunication devices. The applicant sought confirmation of the correct tariff classification under the Customs Tariff Act, 1975, and the applicability of a nil rate of Basic Customs Duty under Serial No. 4 of Notification No. 25/2005-Customs.
The Authority noted that the issue raised was squarely covered under Section 28-I(2) of the Customs Act, 1962, as it related to classification of goods. It examined the technical characteristics and functioning of the imported AC-DC power modules and DC-DC converter power modules. Based on the detailed specifications, the Authority found that AC-DC power modules convert alternating current into direct current, while DC-DC converters convert direct current from one voltage level to another. These products perform voltage conversion, regulation, filtering, and protection functions and incorporate components such as transformers, inductors, capacitors, resistors, and switching elements.
Relying on the Customs Tariff, General Rules for Interpretation, Section and Chapter Notes, and the World Customs Organization Harmonized System Explanatory Notes, the Authority held that such products fall within heading 8504, which covers “Electrical transformers, static converters and inductors.” It observed that DC-DC converters are specifically covered under the category of “static converters,” and that the inclusion of auxiliary components does not alter their essential character as static converters. Since the relevant sub-headings under 8504 40 did not specifically enumerate DC-DC converters, the Authority concluded that the goods were correctly classifiable under tariff item 8504 40 90 as “Other static converters.”
The Authority further examined the claim for exemption under Serial No. 4 of Notification No. 25/2005-Customs, which grants a nil rate of Basic Customs Duty to static converters for automatic data processing machines and units thereof, and for telecommunication apparatus, other than static converters for cellular mobile phones. It noted that the imported power modules were intended for integration into printed circuit board assemblies used in telecommunication equipment such as Wi-Fi transmitters, receivers, and data-centre switches. On this basis, it held that the end-use condition for telecommunication apparatus was satisfied.
The Authority observed that no contrary comments were received from the jurisdictional customs authorities and that the technical nature and end-use of the products were clearly established. It therefore ruled that the imported AC-DC power modules and DC-DC converter power modules are classifiable under tariff item 8504 40 90 as “Other static converters” and are eligible for nil rate of Basic Customs Duty under Serial No. 4 of Notification No. 25/2005-Customs, as they are used for telecommunication apparatus and are not meant for cellular mobile phones. The advance ruling was issued accordingly, to remain valid subject to the provisions of the Customs Act.
