Anti Dumping Duty not imposable on import of ‘Laser Source’: CAAR

In re Aditya Automation (CAAR Mumbai)

In a recent ruling by the Customs Authority for Advance Rulings (CAAR), Mumbai, M/s Aditya Automation sought clarity on whether Notification No. 15/2023-Customs (ADD) dated December 22, 2023, applies to the import of laser sources.

CAAR held that ADD Notification No 15/2023 (ADD) dated 22.12.2023, I find that ADD is applicable on the Import of Industrial Laser Machines, in fully assembled, SKD or CKD form, used for cutting, marking, or welding operations. I find that the Notification is clearly mentioning that the goods has to be fully assembled. “Assembled”, “SKD”, or “CKD” words here itself indicate that the subject goods i.e. “Industrial Laser Cutting Machine” consists of different components. The final finding in the recommendation dated 27.09.2023 of the DGTR on the ADD Notification Para C.3 also indicates the same. It reads as: “Laser cutting, welding or marking machine are essential machines which has laser source as the base product and these sources can be controlled and the laser cutting, welding or marking machines can be produced in many sizes. On going through the literature available in open sources it is gathered that a laser cutting, welding or marking machine may consist of several key components including laser source, laser head optics, focusing lens, controlled system, sensor and detector, nozzle, XY and Z axis, work table, exhaust system, safety enclosures, etc. These components work together to enable precise, high speed cutting, welding, engraving or marking on various materials as selected.

Hence, it can be seen that the laser cutting machine has different components and laser source is one of the components. The laser source may be the crucial one, but, it has to work in association with other components to achieve the desired outcomes. I find much force in the applicant’s contention the laser source is only a component and not a laser cutting device as a whole and that it does not operate on standalone basis. I further find that the subject goods which are proposed to be imported is neither in form of a fully assembled laser cutting machine nor in SKD form or CKD form. I am of the view that the Laser Cutting Machine and the Laser Source are not one and the same, for the purpose of ascertaining the applicability of the ADD Notification in terms of wordings used in the Notification No 15/2023 (ADD) dated 22.12.2023.

9. Therefore, in view of the above discussions, CAAR of the considered opinion that ADD as per Notification No 15/2023 (ADD) dated 22.12.2023 will not be imposable on the import of the subject goods i.e. ‘Laser Source’.

FULL TEXT OF THE ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, MUMBAI

M/s Aditya Automation (IEC No: ADEPN0912D) (Herein after will be referred to as `Applicant’) filed an application for advance ruling in the Office of Secretary, Customs Authority for Advance Ruling (CAAR) Mumbai on 11.03.2024. The applicant seeks as to whether the Notification No. 15/2023-Customs (ADD) Dated 22nd December 2023 is applicable for levy of Anti-Dumping duty on import of Laser Source or otherwise.

2. Submission by the Applicant:

2.1 M/s Aditya Automation are into the business of manufacturing of Laser Cutting Machines at their factory at A-36, MIDC Chakan Industrial Area, Phase I, Near Suzlon Company, Khed, Pune, Maharashtra, PIN-410501.

2.2 The applicant has applied for Advance Ruling so as to ascertain whether the Notification No. 15/2023-Customs (ADD) Dated 22nd December 2023 is applicable for levy of Anti-Dumping duty for the aforementioned Laser Sources. The is filing this application for seeking Advance Ruling under Section 28H of the Customs Act, 1962 in order to confirm the applicability of Anti- Dumping Duty declared by the government.

3. Applicants interpretation of Law/Facts:

3.1 The applicant submits that Laser Source shall not be covered under the Notification No. 15/2023-Customs (ADD) dated 22-12-23, we submit our clarification in this regard as follows:

1. The said notification is not applicable to Laser sources.

2. The said notification is not applicable to components/ parts of Laser cutting machines

Our justification that laser source are parts of laser cutting machines and cannot do the functions of Cutting, welding or marking on standalone basis.

3.2 Technical Details of the Goods: Laser source are required to be assembled in laser cutting machine Flow Chart attached for the function of laser source in the laser cutting machine as Annexure A.

3.3 Justification as to Laser Source cannot do the function of cutting, marking, welding etc. on standalone basis: Fiber Laser Source is a type of laser that uses optical fibers as the gain medium. It produces a laser beam (i.e. amplified light) and is commonly used in various applications like, laser cutting, marking, welding, etc. and cannot work as standalone.

3.4 Difference between Laser Source and Laser Machine:

Laser Source:

• The laser source is the fundamental component that generates the laser beam.
• It typically consists of a gain medium (such as a gas, liquid, or solid), an energy source to pump the gain medium, and optical components to form and amplify the laser beam.
• The laser source is responsible for producing coherent and focused light with specific characteristics, such as wavelength and power.

Laser Machine:

• A laser machine, on the other hand, refers to a system or device that utilizes a laser beam for various applications.
• Laser machines can serve different purposes, such as cutting, engraving, welding, marking, or even medical procedures.
• Laser machines consist of not only the laser source but also additional components like optics, control systems, motion systems (for positioning and movement), and sometimes cooling systems, depending on the application.

In summary, the laser source is the core component that generates the laser beam, while the laser machine is a broader term encompassing the entire system that uses the laser beam for specific tasks. The laser machine includes the laser source as well as other necessary components for its intended application.

3.5 As per the applicant the Laser Source is classified under CTI 84669310- Parts and accessories of machine tools, for working metals.

3.6 The applicant while giving the reference of DGTR Notification final finding dated 27.09.2023 in case no ADD (01)-07/2022, has summarily informed that:

1. Machine means which can perform a Task, the Laser Source on standalone basis cannot perform a Task.

2. Hence laser source are part of laser cutting machines, important indispensable part of laser cutting machine.

3. The notification No. 15/2023-ADD Dated: 22 Dec 2023, uses the word fully assembled Machine’, we do the assembly at our Factory at Pune, hence the Laser Source are not Fully assembled machined.

4. Whole Antidumping recommendation is per provisions contained in Rule 17(1)(b) read with Rule 4(d) of the Rules dated 27 Sept 2023 and Notification No. 15/2023-ADD Dated: 22 Dec 2023 and is referring to exclusively Fully assembled machine comprising of Bed, Laser Power, Laser Source, Laser Cutting Head, Number of Axles, or in SKD and CKD form.

We plead to refer Product under consideration (PUC) and Product Control Number PCN Methodology refer in Anti-dumping investigation F. No. 06/07/2022-DGTR, dated 27 Sept 2023 has been arrived exclusively on the basis of Fully Assembled Machine comprising of Bed, Laser Power, Laser Source, Laser Cutting Head, Number of Axles, or in SKD and CKD form.

5. We locally (within India) procure following goods Parts Components for Manufacture of assembly and manufacturer of Laser Cutting machine India or manufacture

1. Chiller,

2. Bed,

3. Gantry,

4. Motor,

5. Drive,

6. Rack

7. Pinion,

8. Rail and Block,

9. Electrical panel, Drag Chain,

10. Computer Set,

11. Lubrication Unit and many other items

We assemble the Laser source along with the aforementioned parts/components, during the process of manufacturing of Laser Cutting Machine; hence beyond doubt we have adduced that that Laser Source imported are not Fully Assembled Machine to cover under the Notification No. 15/2023 ADD-22 Dec 2023 for levy of anti- Dumping Duty.

3.7. The applicant is seeking Ruling from the Authority as under:

i. Whether the Notification No. 15/2023-Customs (ADD) dated 22nd December 2023 is applicable for levy of Anti-Dumping duty on Import of Laser Source. (Refer Annexure A for description of goods)

4. Port of Import and reply from jurisdictional Commissionerate:

4.1 The applicant in their CAAR-1 indicated that they intend to import the subject goods at the jurisdiction of Office of the Commissioner of Customs, Nhava Sheva-V, JNCH, Tal: Uran. The application was forwarded to the Office of the Commissioner of Customs, Nhava Sheva-V, JNCH, Tal: Uran for their comments on 13.03.2024 & 04.04.2024.

4.2 Jurisdictional Authorities vide their reply letter dated 18.04.2024 has stated that:

4. Ongoing through the submission and catalogue of the applicant, it is noticed that the applicant is intending to import fibre laser source, as per the catalogue and prior to the import, the applicant has submitted that their product doesn’t fall under the ambit of Notification No. 15/2023-Customs dtd. 22.12.2023 for levy of Anti-dumping duty on laser cutting machines.

5. Now, as the said ADD notification is based or the final findings and recommendations dtd 27th Sept 2023 of the DGTR hence the relevant paras of the said findings are appended as below:

Para C.3 of the said findings talks about the examination by the authority for product under consideration (PUC) under the said ADD:

8. Laser cutting, welding, or marking machines are essentially machines which have laser source as the base product and which performs the function of emitting laser required for cutting, welding, marking or any other operations. The laser source is so controlled (in respect of amount of laser density, i.e., brightness and exposure time) that it can perform the function of welding, cutting, marking or any other application. Further, the amount of laser light is controlled by use of different power of laser. The amount of light eventually is relevant to the amount of material that can be welded, marked, or cut. Depending on the object where cutting, marking, or welding operations are required to be performed, different kinds of laser sources are used. Different laser source merely differs in terms of the amount of laser light and the manner in which the laser light will be emitted by the source. Producers normally buy laser from producers who specialize in making lasers. Since the object can be of different kinds of material such as plastic, wood, glass, fabric or metal, the amount of light required to cut, weld or mark would differ. Accordingly, the machines are produced in many sizes to accommodate different size and type of objects. Further, the object may be of varying size. Depending on the size of the object, the product is supplied in different bed sizes. Further, the machine can perform in two ways either the machine will move on with the object, or the object will move along with the machine. Thus, different kinds of laser machines are nothing but one product which essentially perform the function of emitting laser light in a controlled manner. Further it emits light in such a manner that it can produce the desired result of cutting, welding or marking on different kinds and variety of objects. In view of the same, the Authority concludes that different kinds of laser machines constitute one article.

9. Mere fact that the machine may perform the function of welding, cutting, or marking does not render these as different products. These different end applications are merely an end result of the manner in which the laser light is emitted by the machine. Further, different types of machines merely differ in terms of amount of laser power generated or the bed type and size. These differences however do not render these products as different products.

6. It can be inferred from the above paras that laser cutting machine are those machines which have laser source as the base product and which performs the function of emitting laser required for cutting/welding/marking etc. The laser source itself is controlled in such a manner that it can perform the function of welding, cutting etc. The _different type of end applications are merely an end result of the manner in which laser light is emitted by the machine.

7. Accordingly it appears that the very basis of a laser cutting machine is the laser source itself and it performs the cutting/welding/marking etc. of the objects and the other equipment like cutting bead, power supply etc. are just an attachment to it and they cannot be treated as essential components of the laser cutting machine as claimed by the applicant. These components are designed to support & according to the functioning of the laser sources the end use i.e. whether the said laser source to be used for cutting of metal/non-metal objects.

8. Based on above discussions it could be concluded that the laser source has all the essential characters of laser cutting machine and anti-dumping duty levied vide the 15/2023-Customs dtd 22.12.2023 covers the subject item i.e. fibre laser source and the said anti-dumping duty will be applied when this item will be imported from the specific countries/suppliers as specified in the above said ADD notification. Also if the laser sources are exempted from the purview of the said ADD notification then the very purpose of issuing the said notification will be defeated.

9. In view of the above it appears that the intended goods viz. fibre laser source are covered under the ADD notification no. 15/2023-Customs dtd. 22.12.2023. However, the Hon’ble Customs Authority for Advance Rulings may decide the case on its merit.

5. The applicant vide their letter dated 19.06.2024 has submitted rebuttal on the comments dated 18.04.2024 where inter-alia they have replied that:

We humbly deny that Laser Source can be used on standalone basis for the Cutting, marking, or welding operations etc. Further the components are essential which are assembled in India along with Laser Source and hence essential integral part of the Laser Cutting Machine.

A) Functions of Components to adduce that the Components are essential, without these components Cutting functions cannot take place.

Below are the detailed description of each essential component used by us to assemble and manufacture Laser Cutting Machine

1. Chiller

• • Function: Maintains the temperature of the laser source and other critical components.
  • Importance: Prevents overheating, ensuring stable and efficient operation of the laser cutting machine.

2. Laser Power Source

• • Function: Generates the laser beam used for cutting.
  • Types: CO2 lasers, Fiber lasers, Nd
  • Importance: Provides the high-energy beam necessary for cutting materials with precision and speed.

3. Bed

• • Function: The base structure that supports the worktable and the entire machine.
  • Importance: Provides a stable and rigid foundation to ensure precision and accuracy during cutting operations.

4. Laser Cutting Head

• • Function: Focuses the laser beam on the material and directs assist gases.
  • Components: Focus lens, nozzle, height sensor.
  • Importance: Ensures precise focusing of the laser beam, which is critical for achieving high-quality cuts.

5. Gantry

Function: The moving bridge that holds the cutting head and moves it across the material.

Importance: Enables precise positioning of the laser cutting head, crucial for accurate cuts.

6. Motor

• • Function: Drives the movement of the gantry, cutting head, and worktable.
  • Importance: Provides the necessary power and control for smooth and accurate movements of the machine components.

7. Drive

• • Function: Converts the electrical signals from the CNC controller into mechanical movements.
  • Importance: Ensures accurate and controlled movements of the laser cutting, head and gantry.

8. Rack

• • Function: Works with the pinion to provide linear motion to the gantry and cutting
  • Importance: Essential for converting rotational motion from the motor into linear motion for precise positioning.

9. Pinion

• • Function: Engages with the rack to create linear motion.
  • Importance: Ensures smooth and precise movement of the gantry and cutting head.

10. Rail and Block

• • Function: Guide and support the linear motion of the gantry and cutting head.
  • Importance: Provides stability and accuracy in the movement of machine components.

11. Electrical Panel and Drag Chain

• • Electrical Panel Function: Houses all the electrical components and controls for the laser cutting machine.
  • Drag Chain Function: Protects and guides the cables and hoses attached to the moving parts of the machine.
  • Importance: Centralizes control and power distribution, while the drag chain prevents cable wear and tangling, ensuring reliable operation.

12. Computer Set

• • Function: Runs the CNC software that controls the laser cutting process.
  • Importance: Provides the interface for designing and managing cutting operations, ensuring precise execution.

13. Lubrication Unit

• • Function: Automatically lubricates moving parts to reduce friction and wear.
  • Importance: Ensures smooth operation and extends the lifespan of mechanical components.

14. Additional Items

• • Function and Importance: Various other components such as sensors, valves, and connectors are also procured to complete the assembly and to manufacturer the laser cutting machine. Each of these components is essential of a laser cutting machine. They work together to generate, focus, and control the laser beam, manage the cutting. Without integrating these components, we cannot produce laser cutting machines capable of meeting various industrial cutting requirements.

In Laser cutting machine, the laser source itself is the tool used to cut the material. However, the laser source alone does not constitute a complete cutting machine. The laser source must be integrated with other essential components, such as the focusing optics, gantry, motion control systems, assist gas systems, and CNC controllers, to function effectively as a cutting machine. Hence, the laser source by itself cannot perform cutting operations without these additional systems.

B). Summary of our submissions:

Cutting machines utilize various tools and technologies, such as band saws, rotary shears, plasma jets, oxy-fuel systems, and electrical discharges (sparks), to achieve precise and efficient material separation across multiple industries.

In the case of a laser cutting machine, the laser source itself is the tool used to cut the material. However, the laser source alone does not constitute a cutting machine. The laser source must be integrated with other essential components, such as the focusing optics, gantry, motion control systems, assist gas systems, and CNC controllers, to function as a cutting machine. Hence, the laser source by itself cannot perform cutting operations without these additional systems.

Therefore, without the integration/ assembly of the aforementioned components, the cutting function cannot be executed, and the Laser Source, in itself, cannot be classified as a Laser Cutting Machine.

6. Details of Personal Hearing:

6.1 A personal hearing was held on 04.07.2024 at 11:30 am. Jurisdictional officer joined the proceedings however due to non-availability of the applicant or their representative personal hearing could not be completed.

6.2 Another personal hearing was held on 11.07.2024 at 11:30 am. Sh. Shankar Patil, Ld. Advocate appeared on behalf of the applicant. He reiterated the contention mode in the application regarding non-applicability of Anti-Dumping duty on laser source i.e. the subject import goods. He submitted that the subject good is not a laser machine as such but component only. On being specifically asked to show the photograph of the subject good and the other components to be used to make a whole machine, he sought one week time, which is granted. Nobody appeared for PH on behalf of the department/jurisdictional office.

6.3 I have considered all the materials placed before me in respect of the subject goods. I have gone through the submissions made by the applicant during the personal hearing as well as the comments given by the jurisdictional authorities. Therefore, I proceed to pronounce a ruling on the basis of information available on record as well as existing legal framework. The issue before me is whether the Notification No. 15/2023-Customs (ADD) Dated 22nd December 2023 is applicable for levy of Anti-Dumping duty on import of Laser Source or otherwise.

6.4 I find that Laser Source is a type of laser that uses optical fibers as the gain medium. It produces a laser beam (i.e. amplified light) and is commonly used in various applications like, laser cutting, marking, welding, etc. The laser source is responsible for producing coherent and focused light with specific characteristics, such as wavelength and power. The laser source is the core component that generates the laser beam.

7.1 Before deciding on the issue, let me deliberate on the legal framework prescribed in Customs Tariff Act, 1975, Chapter/ Section notes along with HSN explanatory notes. I find that there are no general or specific tariff heading/entry under the first schedule to Customs Tariff Act 1975 which captures the exact description of ‘Laser Source’.

7.2 I find that the applicant has proposed that the subject goods can be classified under Tariff Entry 84669310. Relevant portion of CTH 8466 is reproduced below for ease of reference:

I find that in chapter 84, headings 8466 covers the Parts and accessories suitable for use solely or principally with the machines of headings 8456 to 8465 including work or tool holders, self-opening die heads, dividing heads and other special attachments for the machines; tool holders for any type of tool, for working in the hand. I find that CTSH 846693 covers parts and accessories for machines of headings 8456 to 8461.

7.3 Relevant portion of CTH 8456 is reproduced below for ease of reference:

I find that Laser Cutting Machine finds its classification under CTI 84561000 and therefore parts thereof will be covered under CTSH 846693.

7.4 I find that Central Government imposes ADD on the subject goods, the description of which is specified in column (3) of the Table , falling under tariff item of the First Schedule to the Customs Tariff Act as specified in the corresponding entry in column (2), originating in the country as specified in the corresponding entry in column (4), exported from the countries as specified in the corresponding entry in column (5), produced by the producers as specified in the corresponding entry in column (6), and imported into India, an antidumping duty calculated at the rate as specified in the corresponding entry in column (7) of the said Table, namely:—

It is amply clear from the above that ADD is imposable only on Industrial Laser Machines, in fully assembled, SKD or CKD form, used for cutting, marking, or welding operations. Now the issue before me is whether the Industrial laser machine and the Laser Source are the same or otherwise.

8.1 I find that the applicant has stated that the Laser Source i.e. the subject goods cannot be used on standalone basis for the Cutting, marking, or welding operations etc. Further the components are essential which are assembled in India along with Laser Source and hence essential integral part of the Laser Cutting Machine. The applicant has stated that the essential component used by them to assemble and manufacture Laser Cutting Machine are:

1. Chiller,

2. Bed,

3. Gantry,

4. Motor,

5. Drive,

6. Rack

7. Pinion,

8. Rail and Block,

9. Electrical panel, Drag Chain,

10. Computer Set,

11. Lubrication Unit and many other items

8.2 I find that the applicant has further stated that the laser source is the core component that generates the laser beam, while the laser machine is a broader term encompassing the entire system that uses the laser beam for specific tasks. The laser machine includes the laser source as well as other necessary components for its intended application. In Laser cutting machine, the laser source itself is the tool used to cut the material. However, the laser source alone does not constitute a complete cutting machine. The laser source must be integrated with other essential components, such as the focusing optics, gantry, motion control systems, assist gas systems, and CNC controllers, to function effectively as a cutting machine. Hence, the laser source by itself cannot perform cutting operations without these additional systems. The applicant has provided image of the Laser Cutting Machine as below:

Laser Machine Full View
Closed Machine

Image 1: Laser Cutting Machine

The applicant has also provided images of the subject goods i.e. Laser Source as below:

Image 2: Laser Source

The applicant has also submitted the images of other parts of the Laser Cutting Machines in their additional submission dated 19.06.2024.

8.3 Further, I find that the jurisdiction has stated that the laser source has all the essential characters of laser cutting machine and anti-dumping duty levied vide the 15/2023-Customs dated 22.12.2023 covers the subject item i.e. fibre laser source and the said anti-dumping duty will be applied when this item will be imported from the specific countries/suppliers as specified in the above said ADD notification. Also if the laser sources are exempted from the purview of the said ADD notification then the very purpose of issuing the said notification will be defeated.

8.4 On careful examination of the ADD Notification No 15/2023 (ADD) dated 22.12.2023, I find that ADD is applicable on the Import of Industrial Laser Machines, in fully assembled, SKD or CKD form, used for cutting, marking, or welding operations. I find that the Notification is clearly mentioning that the goods has to be fully assembled. “Assembled”, “SKD”, or “CKD” words here itself indicate that the subject goods i.e. “Industrial Laser Cutting Machine” consists of different components. The final finding in the recommendation dated 27.09.2023 of the DGTR on the ADD Notification Para C.3 also indicates the same. It reads as: “Laser cutting, welding or marking machine are essential machines which has laser source as the base product and these sources can be controlled and the laser cutting, welding or marking machines can be produced in many sizes. On going through the literature available in open sources it is gathered that a laser cutting, welding or marking machine may consist of several key components including laser source, laser head optics, focusing lens, controlled system, sensor and detector, nozzle, XY and Z axis, work table, exhaust system, safety enclosures, etc. These components work together to enable precise, high speed cutting, welding, engraving or marking on various materials as selected.

8.5 Hence, it can be seen that the laser cutting machine has different components and laser source is one of the components. The laser source may be the crucial one, but, it has to work in association with other components to achieve the desired outcomes. I find much force in the applicant’s contention the laser source is only a component and not a laser cutting device as a whole and that it does not operate on standalone basis. I further find that the subject goods which are proposed to be imported is neither in form of a fully assembled laser cutting machine nor in SKD form or CKD form. I am of the view that the Laser Cutting Machine and the Laser Source are not one and the same, for the purpose of ascertaining the applicability of the ADD Notification in terms of wordings used in the Notification No 15/2023 (ADD) dated 22.12.2023.

9. Therefore, in view of the above discussions, I am of the considered opinion that ADD as per Notification No 15/2023 (ADD) dated 22.12.2023 will not be imposable on the import of the subject goods i.e. ‘Laser Source’.

10. I rule accordingly.