Case Law Details
In re Mitsubishi Electric India Private Limited (CAAR Delhi)
The legal position regarding classification of goods in CKD/ SKD conditions are fairly settled. As per rule 2(a) of the GRI, “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 articles 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 un-assembled or disassembled.” This position has been upheld by Hon.ble Supreme Court in various cases, as mentioned above detailing the submissions of the applicant.
In order to answer this question posed for advance ruling, what is required to be examined is whether air conditioners kits, without capacitors have acquired the primary characteristics of an air conditioner? Viewed alternately, whether capacitors and ODS gas are essential or non-essential components of air conditioners? I note that the applicant has submitted that capacitors are non-essential component of an air conditioner. On cursory reading of technical literature available in public domain suggests that capacitors are essential component of an air conditions, which provide the initial jolt of electricity to the air conditioner’s motors needed to run successfully and a bad capacitor prevents the exterior unit from properly functioning, which hinders the cooling process as a whole. Be that as it may, notwithstanding the role of capacitors in air conditioners, I accept the larger contention that the air conditioner kit, as described by the applicant have acquired the characteristics of an air conditioner and are classifiable as air conditioners when presented together.
Therefore, I conclude that imported air conditioner kits in CKD/SKD condition, as described above have acquired the essential characteristics of an air-conditioner and therefore, when presented together at the stage of assessment under common invoice and bill of entry would merit classification under heading 8415 and specifically under sub-heading 841510 or 841581 or 841582 or 841583, as the case may be depending upon the configuration and model type. In coming to this conclusion, I have also been guided by the submission of the Commissioner of Customs, Chennai Import Commissionerate that for convenience of transport, many machines and apparatus are transported in an unassembled state; although in effect the goods are then a collection of parts, they are classified as being the machine in question and not in any separate heading for parts; the same applies to an incomplete machine having the features of the complete machine presented un-assembled and hence the indoor and outdoor units presented together in CKD/SKD forms are to be classified under heading 841510/ 841581/ 841582/ 841583, as applicable.
I now take up the second question, i.e. when the parts of IDU/ODU or Cooler/Condenser [Heat Exchange Units (HEX)] are imported in CKD/SKD condition, would the same also to be treated as ‘parts of air conditioners’ in as much as such parts are specifically designed for use in the assembly of HEX (IDU/ODU or Cooler/Condenser), which is an integral part of an air-conditioner; and therefore, eligible to be classified under sub-heading 84159000 as parts of a part of air-conditioner?
Please become a Premium member. If you are already a Premium member, login here to access the full content.
