Case Law Details
In re Mahavir Jain Aradhna Kendra (CAAR Mumbai)
In a recent ruling, the Customs Authority for Advance Rulings (CAAR), Mumbai, delivered its decision in the case of Mahavir Jain Aradhna Kendra regarding the classification of furniture and display cases imported from Singapore in Completely Knocked Down (CKD) or Semi Knocked Down (SKD) condition. The case revolved around the appropriate classification of these goods under the Customs Tariff Act, 1975, and their eligibility for duty exemption under the ASEAN-India Free Trade Agreement (AIFTA).
Background
The applicant, Mahavir Jain Aradhna Kendra, sought an advance ruling on two primary issues:
- The classification of furniture/display cases in CKD/SKD form expected to be imported from Singapore.
- The eligibility of these goods for duty exemption as per the AIFTA, under CBIC Notification No. 46/2011-Cus, dated 1st June 2011.
The applicant proposed that the subject goods, which are part of a museum project, should be classified under Customs Tariff Heading (CTH) 9403, covering furniture and parts thereof.
Legal Framework for Classification
In addressing the classification issue, CAAR Mumbai referred to Section 28H(2)(a) of the Customs Act, 1962, which covers matters related to the classification of goods. Additionally, the authority considered Rule 2(a) of the General Rules for the Interpretation of the Harmonized System (GRI), which deals with articles imported in an incomplete or unassembled state.
According to Rule 2(a), any reference to an article in a tariff heading includes incomplete or unassembled articles, provided they have the essential character of the complete or finished article. CAAR Mumbai noted that in cases where goods are imported in CKD/SKD condition, the classification must be made based on the complete article’s characteristics.
Classification of Furniture/Display Cases
CAAR Mumbai examined the photographs and descriptions provided by the applicant, which included various types of demountable show cases, wall-mounted show cases, table-top display cases, and art gallery showcases. These goods are to be imported in CKD/SKD form for use in a museum project.
The authority found that the subject goods, though imported in parts, possess the essential character of complete furniture/display cases. Therefore, these goods should be classified under CTH 9403 as “Other furniture and parts” when presented for customs clearance under a single Bill of Entry.
CAAR also noted that there is no specific tariff heading for “Furniture/Display Cases in CKD/SKD condition” under the Customs Tariff Act, 1975. The proposed classification under CTH 9403 was accepted based on the goods’ composition and intended use in a museum setting.
Duty Exemption Under AIFTA
Regarding the second issue, CAAR Mumbai examined the eligibility of the imported goods for duty exemption under the ASEAN-India Free Trade Agreement (AIFTA). The relevant notification, CBIC Notification No. 46/2011-Cus, dated 1st June 2011, provides duty exemptions for goods imported from ASEAN member countries, including Singapore, if certain conditions are met.
The authority found that the subject goods, classified under CTH 9403, are eligible for duty exemption under the AIFTA, provided the conditions laid out in Notification No. 81/2020-Customs (N.T.) and other related provisions are fulfilled at the time of import. These conditions include compliance with the Rules of Origin under the Preferential Trade Agreement between ASEAN and India.
CAAR Mumbai emphasized that the importer must provide satisfactory evidence to the customs authorities to prove the goods’ origin from an ASEAN member country to claim the duty exemption.
Conclusion
In its ruling, CAAR Mumbai concluded the following:
- The furniture/display cases imported from Singapore in CKD/SKD form under a single invoice and Bill of Entry possess the essential character of complete furniture and should be classified under CTH 9403.
- The goods are eligible for duty exemption under the AIFTA, subject to compliance with the conditions specified in Notification No. 46/2011-Cus and other relevant provisions at the time of import.
This ruling provides clarity on the classification of goods imported in CKD/SKD form and outlines the conditions for claiming duty exemptions under free trade agreements, which can be of interest to importers dealing with similar products.
FULL TEXT OF THE ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, MUMBAI
M/s. Mahavir Jain Aradhna Kendra (having lEC No. AADTS7140()) (hereinafter referred to as ‘the applicant’, in short) filed application (CAAR-1) for advance ruling before the Customs Authority for Advance Rulings, Mumbai (CAAR in short). The said application was received in the secretariat of the CAAR, Mumbai on 05.06.2024 along with enclosures in terms of Section 281-I (1) of the Customs Act, 1962 (hereinafter referred to as the ‘Act’ also; The applicant is seeking advance ruling on appropriate classification of the item/ product imfort of Furniture/ Display Cases in SKD/CKD form imported in different consignments and its eligibility for the duty Exemption benefit as per ASEAN-India Free Trade Agreement (s per CBIC Notification No. 46/2011 dated 01.06.2011).
2. Submission by the Applicant:
2.1 M/s Shri Mahavir Jain Aradhna Kendra (IEC: AADTS7140()) intends to import furniture/ cabinets, classifiable under CTH 9403), for the Museum in CKD/ SKI) form from Singapore for their Kuba Museum Project in different consignments by availing duty exemption in accordance with provisions of the Customs Tariff [Determination of Origin of Goods under the Preferential Trade Agreement between the Governments of Member States of the Association of Southeast Asian Nations (ASEAN) and the Republic of India] Rules, 2009, published in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 189/2009-Customs (N.T.), dated the 31st December, 2009 and CBIC Notification No. 46/2011 dated 01.06.2011, as amended from time to time. The applicant seeks to obtain an advance ruling on appropriate classification of the item/product import of Furniture in SKD/CKD Form imported in different consignments and its eligibility for the duty exemption as per the ASEAN-India Free Trade Agreement (as per CBIC Notification: 46/2011-Cus. dated 01-Jun-2011,).
2.2 As regards the eligibility of getting benefit of duty exemption under ASEAN-India Free Trade Agreement as per the CBIC Notification: 46/2011-Cus. dated 01-Jun-2011, for the import of Furniture/ cabinets in CKD/ SKD Form under CTH 9403 in different consignments from Singapore the applicant has submitted that it may be noticed that AGREEMENT ON TRADE IN GOODS UNDER THE FRAMEWORK AGREEMENT ON COMPREHENSIVE ECONOMIC COOPERATION BETWEEN THE REPUBLIC OF INDIA AND THE ASSOCIATION OF SOUTHEAST ASEAN NATIONS is silent about import of goods in CKD / SKD Form. It means there is no restriction for extending benefit of duty exemption under ASEAN-INDIA FREE TRADE AGREEMENT to the import of goods in CKD/ SKD form Singapore provided the said goods qualify the origin criteria as per Rule 3 of the Customs Tariff [Determination of Origin of Goods under the Preferential Trade Agreement between the Governments of Member States of the Association of Southeast Asian Nations (ASEAN) and the Republic of India] Rules, 2009.
2.3 Therefore, from the above submissions, it is very clear that the subject goods viz. Furniture/Cabinet in CKD/ SKD Form while being imported from Singapore (Country of Origin) in different consignments are to be classified under CTH 9403 and are eligible for getting benefit of duty exemption in accordance with provisions of the Customs Tariff [Determination of Origin of Goods under the Preferential Trade Agreement between the Governments of Member States of the Association of Southeast Asian Nations (ASEAN) and the Republic of India] Rules, 2009, published in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 189/2009-Customs (N.T.), dated the 31st December, 2009 rescinded by Notification: 46/2011-Cus. dated 01-Jun-2011, as amended from time to time.
3. Port of Import and reply from jurisdictional Commissionerate:
3.1 The applicant in their CAAR-1 indicated that they intend to import the subject goods i.e. Furniture/ Display Cases in CKD/SKD condition expected to be imported from Singapore at the jurisdiction of Office of the Commissioner of Customs(Import) Mundra. The application was forwarded to the Office of the Commissioner of Customs(Import) Mundra for their comments on 15.07.2024 and 13.08.2024, however, no response has been received from the Office of the jurisdictional Commissioner.
4. Details of Personal Hearing:
4.1 A personal hearing was held on 26.07.2024 Shri Ashwani Kumar Prabhakar, A0v cate appeared for the hearing on behalf of the applicant. He reiterated the contention made in the application and submitted that the subject import goods i.e. furniture/ display cases in CKD/SKD form to be imported in different consignment are to be classified under CT’H 9403 and merit exemption/ duty benefit under ASEAN Preferential Trade Rules 2009 read with Customs Notification 189/2009 Custom (NT) rescind by 46/2011 and as amended. He further submitted a compendium of case laws and circular in support of their claim. They relied upon the following case laws :
(a) 2018(10) G.S.T.L. 3(SC)
(b) 2006(193) E.L.T. 138(A.A.R.)
(c) Ruling No. CAAR/Mum/ARC/48-51/2022 in Application No. CAAR/CUYAFT 7174/2022 0/o Commr —CAAR-Mumbai decided on 29.12.2022
(d) (2023) 2 Centax 74 (A.A.R.-Cus-Del.)/2023 (383) E.L.T. 224 (A.A.R-Cus-Del) Before the Customs Authority for Advance Ruling, New Delhi.
It was specifically asked as to how it can be ascertained the correlation between the 9<.D/ SKD parts for arriving at the discovery about the consignment as a complete furniture, the applicant sought one week time, that is granted.
4.2 Nobody appeared from the department side for the Personal Hearing nor any written submission is provided by the department either.
5. Additional submission
5.1 With regard to the question raised during Personal Hearing as to how the correlation between CKD -SKD can be established and how it can be ascertained to be complete furniture the Applicant has submitted as under:
“Each shipment would have the complete piece of a single unit of the furniture being imported together in a single shipment and the furniture components which will make one single unit / single piece of furniture though packed separately for packing and shipping purposes would not be shipped in separate shipments. The Applicant would be able to establish this with a detailed packing list as well as a schematic diagram for each piece.”
6. DISCUSSION AND FINDINGS
6.1 I have considered all the materials placed before me in respect of the subject goods. I have gone through the case records and all the submissions made by the applicant during he personal hearing and the clarification provided by the applicant. Therefore, I proceed to pronounce a ruling on the basis of information available on record as well as existing legal framework having bearing on the classification of the goods in question under the first schedule of the Customs Tariff Act,1975.
6.2 The first question requires ruling on classification of goods i.e. Furniture/ Display Cases in CKD/SKD condition expected to be imported from Singapore. At the outset, I find that the issue raised in the first question is squarely covered under Section 28H(2)(a) of the Customs Act, 1962 being a matter related to classification of goods under the provisions of this Act.
6.3 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. 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 any article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article 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 by virtue of this rule), presented unassembled or disassembled Thus, when any article such as CFL is imported in CKD/SKD condition, its classification for the purpose of assessment would be done as complete or finished article in terms of the said Rule 2(a). Accordingly, when anit-dumping duty is attracted on any article then it is also to be levied if the said article is imported on CKD/SKD condition either together of in one lot or in part shipments.”
6.4 Here, the terms ‘as presented’ and ‘essential character’ are important to decide the case at hand. These two terms are employed in the proviso of the Rule 2(a) mentioned above. It is observed that the incomplete or unfinished articles may be classified under the same heading wherein the complete or finished article are classified, provided, the articles/ goods as presented before the Customs for clearance have the essential character of the complete or finished articles/ goods.
6.5 Therefore, by virtue of this rule, in the instant case, I find that the applicant has proposed to import Furniture/ Display Cases in CKD/SKD condition and has clarified that each shipment would have the complete piece of the furniture being imported together in a single shipment and the furniture components which would make a single unit/ single piece of furniture though packed separately for packing and shipped purposes would not be shipped in separate shipments. Thus the goods in CKD/SKD form imported under one invoice, and presented before the Customs for clearance under a single Bill of Entry, may be classified under the heading which is appropriate to classify the complete or finished articles/ goods.
6.6 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 ‘Furniture/ Display Cases in CKD/SKD condition’.
6.7 I find that the applicant has proposed that the subject goods can be classified under Tariff Entry 9403. The relevant portion of CTH 9403 is reproduced below for ease of reference:
6.8 While examining the scope of CTEI 9403 it is found that as per HSN Explanatory Notes, heading 9403 covers furniture and parts thereof, not covered by the previous headings. It includes furniture for general use (e.g., cupboards, show-cases, tables, telephone stands, writing desks, escritoires, book cases and other shelved furniture (including single she yes presented with supports for fixing them to the wall, etc.), and also furniture for special u es. The heading includes furniture’s for:
(1) Private dwellings, hotels, etc., such as: cabinets, linen chests, bread chests, log chests; chests of drawers, tall boys; pedestals, plant stands; dressing–tables; pedestal tables; wardrobes, lien presses; hall stands, Umbrella stands; side-boards, dressers; cupboards; food-safes; bedside tables; beds (inducing wardrobe beds, camp-beds, folding beds, cots, etc.); needlework tables stools and foot-stools (whether or not rocking) designed to rest the feet, fire screens; draught-screens; pedestal ashtrays; music cabinets, music stands or desks; play-pens; serving trolleys (whether or not fitted with a hot plate).
(2) Offices, such as: clothes lockers, filing cabinets, filing trolleys, card index flies, etc.
(3) Schools, such as: school-desks, lecturers’ desks, easels (for blackboards, etc.).
(4) Churches, such as: altars, confessional boxes, pulpits, communion benches, lecterns, et
(5) Shops; stores, Workshops, etc; such as: counters; dress racks; shelving units; compartment or drawer cupboards; cupboards for tools, etc.; special furniture (with cases or drawers) for printing-works
(6) Laboratories or technical offices, such as: microscope tables; laboratory benches (whether or not with glass cases, gas nozzles and tap fittings, etc.); fume-cupboards; unequipped drawing tables.
6.9 The applicant has provided some photograph of the proposed import goods which is given below:
National Gallery show cases
Natural History Museum
Demountable Show cases
Table Top Show Cases
Wall mounted Showcases
Crafting showcases for Cartier
Show cases for Art Gallery
6.10 On going through the subject photographs of the proposed import goods and description provided, it is observed that the subject goods are different kinds of demountable show cases, table top show cases, wall mounted show cases, gallery show cases, crafting show cases for Cartier, show cases for art gallery, etc. The applicant has submitted that these goods are to be imported in CKD/SKD form for Kuba museum project. The subject goods are meant to be used in museum and proposed to be finally assembled to make a complete finished set/ sets. Accordingly, I find that the subject goods merit Classification under CTH 9403 as ‘Other furniture and parts’ (for the museum project).
Accordingly, I find that the subject goods merit Classification under CTH 9403 as ‘Other furniture and parts’ (for the museum project).
6.11 Now, I take up the second question regarding eligibility for the duty exemption a; per the ASEAN India Free Trade Agreement (as per CBIC Notification No. 46 dated 01.06.2611). At the outset, we find that the issue raised in the first question is squarely covered under Section 28H(2)(b) of the Customs Act, 1962 being a matter related to applicability of Notification issued under the provisions of this Act.
6.12Notification: 46/2011-Cus. dated 01-Jun-2011 exempts goods of the description as specified in column (3) of the Table appended thereto and falling under the Chapter, Head ing, Sub-heading or tariff item of the First Schedule to the Customs Tariff Act, 1975 (51 of 1 ; 75) as specified in the corresponding entry in column (2) of the said Table, from so much o the duty of customs leviable thereon as is in excess of the amount calculated at the rate specified in,—column (4) of the said Table, when imported into the Republic of India from a c:ou try listed in APPENDIX-I; or column (5) of the said Table, when imported into the Reup 1)1i of India from a country listed in. APPENDIX-II :
Provided that the importer proves to the satisfaction of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, that the goods in respect of which the benefit of this exemption is claimed are of the origin of the countries as mentioned in 1[Appendix I or Appendix II, as the case may be], in accordance with provisions of the Customs Tariff [Determination of Origin of Goods under the Preferential Trade Agreement between the Governments of Member States of the Association of Southeast Asian Nations (ASEAN) and the Republic of India] Rules, 2009, published in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 189/2009-Customs (N.T.), dated the 31st December, 2009 At All goods specified in column (2) at S. No. 966 (I) of Notification No. 046/2011-Cus dated 01.06.2011 provides said exemption for the goods.
6.13 Conditions/provisions and procedures stipulated in AIFTA, Customs Notification: 46/2011-Cus. dated 01-Jun-2011, Section 28 DA of the Customs Act, 1962 and CAROTAR 2020 need to be verified in each case. Singapore is listed at sr. no. 2 in the Appendix 1 of this notification. The benefit of exemption under Notification 46/2011- Cus. is available to all goods falling under CTH 9 03 of the first schedule of the Custom Tariff Act, 1975.
6.14 On the basis of foregoing facts on record, discussions and observations, I have corm to the conclusion that if the applicant complies with the conditions/instructions/provisions (as amended) provided in the Notification: 46/2011-Cus. dated 01-Jun-2011, the Governments of Member States of Association of Southeast Asian Nations (ASEAN) and the Republic of India, Rules, 2009, published in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 189/2009-Customs (N.T.), dated the 31st December, 2009, Section 28DA of Customs Act, 1962, Customs (Administration of Rules of Origin under Tr de Agreements) Rules, 2020 issued vide Notification No. 81/2020- Customs (N.T.) dated 21st August, 2020 and any other conditions insofar as they relate to eligibility to avail the benefits of Preferential Trade Agreements- the Applicant can claim benefit of duty exemption under the Preferential Trade Agreement
7. On the basis of the foregoing discussions and findings, I answer in positive to both the questions asked in the present application and rule that
a) The Furniture/ Display cases, imported for the Museum from Singapore in CKD/SKD form in different consignments imported under one invoice, and presented before the Customs for clearance under a single Bill of Entry, having essential character of the complete and finished Furniture/ Display cases merits classification under the CTH heading 9403 and the said ‘products’ are classifiable at 8-digit level according to their respective composition and characteristics under the said chapter heading 9403.
b) Eligibility of duty exemption as per the Aasen India Free Trade Agreement (as per the CBIC Notification: 46/2011-Cus. dated 01-Jun-2011) with a caveat that the conditions/instructions of the Notification No. 81/2020- Customs (N.T.) dated 21st August, 2020 of are to be complied with at the time of imports.
I rule accordingly.
(Prabhat K Rameshwaram)
Customs Authority for Advance Rulings, Mumbai
F. No. CAAR/CUS/APPL/66/2024-0/o Commr-CAAR-Mumbai
Dated:26-07-2024
