In re H.Q. Lamps Manufacturing Co. Pvt Ltd (CAAR Delhi)
M/s H.Q. Lamps Manufacturing Co. Pvt Ltd Plot No. 459-B, Sector-53, Phase-3 Industrial Estate, Kundli, Sonipat, Haryana, a private limited company having IEC No.0515905305 and PAN-AADCH4915R, has filed an application dated 21.03.2022 before the Customs Authority for Advance Rulings, New Delhi (CAAR, New Delhi in short) seeking advance ruling under Section 28-H of the Customs Act, 1962. On scrutiny of the application, it was found to be in order as per CAAR Regulations, 2021 and the application was accordingly registered under serial No. 07/2022 dated 23.03.2022.
2. The applicant, vide the aforesaid application, has sought ruling by CAAR, New Delhi on the question of applicability of notification issued under sub section (1) of Section 25 of the Customs Act, 1962, having a bearing on the rate of duty. The basic objective of the application is to seek clarification on issue as to whether the goods sought to be imported namely “Lithium Ion Cell (Captive Consumption — For LED)” merits benefit under Sr. No. 471 of Exemption Notification No. 50/2017-Cus. dated 30.06.2017, as amended by Notification No. 02/2021-Cus. dated 01.02.2021 as part for use in manufacture of LED Emergency Bulb/ Light.
3. The applicant has submitted statement of facts and question of law with the said application, wherein the applicant has, inter alia, mentioned as under: –
3.1 Under the Customs Tariff, Sections and Schedules, there is no restriction or specific inclusion/ exclusion on the variety of LED Bulb/ Lights/ Fittings. Any light or bulb which has the technology of LED, i.e. Light Emitting Diode, shall be classified under the category of LED Bulb/ Light. Therefore, the emergency bulb which has the technology of LED shall be undoubtedly considered as LED Emergency Bulb.
3.2 The demand of LED Emergency Bulb has increased in the past few years especially in small cities and villages as it provides light backup for some time when the power is gone; and therefore, the Applicant has expanded its manufacturing towards LED Emergency Bulb/ Light in the past two years. As stated above the characteristic of the said bulb is that when there is supply of power/current, it will light up and when the power/current stops, it will still remain illuminated with the essential property of power backup for some hours. For the said purpose, the applicant installs one “Lithium Ion Cell” inside the LED Bulb, which gives it the essential characteristic of power backup. The said product is sold in the market as Emergency LED Bulb or Inverter LED Bulb, which provides the backup for 3-4 hours.
3.3 The “Lithium Ion Cell” is an essential part of the LED Emergency Bulb, which is designed in a manner to fit exclusively into the LED Emergency Bulb. “Part” is defined as an identifiable component of an article, machine, apparatus, equipment, appliance or specific good, which is integral to the design and essential to the function of the product in which it is used. As per the said definition the “Lithium Ion Cell” arc integral to the design of the LED Emergency Bulb and is essential to the function of the Bulb as LED Emergency Bulb. The “Lithium Ion Cell” is essential and exclusive part of the I El) iliergency Bulb: and therefore, shall he defined as “Part” in terms of Note 2(a) of Section XVI. The said Rule is extracted below:
“2. Subicct to Note I to this Section, Note I to Chapter 84 and to Note Ito Chapter 85, parts of MaChil7CS (not being parts of the articles of heading 8484, 8544, 8545, 8546 or 854″) are to he classified according to the following rules :
(a) parts which are goods included in any of the headings of Chapter 84 or 85 (other than headings 8409, 8431, 8448, 8466, 8473, 8487, 8503, 8522, 8529, 8538 and 8548) are in all cases to be classified in their respective headings; “
3.4 For the purpose of classification, above rule enumerates that any part of a machine shall be classified under their respective Chapter Heading and adhering to the said Rule, the Applicant has defined the “Lithium Ion Cell” under Chapter 85 of the Customs Tariff and therefore, the “Lithium Ion Cell– forms an exclusive and essential part of the LED Emergency Bulb.
3.5 For the manufacturing of LED Emergency Bulb, the applicant has been importing “Lithium Ion Cell– for captive consumption as parts of LED Bulb/ Light and has been availing the benefit of Sr. No. 471 of Exemption Notification No. 50/2017-Cus. dated 30.06.2017, as amended by Notification No. 02/2021-Cus. dated 01.02.2021. The said product is declared under CTI-I 8507 6000 @ BCD 10% while fulfilling the condition for furnishing of Bond under the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 (in short, IGCR Rules). The relevant portion of Notification is as under:
“Notification No. 50/2017-Cus. dated 30.06.2017: Exemption & Effective Basic and Additional Customs Duty for specified goods falling under Chapters 1 to 98:
