Classification & Notification of Parts to manufacture ASSY-Case front: CAAR Ruling

In re Elentec India Pvt. Ltd. (CAAR Delhi)

M/s Elentec India Pvt. Ltd., based in Greater Noida, U.P., manufactures parts for cellular mobile phones and supplies mainly to Samsung India Electronics Pvt. Ltd. The company is registered under GST and holds an Importer Exporter Code (IEC). Their manufacturing process includes injection molding, coating, sub-assembly, inspection, quality testing, outward quality control, and packaging.

Notification Context: The applicant referenced Notification No. 09/2024-Customs dated January 31, 2024, which amends Notification No. 57/2017-Customs. They sought clarification on custom duty exemption under Serial No. 6E for manufacturing a product listed under Serial No. 6D(ii) of this notification.

Clarification Sought:

1. Naming Conventions:
   • The applicant wished to know if “ASSY-CASE-FRONT” could be named in lieu of “FRONT COVER.” The term “FRONT COVER” is explicitly mentioned in Serial No. 6D(ii) of the notification, while the applicant’s customer uses “ASSY-CASE-FRONT” in their SAP software. They queried if the customs department would accept this nomenclature for duty exemption purposes.
2. HS Code Usage:
   • The HS Code for the final product under Serial No. 6D is 39, 73. The applicant intended to use HS Code 85177990 and sought clarity on whether this would still qualify for the custom duty exemption.
3. Manufacturing Process:
   • They questioned whether the process undertaken for manufacturing “ASSY-CASE-FRONT” with imported inputs under Serial No. 6E of the notification would qualify as manufacturing, considering that goods imported duty-free under IGCR Rules must undergo a manufacturing process.

Commissionerate Comments: The concerned Commissionerate provided comments on the applicant’s eligibility and the specifics of their claims. They confirmed that:

• The applicant is a valid entity as per Section 28E(c) of the Customs Act, 1962.
• No pending applications exist with any officer, tribunal, or court concerning the applicant’s queries.
• The activities described were ongoing or proposed and had not been previously imported.

Analysis and Ruling:

1. Naming “ASSY-CASE-FRONT” vs. “FRONT COVER”:
   • The CAAR noted the distinct difference between “ASSY-CASE-FRONT” and “FRONT COVER.” The “FRONT COVER” refers to the external panel of a mobile device, while “ASSY-CASE-FRONT” encompasses a fully assembled front portion, including the display screen, touch panel, and other components. The CAAR ruled that since “ASSY-CASE-FRONT” is not explicitly mentioned in the notification, the duty exemption under Serial No. 6E does not apply.
2. HS Code Usage:
   • The notification specifies the HS Codes 39 and 73 for the final product listed under Serial No. 6D. The CAAR concluded that using HS Code 85177990, as intended by the applicant, does not qualify for the duty exemption since the notification strictly mentions goods under Chapter Head 39 or 73.
3. Manufacturing Process:
   • While the CAAR acknowledged the applicant’s manufacturing process, it clarified that it could not rule on whether a process qualifies as manufacturing. The CAAR’s mandate does not cover determinations of manufacturing processes as per Section 28-I-1 of the Customs Act, 1962.

Final Rulings:

1. The CAAR ruled that “ASSY-CASE-FRONT” cannot be named in lieu of “FRONT COVER” and the product under HS Code 85177990 does not qualify for exemption under the notification.
2. Importing inputs for manufacturing “ASSY-CASE-FRONT” does not meet the criteria for duty exemption since the final product description does not align with the notification’s specified terms.
3. The CAAR is not authorized to provide a ruling on whether the process undertaken amounts to manufacturing.

Conclusion: The CAAR concluded that the duty exemption benefits under Notification No. 09/2024-Customs dated January 30, 2024, cannot be extended to “ASSY-CASE-FRONT” as it does not align with the specific product description (“FRONT COVER”) and HS Code requirements outlined in the notification. The manufacturing process query is beyond the CAAR’s jurisdiction. This ruling clarifies the strict interpretation required for classification and eligibility for custom duty exemptions under specific notifications.