Classification of Thermal Putty for Mobile Phone Manufacturing: CAAR Delhi Ruling

In re Vivo Mobile India Pvt Ltd. (CAAR New Delhi)

M/s. Vivo Mobile India Pvt. Ltd. has sought an advance ruling from the Customs Authority for Advance Rulings, New Delhi (CAAR) regarding the classification of Thermal Putty used in manufacturing mobile phones. This article delves into the detailed analysis of the issue and the ruling provided by CAAR New Delhi.

1. Classification of Thermal Putty:

• The applicant imports Thermal Putty for use in manufacturing mobile phones, primarily for its thermal conductivity and heat dissipation properties.
• Thermal Putty acts as a heat conduction medium between microchip positions, preventing damage due to heat generated by the CPU.
• Its composition includes alumina, zinc oxide, and various siloxanes, contributing to its thermal transfer and stress-relieving capabilities.

2. Competing Tariff Headings:

• The applicant seeks classification under Sub-heading 38249900, covering chemical products not elsewhere specified or included, for tariff exemption.
• The alternative classification is under Sub-heading 32149090, which includes various putty types but may not accurately represent Thermal Putty’s functionality.

3. Legal Interpretations:

• The applicant argues for classification under Heading 3824 based on the chemical composition and functionality of Thermal Putty.
• They cite US CROSS Ruling NY HQ 952979 to support their claim that similar thermal conductive products fall under chemical preparations categories.

4. Application Admissibility:

• CAAR New Delhi examines the admissibility of the application under Section 28E of the Customs Act, finding it eligible for an advance ruling.
• The ongoing nature of the activity and lack of prior dispute or settlement support the admissibility of the application.

Conclusion:

The application submitted by M/s. Vivo Mobile India Pvt. Ltd. regarding the classification of Thermal Putty for mobile phone manufacturing has been examined by CAAR New Delhi. After considering the chemical composition, functionality, and competing tariff headings, CAAR New Delhi ruled in favor of classification under Sub-heading 38249900. This ruling provides clarity on the customs tariff for Thermal Putty imports, ensuring compliance and facilitating smoother import procedures for mobile phone manufacturers.

FULL TEXT OF THE ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, NEW DELHI

M/s. Vivo Mobile India Pvt. Ltd., 10th & 1 1 th Floor, Palm Springs Plaza (Complex), Village Wazirabad, Sector-54 Gurugram- 122003 (hereinafter referred to as the applicant’), having IEC No. 0514053739 has filed an application (CAAR-1) for advance ruling before the Customs Authority for Advance Rulings, New Delhi (CAAR, in short). The said application was received in the Secretariat of CAAR, New Delhi on 26.12.2023 along with enclosures in terms of Section 28H (1) of the Customs Act, 1962 (hereinafter referred to as the ‘Act’). The applicant has filed the instant application for seeking Rulings on the issue of classification of products namely Thermal Conductive Putty SY-TP 351-K; Thermal Putty TP-351-K 300m1 and Thermal Putty SY-SG201LV jointly referred to as the Thermal Putty, used by the applicant in manufacturing of mobile phones and sought for advance rulings by raising the question, as to Whether the Thermal Conductive Putty SY-TP 351-K, Thermal Putty TP-351-K 300m1 and Thermal Putty SY-SG2OILV can be classified under Tariff Ito, 38249900?

2. The applicant has stated inter-alia that they are engaged, in the business of manufacturing mobile phones at its manufacturing unit situated at Noida and for the said purpose, imports various parts and equipment from the Customs port at IGI Airport, New Delhi; in a similar manner, they intend to import Thermal Putty for manufacturing mobile phones; Thermal Putty is used in various models having separate product (Ds; however, the description and functionality 4’1 hernial Putty remains the same irrespective of product code and the model in which it is used; the detailed description of Thermal Putty intended to import is as follows:

2.1 Product Description

Thermal Putt’ is thermal interface material having good thermal conductivity and effective heat dissipation features. The chemical composition is of Alumina and Zinc Oxide. treated with a combination of different Siloxanes. Thermal Putty is mainly used in the Central Processing Unit (“CPU”) area of the mobile phone %\ here high heat is generated, preventing the internal components of the mobile phone from being damaged due to heat while the CPU is working.

2.2 Product Functioning

Thermal Putty is mainly used in microchip positions with high heat generation, as a heat conduction filling medium between the surface of the CPU and the Copper foil of the shield cover as well as the Copper foil of the shield cover and the upper cover of the motherboard. It can be compressed into a very thin variety of shapes and is also placed between the uneven and rough surfaces of solid interfaces to reduce the thermal resistance of contact so as to enhance the heat transfer effect. It is mainly used in smartphone CPU, Memory Chips dispensed or screen printing to various thickness and shapes for general thermal management of Printed Circuit Boards (“PCB”) assemblies. In other words, Thermal Putty helps in thermal transferring, stress relieving and shock damping. Thermal Putty is heat/humidity resistor and sustains other harsh environments without cracking and slumping.

2.3 Product Classification

They have been earlier importing Thermal Putty under Sub-heading 32149090. However, they intend to import Thermal Putty in future by classifying them under Sub-heading 38249900, which covers chemical products and preparations of the chemical or allied industries not elsewhere specified or included, by availing exemption granted under Notification No. 50/2017-Cus dated 30.06.2017. The competing entries of the Import Tariff and as the corresponding duties are as under:-

Tariff Item	Description	Unit	Standard Rate of Duty	Preferential Rate of Duty
3214	Glaziers’ Putty, Grafting Putty, Resin Cements, Caulking Compounds and Other Mastics; Painters’ Fillings; Non-Refractory Surfacing Preparations for Facades, Indoor Walls, Floors, Ceilings or the like
321490	Other
32149090	Other	Kg.	10%
3824	Prepared Binders for Foundry Moulds or Cores; Chemical Products and Preparations of the Chemical or Allied Industries (Including Those Consisting of Mixtures of Natural Products), not Elsewhere Specified or Included
38249900	Other	Kg.	17.5%

3. The applicant has further stated that Section 28E (b) of the Act defines ‘advance ruling’ as a written decision on questions referred to in Section 28H raised by the applicant in the application in respect of any goods prior to its importation; the present application deals with classification of the goods which are intended to be imported in the future under the proposed classification subject to the ruling of the I Hon’ble Authority of Advance Ruling, New Delhi; Sect .’81^. 110 does not preclude any applicant from raising a question merely because similar goods have been n111)0,1(1 in the past; therefore, it is submitted that the present application is admissible in terms of Section 281; (h) of the Act; in this regard, reliance is placed on the following extracts from the earlier Rulings:

a. in Re: Amazon Seller Services, (2023) 5 Centax, com 186 (AAR-Del) where rejecting the objections, it is observed that:

“In so far as the issue of advance rulings in respect of an ongoing activity is concerned, with due regard to the definition of advance ruling in law, 11 is my considered opinion that operation of advance rulings do not get extinguished just because an activity of import/export has taken place earlier, irrespective of the frequency of such activity. Drawing strength from the provisions of law reproduced earlier in This paragraph, a correct interpretation would be that advance rulings can be sought and given even for ongoing activities, so long as such activities, in respect of the same applicant, are not involved in any dispute; or already settled by an order of any competent tribunal/court. However, the application of such an advance ruling, in respect of an ongoing activity, shall be prospective and would not have any implication for activities, which stand concluded”

b. In re: Nikon India Pvt Ltd., (2023) 12 Centax 114 (A.A.R. – Cus. – Del.) it is held as follows:

I note that the concerned Commissionerate has neither commented on classification of the subject goods nor on applicability of serial number 502 of Notification No. 50/2017-Cus dated 30.06.2017, on import of the subject goods. However, it is observed that the concerned

Commissionerate has allowed import of the subject goods under Sub-heading 85258900 and extended exemption from Basic Notification No. 50/2017-Cus dated 30.06.2017 (S. No. 502).

The concerned Commissionerate has also inter-alia commented that the applicant does not fulfill the of provisions of section 28E (b) of the Customs Act, 1962 to seek advance ruling in respect of the goods which are already being imported by them in commercial quantity before any written decision of the Authority; it appears that the application filed by M/s. Nikon India Private Limited merits rejection in terms of section 28E(b) of the Customs Act, 1962. However, I note that CAAR, New Delhi, had issued an advance ruling dated 05.10.2021 in the application for advance ruling filed by M/s. Spraytec India Ltd. wherein, while noting that goods in question have been imported in the past, the Authority had also observed that the application for advance ruling relates to the on-going activity. However, a ruling by the Authority shall impart certainty to the issue of appropriate classification, provided that the jurisdiction of this Authority is not ousted by proviso to section 28-1 (2) of the Customs Act, 1962. Accordingly, in line with the earlier ruling dated 05.10.2021, 1 intend to issue ruling in the instant application or advance ruling as the same would provide certainty to classification and applicability of exemption notification even though, the application relates to an on-going activity. Moreover, the application is not barred under proviso to Section 281(2) of the Customs Act, 1962. Further. / also note that the concerned Commissionerate has not supplied the Annexure containing details of import of the subject goods made by the applicant. Thus, I intend to rely on the declaration of the applicant that commercial imports of the subject goods have taken place after filing of the instant application for advance ruling

In view of the above, it was categorically observed that a ruling by the Authority shall impart certainty to the issue of appropriate classification, provided that the jurisdiction of this Authority is not ousted by proviso to section 28-1 (2) of the Act. Therefore, the applicant is of the view that the present application is admissible in terms of the Act.

4. The applicant has also submitted that, Thermal Putty shall be classified under Heading 3824 which covers “Prepared Binders for Foundry Moulds or Cores; Chemical Products and Preparations of the Chemical or Allied Industries (Including those consisting of mixtures of natural products), not elsewhere specified or included”. The products of this Heading are preparations of chemicals which are not elsewhere specified in the nomenclature; CI 3824 covers mainly two groups ,first, prepared hinders for foundry moulds Or cores and _second, chemical products and preparations of the chemical or allied industries which are not elsewhere specified or included; the latter group of the I lending acts as a residuary heading which covers the chemical products or preparations which are not specifically defined in the Tariff Act; the INN Explanatory Notes to Heading 3824 explains that the I leading 3824 covers chemical products or preparations whose composition is not chemically defined; the relevant extracts of Explanatory Notes are as follows:

(B) CHEMICAL PRODUCTS AND CHEMICAL OR OTHER PREPARATIONS

With only three exceptions (see paragraphs (7), (19) and (32) hello, this heading does not apply to separate chemically defined elements or compounds.

The chemical products classified here are therefore products whose composition is not chemically defined whether they are obtained as by-product of the manufacture of other substances (this applies. for example. to naphthenic acids) or prepared directly. The chemical or oilier preparations are either mixtures (of which emulsions and dispersions are special forms) or occasionally solutions. Aqueous solutions of the chemical products of Chapter 28 or 29 remain classified within those Chapters, but solutions of these products in solvents other than water are, apart from a few exceptions, excluded therefrom and accordingly fall to be treated as preparations of this heading.

Since, in the present case, Thermal Putty is composed of Alumina and Zinc Oxide treated with a combination of different Siloxanes, shall be classifiable under CTH 3824 in as much as they are not chemically defined elsewhere, or no specific heading is for the said chemical preparation in the nomenclature.

5.1 The applicant has placed reliance on the following and stated,

(i) US CROSS Ruling NY HQ 952979 dated May I1, 1993 wherein it was held that the thermal conductive greases can be classified under Heading 3824. The relevant portion of the cross ruling is extracted below for reference: –

From the additional information on thermally conductive silicones provided by Protestant, we note that the protestant has developed a number of silicone products that are up to 30 times more thermally conductive than normal silicone materials: “This enhancement is derived from adding metallic, metal oxide and metal nitride fillers to silicone polymers and formulating these mixtures to obtain other desired properties. Typical end use applications include: inter alia potting coils; bonding to heat sinks; thermal transfer to heat sink mediums; thermal transfer continuity over surfaces; and thermally conductive gap filling and coating.”

We are of the opinion that SE 4420 is not adequately described by heading 3506 because of its thermal conductivity. We find that it is not just an adhesive of heading 3506, but is a preparation of the chemical or allied industries not elsewhere specified or included.

The product known as SE 4420, a mixture of two siloxane polymers and alumina, is classifiable under subheading 3823.90.5050, HTSUSA, a provision for prepared binders for foundry molds or cores; chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included; residual products of the chemical or allied industries, not elsewhere specified or included; other; other; other; other; other.

Therefore, in view of the above relevant notes and ruling, Thermal Putty is thermal interface materials having chemical composition of alumina and zinc oxide treated with a combination of different siloxanes would appropriately be classifiable under CTH 8542 inasmuch Thermal Putty is not specifically covered under the nomenclature.

5.2 The applicant is of the view that Thermal Putty is not classifiable under Heading 32149090 as rule 1 of General Rules for Interpretation of Import Tariff (GRI, in short) lays down that the titles of Sections, Chapters and Sub-chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes. The Heading 3214 covers Glaziers’ Putty, Grafting Putty, Resin Cements, Caulking Compounds and Other Mastics; Painters’ Fillings; Non-Refractory Surfacing Preparations for Facades, Indoor Walls, Floors, Ceilings or the like. Further, as per the HSN Explanatory Notes to Heading 3214, the products of this heading are preparations of widely differing composition which are essentially characterised by the uses to which they are put. These preparations are usually put up in a more or less pasty form and in general they harden or cure after application. However, are in solid or powder tunes which are made pasty at the time of use by heating (e.g., by melting) or by addition of a NW leg’s- \\Ater) itch a caulking gun, a spatula, a trowel, a plasterer’s float or similar tools. (I) – GLAZIERS’ PUTTY GRAFTING PUTTY, RESIN CEMENT,CAULKING COMPOUNDS AND OTHER MASTICS. These preparations am mainly used to stop, seal or caulk cracks and, in certain eases, to bond or firmly join imponent together. They are distinguished Wm glues and other adhesives by the fact that they are applied in thick coatings or layers. It should be noted, however, that this group of products also covers mastics used on the skin of patients around stomas and fistulas. It is evident from the above that only those preparations which are mainly to stop, seal or ezttilk cracks are covered in this !leading. The Putty(s) covered herein are mainly used ^as adhesion‘ es alone. I We \ cr, in the present case, the Thermal Putty is meant for heat dissipation and conduction on rough surfaces which protects the other components and chip of the Mobile phone. therefrom, Thermal Putty cannot be covered under CTH 32149090. In this regard, in the case of Commissioner of Central &rise, Namur vs Simplex Mills Co. La, 2005 (181) E.L.T. 345 (SC), it is held that classificatitm cutoff a proud is determined (teem* to the terms of the Headings and any relative Section or Chapter Note, GRI 1 also provides that titles of Sections, Chapters and sub-chapters are provided far ease of reference only legal purposes, classification is determined according to the terms afar(‘ Headings and ant. relative Section or Chapter Notes, It is only when such Headings or Notes do not otherwise require that the provisions (2), _(3). (4), (5) and (61 of GR1 would apply. The subsequent rules can he resorted to only when no clear picture emerges hr. application of rule (1). Insofar as the present case is concerned, given that Heading 3824 expressly includes chemical products and preparations of the chemical or allied industries Iritic are not elsewhere specified or included and thus Thermal Putty shall he classified under Heading 3824 instead of Heading 3214.

Therefore, in light of the above, it is submitted that the Thermal Putty which is the subject matter of the present application is composed of Alumina and Zinc Oxide treated with various combinations of Siloxanes, will fall within Sub-heading 38249900 which covers preparation of the chemical or allied industries not elsewhere specified or included.

6. A personal hearing in the matter was conducted on 22,03.2024. During the personal hearing, the authorized representative of the applicant briefly explained the issue involved and also explained in brief the goods in question. He discussed the competing sub-headings of the Customs Tariff. He submitted compilation of documents and referred to reit:\ ala explanatory notes. He also referred to a few judgements in support of their claim. Authority asked the Al: ii they have any other documents viz, chemical analysis report, etc., to prove that the main feature of the goods in question. AR requested fora week time fix submission of the requisite documents. Further, the Authorized Representative has requested for one week time for submission of the requisite documents i.e. chemical analysis report, etc. Accordingly, opportunity of 214 was provided to the applicant. The 2″d PH was conducted on 18.04.2024 on virtual mode wherein the authorized representative pleaded that due to the paucity of the time, they could not approach any test lab. However, they have obtained a certificate from the supplier which depicts the properties of the Putty in question, They requested for the ruling accordingly.

7. The comments to the application of Mis Vivo Mobile of the concerned Commissionerate is as under:

7.1 The matter was re-examined and the comment, afresh are as:-

a) Since the importer has a valid II hence the same is eligible for advance ruling.t in terms of 28-E(c) of Customs Act 1962.

b) As per available records applicant’^, is not pending before any officer of customs, the Appellate Tribunal or any Court and the matter has not already been decided by the Appellate Tribunal or any Court:

c) Nature of activity is ongoing.

d) The application for advance ruling has been filed to decide the classification of the item to be imported with description as Thermal Conductive putty SY-TP 351-K, Thermal Putty TP-351-K 30ml and Thermal Putty SY-SG201LV. Further, the product description and functioning provided by the applicant were pressure and from the same following observation are made:-

i. Thermal putty is a thermal interface having good thermal conductivity and effective heat dissipation features.

ii. The Chemical Composition of the item is of alumina and zinc oxide treated with a combination if different siloxanes.

iii. Thermal putty is mainly used in microchip positions with high heat generation, as a heat conduction filling medium between the surface of the CPU and the copper foil of the shield cover as well as the copper foil of the shield cover and the upper cover of the motherboard.

iv. Thermal putty can be compressed into a thin verity of shapes and can he placed between the uneven and rough surfaces I to enhance the heat transfer effect.

v. Further the applicant has stated that they were earlier importing Thermal putty under 32149090.

7.2 Understanding the product:

7.2.1 To arrive at the CI1-1 of the item imported the answer to the questions placed above has to be answered and for the same the chemical composition of the material is to be analyzed.

7.2.2. The Material Safety Data Sheet (MSDS) as provided by the party (annexure C) of the Thermal Putty indicates the chemical composition as follows:

Name of Chemical	Percentage by Weight (%)
Silicone Polymer	10
Alumina	90

7.2.3. As per the submission given by the importer the thermal putty is mainly used in microchip positions with high heat generation, as a heat conduction filling medium between the surface of the CPU and the copper foil of the shield cover as well as the copper foil of the shield cover and the upper cover of the motherboard.

7.2.4. The chemical product in question is a type of thermal interface material (TIM), compound of 2 different chemicals. The chemical composition renders the product particularly suitable for a specific use, that is, to improve the heat transfer between a heat source and a heat sink.

7.3 Classification:-

7.3.1 To classify chemicals and chemicals products, it is pertinent to understand the following:

• Is it a separate chemical element, a separate chemically defined compound, or a chemical mixture?
• What are the functions, intended usage and chemical composition of the product?

Now taking up the Is’ question whether the item is a separate chemically defined element/compound or a mixture?

7.3.2 The analysis between element, compound and mixture.

a. Elements

• consists of only one kind of atom,
• cannot be broken down into a simpler type of matter by either physical or chemical means, and
• can exist as either atoms (e.g. argon) or molecules (e.g., nitrogen).

A molecule consists of two or more atoms of the same element, or different elements that are chemically bound together. Note that the two nitrogen atoms which comprise a nitrogen molecule move as a unit.

b. Compounds

• consists of atoms of two or more different elements bound together,
• can be broken down into a simpler type a miler (elements) by chemical means (hut not by physical means),
• has properties that are different from its component elements, and
• always contains the same ratio of its component atoms.

e. Mixtures

• consists of two or more different elements and/or compounds physically intermingled,
• can be separated into its components by physical means, and
• Often retains many of the properties of its components.

A separate chemically defined compound is a substance which consists of one molecular species (e.g., covalent or ionic) whose composition is defined by a constant ratio of elements and can be represented by a definitive structural diagram.

7.3.3 (Chapters 28 and 29) Separate Chemical Elements and Separate Chemically Defined Compounds

Separate chemical elements and separate chemically defined compounds (commonly known as pure chemicals) are generally classified in Chapters 28 and 29, depending on whether they are inorganic or organic chemicals. Such chemical elements or compounds, whether or not containing impurities, would remain classified in these Chapters, and could still be classifiable in their respective Chapters when they are mixed with certain substances, provided such additions do not render the product particularly suitable for a specific use. The presence of by-products or unconverted starting materials as a result of the manufacturing process of a chemical product of Chapter 28 or 29 could be regarded as permissible impurities. The chemical product could still be classified in Chapter 28 or 29 provided that these impurities are not deliberately left in the product to render it suitable for a specific use.

7.3.4 (Chapters 30 to 38) Chemical Mixture

Chemical mixtures are generally classified in Chapters 30 to 38 based on their intended usage. The possible HS headings according to the intended usage of the product have to be shortlisted:

Chapter 30	Pharmaceutical products
Chapter 31	Fertilizers
Chapter 32	Tanning or dyeing extracts; tannins and their derivatives; dyes, pigments and other coloring matter; paints and varnishes; putty and other mastics; inks
Chapter 33	Essential oils and resinoids; perfumery, cosmetic or toilet preparations
Chapter 34	Soap, organic surface-active agents, washing preparations, lubricating preparations, artificial waxes, prepared waxes, polishing or scouring preparations, candles and . similar articles, modelling pastes, “dental waxes” and dental preparations with a basis of plaster
Chapter 35	Albuminoidal substances; modified starches; glues; enzymes
Chapter 36	Explosives; pyrotechnic products; matches; pyrophoric alloys; certain combustible preparations
Chapter 37	Photographic or cinematographic goods

7.3.5. The ITC HS headings under consideration in this case are 32149090, 38249900 or any other CTN. The details of the heading under consideration are as follows:-

7.3.6 In understanding the language of the ITC-HS, the Explanatory Notes (ENs) of the Harmonized

Commodity Description and Coding System, which constitute the official interpretation of the Harmonized System at the international level, may be utilized. The ENs, although not diapositive or legally binding, provides a commentary on the scope of each heading, and is generally indicative of the proper interpretation of the ITC-HS.

(a) The EN to 3214 is reproduced below:-

32,14 -Glazer putty, grafting putty, resin cements caulking compounds and other mastics painters rulings non-refractory surfacing preparation for facades, indoor walls, floors, callings or like

3214.10 – Glaziers’ putty grafting putty, resin cements, caulking compounds and other mastics: painters filling

3214.90- Other

The products of this beetling ate preparations of widely differing composition which are essentially characterised by the uses to which they are put.

These preparations arc usually put up in a more or less pasty form and in general they harden or cure attar application. However, %Mile tire in solid or powder forms whi_ch _{are ma}d_{e pasty at t}h_e time ol use y heating (e.g., by melting) or by addition of a liquid (e.g., water).

The products of this heading me usually applied with a caulking gun, n spatula, a trowel, a plasterer’s float or similar tools.

(I) GLAZIERS’ PUTTY, GRAFTING PUTTY, RESIN CEMENTS, CAULKING COMPOUNDS AND OTHER MASTICS

These preparations are mainly used to stop, seal or caulk cracks and, in certain cases, to bond or firmly yam components together. They um distinguished from glues and other adhesives by the fact that they are applied in thick coatings or layers. it should be noted, however, that this group of products also covers mastics used 00 the skin of patients around stomas and fistulas.

This group includes:

1…….

2…….

(9) Mastics based on plastics (e.g., polyesters, polyurethanes, silicones and epoxide resins) whether or not containing a high added proportion (up to 80 %) of various fillers (e.g. Sand and other silicates, titaniu_m di_oxid_e, _met_alli_c powders). Some of these mastics are used after the addition of hardeners. Some mastics do not harden and remain tacky after application (e.g., acoustic sealants). Others harden by the evaporation of solvents, by solidification (hot-melt mastics), by curing after exposure to the atmosphere or by the reaction of different components mixed together (multi-component mastics).

Products of this nature are to be classified in this heading only if they are fully formulated for use as mastics, Mastics may be used to seal certain joints in construction or home repair, for sealing or repairing glass, metal or porcelain articles, as fillers or sealants for coachwork or, in the case of adhesive sealants, to bond various surfaces together.

(b) On perusal of the ENs to heading 3214 reproduced above, it is observed that based on the chemical composition the item seems to be covered by the Para 9 of heading 3214(reproduced above). But, on further studying of the EN to 3214 it is observed that the item covered under 3214 are mainly used to stop, seal or caulk cracks and in some cases to bond or firmly join components together, but, no cases the items of 3214 are used for heat dissipation. Hence, it seems that the item “Thermal Putty” does not merit classification under 3214.

7.3.7 Further EN to 3824 was perused and the same reproduced below: –

(a) On cumulative reading of ITC-HS IS and FN it is observed that the I leading 3824, is a basket provision. As such, if the subject merchandise cannot be more specifically classified elsewhere in the tariff, it is classified in heading 3824. Further, From reading it is also observed that Chapter 38 does not cover the chemical products whose composition is chemically defined. As per chemical composition given by the party the item prima facie seems to be separate chemically defined product made from Aluminum Oxide and Silicone polymer. Hence, by virtue of the chapter notes the goods do not merit classification under chapter 38.

7.3.8 On perusal of GRI Rule 3(13) the classification of the goods can be carried out based on the essential character, As per the chemical composition given the item contains more of Aluminum Oxide than Silicone polymer and as per the test of the essential character the same can he classified as per classification of the Aluminum Oxide.

7.3.9 Application of the relevant Chapter Notes and Subheading Notes

(b) On perusal of the same it is observed that the Inorganic separate chemically defined products are

defined in Chapter 28.

7.3.10 Determine the IIS code at 8-digit level

To start. compare the description of 1 dash subheading under the appropriate heading and choose the correct 1 dash Next, repeat the process for the subsequent lines with 2 or more dashes.

7.4. On the basis of the above classification of the item under question based oil chapter notes, GR1 and EN should be under CTH 2818 2090.

8. In response to comments of the concerned Commissionerate, the applicant has submitted their reply wherein they submitted as under:

8.1. Thermal Conductive Putty, which is the subject matter of the present application is proposed to be imported as a heat conduction filling medium between the surface of the CPU and the copper foil of the shield cover as well as the copper foil of the shield cover and the upper cover of the motherboard of the mobile phone. Thermal Conductive Putty is a mixture of 90% aluminium oxide and 10% silicone polymer having composition temperature at 500-degree Celsius. In support of the said claim the Applicant has produced the supplier certificate.

8.2. As per the Applicant’s interpretation, Thermal Conductive Putty being a mixture of aluminum oxide and silicone polymer is not a chemical which is separately defined in the nomenclature and thus, would fall under Tariff Item 3824 9900 of the Customs Tariff Act, 1975 (“Tariff”) which covers chemical products and preparations of the chemical or allied industries which are not specified or included elsewhere in the Tariff.

8.3. In support of the proposed classification under CTI 3824 9900, the Applicant has submitted as under:

a. Customs Tariff Heading (“CTH”) 3824, as per the HSN Explanatory Notes, covers mainly two groups first, prepared binders for foundry moulds or cores and second, chemical products and preparations of the chemical or allied industries which are not elsewhere specified or included. The latter group of the Heading acts as a residuary heading which covers the chemical products or preparations which are not specifically defined anywhere else in the Tariff.

b. In the present case, Thermal Putty is composed of alumina and zinc oxide treated with a combination of different siloxanes and should be classifiable under CTH 3824 inasmuch as, they are not chemically defined elsewhere and no other specific heading in the Tariff covers the said chemical preparation.

c. In this regard, the Applicant has placed reliance on the US CROSS Ruling NY HQ 952979 dated May 11, 1993 wherein, it is held that the thermal conductive greases can be classified under Heading 3824 and thus, the product under consideration in the present application viz., Thermal Conductive Putty is also classifiable under CTH 3824.

8.4. The Department has filed the Response to the Application making the following submissions:

a. It is observed that the item covered under CTH 3214 are mainly used to stop, seal or caulk cracks and in some cases to bond or firmly join components together but none of the items of CTH 3214 are used dissipation. Hence, it seems that the item “Thermal Puffy” does not merit classification under 3214,

b. It is observed that the I leading 3824, is a basket provision, As such, if the subject merchandise cannot be more specifically classified elsewhere in the tariff, it is classified in heading 3824. Further, it is also observed that Chapter 38 does not cover the chemical products whose composition is chemically defined. As per chemical composition given by the party the item prima facie seems to be separate chemically defined product made from Aluminum Oxide and Silicone polymer. Hence, by virtue of the Chapter Notes, the goods do not merit classification under Chapter 38 of the Tariff.

c. On perusal of General Rules of Interpretation (“G RI”) Rule 3(b), the classification of the goods can
be carried out based on the essential character. As per the chemical composition given the item contains more of Aluminum Oxide than Silicone polymer and as per the test of the essential character, the same can be classified as per classification of the Aluminum Oxide.

d. It is observed that the Inorganic separate chemically defined products are defined in Chapter

e. Thus, more appropriate classification of the item under question based on chapter notes, GRI and Explanatory Notes should be under CTH 2818 2090

8.5. The applicant, in response to the above points (a) to (e), submitted as under:

CHAPTER 28 – Inorganic chemicals, organic or inorganic compounds of precious metals, of rare-earth metals, of radioactive elements or of isotopes

NOTES:

1. Except where the context otherwise requires, the headings of this Chapter apply only to:

(a) separate chemical elements and separate chemically defined compounds, whether or not containing impurities;

(b) the products mentioned in (a) above dissolved in water;

(c) the products mentioned in (a) above dissolved in other solvents provided that the solution constitutes a normal and necessary method of putting up these products adopted solely for reasons of safety or for transport and that the solvent does not render the product particularly suitable for specific use rather than for general use;

(d) the products mentioned in (a), (b) or (c) above with an added stabilised including an anti-caking agent) necessary for their preservation or transport:

(e) the products mentioned in (a), (b), (c) or (d) above with an added anti-dusting agent or a coloring substance added to facilitate their identification or for safety reasons, provided that the additions do not render the product particularly suitable for specific use rather than for general use.”

8.6. The applicant further submitted that the Chapter 28 covers ‘Inorganic chemicals, organic or inorganic compounds of precious metals, of rare–earth metals, of radioactive elements or of isotopes’. The headings of this Chapter apply to separate chemically defined elements and separate chemically defined compounds. However, in the present case Thermal Conductive Putty is neither an element nor a compound. Thermal Conductive Putty is mixture of Alumina and Silicone Polymer, which is not specifically defined chemical in the nomenclature. Therefore, Thermal Conductive Putty will be excluded from Chapter 28.

8.7. Without prejudice to above, it is submitted that the above referred Notes to Chapter 28 specifically states in Note 1(c) and (e) that the product will be excludable from Chapter 28 if any addition in the product is made for the purpose of rendering the product for ‘suitable use’ rather than ‘general use’. Therefore, in the present case, Thermal Conductive Putty will be excluded from Chapter 28 inasmuch as, it is a mixture of Alumina which works merely as a filler and addition of Silicone Polymer solely for achieving thermal conductivity and effective heat dissipation features. Thermal Conductive Putty renders suitable function of filling the gaps between solid surfaces to achieve good heat transfer between solid interfaces.

8.8. Further, the Explanatory Notes to Chapter 28 describes the term ‘separate chemically defined’ as follows:

A. separate chemically defined compound is a substance which consists of one molecular species (e.g. covalent or ionic) whose composition is defined by a constant ratio of elements and can he represented by a definitive structural diagram. In a Crystal lattice, the molecular species corresponds to the repeating unit cell.”

8.9 Further, the applicant place reliance upon the matter of Collector of Customs, Bombay vs. Atul Products Ltd., Bulsar Atic Industries Ltd., Viand, 1985 (20) E.L.T. 147 (Tri.-Del), the Hon’ble tribunal has observed the scope of separate chemically defined compounds as follows:

14. It is useful to see what the CCCN says about a separate chemically defined compound .It defines it as a single chemical compound of structure, which does not contact other substances deliberately added during or after its manufacture (including purification).

the composition of Thermal Conductive Putty viz., Alumina and Silicone Polymer is not separate chemically defined in as much as, both the elements do not belong to one molecular species and the addition of silicone polymer is done deliberately during the manufacturing process to render a suitable function of the product which is thermal conductivity.

Accordingly, the Thermal Conductive Putty is excludable from the scope of Chapter 28 of the Customs Tariff and given that no other specific entry is available for this chemical composition, the same is rightly classifiable under CTH 3824.

8.10. The applicant again submitted that the entire basis of the Response of the Department that the Thermal Conductive Putty contains 90% of Alumina component and thus, the same is correctly classifiable under CTH 2818 is completely misplaced. The Department has failed to consider the nature of Thermal Conductive Putty which is a thick paste like material specifically used to fill the gaps between solid surfaces to achieve good heat transfer between solid interfaces. Moreover, the HSN Explanatory Notes in this regard specifically provides that the Chapter 38 covers chemical products and preparations of the chemical or allied industries which are not elsewhere specified or included. Therefore, combined reading of Explanatory Notes and Note 3 to Chapter 59 clarifies that when chemical preparation which are not elsewhere specified, they fall under CTH 3824.

8.11. In this regard, in US CROSS Ruling N011983 dated June 14, 2007, it was held that Activated alumina, imported in bulk, from China which is a mixture of inorganic compounds composed of over 92 percent aluminum oxide with minimal amounts of sodium oxide, silica and iron oxide shall be classifiable under CTH 3824. The relevant extracts of the said Rulings are extracted below:

The product is a mixture of inorganic compounds composed of over 92 percent aluminum oxide with minimal amounts of sodium oxide, silica and inn, oxide. The Activated alumina, designed for use as a desiccant, keeps things dry by absorbing water from the air. The desiccant, used extensively in compressed air dryers, works by a process called adsorption. The water in the air sticks to the alumina itself in between the tiny passages, as the air passes through them. The water molecules become trapped so that the air is dried out as it passes through the filter. When the desiccant is heated. the process is reversed, and the stored water is released thereby regenerating the desiccant. The Activated alumina, in bead foray. will be packaged in bags and drums.

The applicable subheading for Activated alumina will be 3824.90.3900, Harmonized Tariff Schedule of the United States (HTSUS), which provides for chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included: other: mixtures of two or more inorganic compounds: other. The rate of duty will be five.

8.12. Further, the applicant submitted that the Department has also failed to consider the Ruling referred to in Para 9.4 (c) above and based on the same so the Applicant’s interpretation of the matter should be upheld. Since, the Department in its reply has accepted the stance of the Applicant that Thermal Conductive Putt)^. does not merit classification under 3214 inasmuch as, the item covered under CTH 3214 are mainly used to stop, seal or caulk cracks and in some cases to bond or firmly join components together, but, no cases The items of CT1-13214 are used for heat dissipation. Hence, Thermal Conductive Putty by its composition ,„d suitable feature of heat dissipation is squarely covered under CTI 3824 9900.

9. I have taken into consideration all the materials placed on record in respect of the subject goods including the submission made by the applicant during the course of personal hearing. I have gone through the comments of the concerned Commissionerate. I, therefore proceed to decide the present application, seeking ruling on applicability of the exemption notification, on the basis of information available.

10. Concept, Law & Interpretation

10.1 Concept of ‘Thermal interface material’: From Wikipedia, the free encyclopedia- “A thermal interface material (shortened to TIM) is any material that is inserted between two components in order to enhance the thermal coupling between them. A common use is heal dissipation, in which the TIM is inserted between a heal-producing device (e.g. an integrated circuit) and a heat-dissipating device (e.g. a heat sink). There are intensive studies in developing several kinds of TIM with different target applications:

• Thermal paste: Mostly used in the electronics industry, thermal pastes provide a very thin bond line and therefore a very small thermal resistance. They have no mechanical strength (other than the surface tension of the paste and the resulting adhesive effect) and require an external mechanical fixation mechanism. Because they do not cure, thermal pastes are typically only used where the material can be contained, or in thin applications where the viscosity of the paste will allow it to stay in position during use.
• Thermal adhesive: As with thermal pastes, thermal adhesives provide a very thin bond line, but provide additional mechanical strength to the bond after curing. While curing TIMs like thermal adhesives may be used outside of a semiconductor package, often they are used in inside of a thermal package, as their curing properties can improve reliability over different thermal stresses. Thermal adhesives come in both single-part formulations as well as two-part formulations, often containing additives to improve thermal conductivity, including solid fillers (metal oxides, carbon black, carbon nanotubes, etc.)01, or liquid metal droplets. L3.1
• Thermal gap filler: This could be described as “curing thermal paste” or “non-adhesive thermal glue”. It provides thicker bond lines than the thermal paste, as it cures while still allowing an easy disassembly, thanks to limited adhesiveness.
• Thermally conductive pad: As opposed to previous TIMs that come in a fluidic form, thermal pads are manufactured and used in a solid state (albeit often soft). Mostly made of silicone or silicone-like material, thermal pads have the advantage of being easy to apply. They provide thicker bond lines (ranging in thickness from larger than a few hundred pm to a few mm) to accommodate non -flat interfaces and even multi-component interfaces, bedevil usually need higher force to press the heat sink onto the heat source, so that the thermal pad conforms to the bonded surfaces.
• Thermal tape: These materials adhere to the bonded surfaces, require no curing time, they are easy to apply, Similar to thermal pads, they are typically shipped in a solid but flexible form and come in a variety of thicknesses larger than a few hundred pm.”

[https://en.wikipedia.org/wiki/Thermal interface material]

10.1.1. The Journal Science Direct explains: “Thermal management is the capability of a system to maintain its temperature with the support of thermodynamics and heat transfer-based technologies. Thermal Interface Materials (TIMs) are any kind of material that is inserted between two components in order to enhance the thermal coupling between them hence the heat transfer rate. It is commonly used in many systems for heat dissipation. Thermal Interface Material with higher thermal conductivity value will improve the heat transfer performance of such devices. The conventional heat dissipaters are typically made up of materials like aluminum and copper which are quite heavy (density of Al-2.7 g/cm3, density of Cu-8.96 g/cm3) and have low thermal conductivity value (for A1-207 W/mK, Cu-385 W/mK) in pure form.”

“Thermal Interface Materials may be used to improve the heat transfer between two solid interfaces and that may improve the efficiency and working life of electronic equipment’s. There are different kinds of TIMs based on application, material and manufacturing process used. There are pastes made of various liquid polymers,

https://www.talobalcorp.com/product/thermal-interface-materials/therm a I-putty

10.2 The application for advance ruling has been filed to decide the classification of the item to be imported with description as Thermal Conductive Putty SY-TP 351-K, Thermal Putty TP-351-K 30m1 and Thermal Putty SY-SG201LV. Further, the product description and functioning provided by the applicant were perused and from the same the following observations are made: –

• Thermal putty is a thermal interface having good thermal conductivity and effective heat dissipation features.
• The Chemical Composition of the item is of alumina and /in,: oxide treated with a combination if different siloxanes.
• Thermal putty is mainly used in microchip positions with high heat generation, as a heat conduction filling medium between the surface of the CPU and the copper foil of the shield cover as well as the copper foil of the shield cover and the upper cover of the motherboard.
• Thermal putty can be compressed into a thin verity of shapes and can be placed between the uneven and rough surfaces 1 to enhance the heat transfer effect.
• Further the applicant has stated that they were earlier importing Thermal putty under CTH 32149090.

10.2.1. The subject item is classifiable under the Customs Tariff Act, 1965 and the General Rules for the Interpretation (GRI) of Import Tariff. The classification of goods in the Schedule shall be governed by the principles laid out as per the titles of Sections, Chapters and sub-chapters are provided for ease of reference only. GRI 1 provides that classification shall be determined first according to the terms of the headings of the tariff schedule and any relative section and chapter notes and, unless otherwise required, according to the remaining GRI’s, taken in their appropriate order. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings or notes do not require otherwise, the remaining GRIs 2 through 6 may be applied. GRI 6 requires that the classification of goods in the subheadings of headings shall be determined according to the terms of those subheadings, any related subheading notes and mutatis mutandis, to the GRIs.

10.2.2. In order to determining the classification of Thermal Putty, there are three competing ITC HS headings such as — 28182090, 32149090 and 38249900. In understanding the language of the ITC-HS, the Explanatory notes (ENs) of the Harmonized Commodity Description and Coding System, which constitute the official interpretation of the Harmonized System at the International level, may he utilized. The Explanatory Notes (ENS) to the Harmonized Tariff Schedule of the World Customs Organization (I ITS), provide an interpretation of the tariff at the international level.

10.2.3. Out of the aforementioned three headings, 32 149090 was earlier being applied by the applicant in the past and it is not under contention at this moment before the authority. Thus, the heading at 28182090 as recommended by the Port Commissionerate needs to be examined first, as to whether it could capture the classification in totality and explain the product that is intended to be imported to India.

10.2.4. It is submitted at the first place that the Chapter 28 covers ‘Inorganic chemicals^, organic ^{or in}o^rg^anic compounds qf precious metals, of rare-earth metals, of radioactive elements or of Isotopes . The headings of this Chapter apply to separate chemically defined elements and separate chemically defined compounds. However^, in the present case ‘Thermal Conductive Putty’ is neither an element nor a compound which could be placed under this chapter. As Thermal Conductive Putty is mixture of Alumina and Silicone Polymer, that even recognized by the Metal Safety Data Sheet is not specifically defined chemical in the nomenclature. Further, without prejudice to above, it is submitted that the above referred Notes to Chapter 28 specifically states in Note 1 (c) and (e) that the product will be excludable from Chapter 28 if any addition in the product is made for the purpose of rendering the product for ‘suitable use’ rather than ‘general use’. Therefore, in the present case, Thermal Conductive Putty will be excluded from Chapter 28 inasmuch as, it is a mixture of Alumina which works merely as a filler and addition of Silicone Polymer solely for achieving thermal conductivity and effectively dissipating heat features. Thermal Conductive Putty renders suitable function of filling the gaps between solid surfaces to achieve good heat transfer between solid interfaces.

10.2.5. The response of the Port Commissionerate also does not elaborated on the nature of the Thermal Conductive Putty, which is a thick paste like material specifically used to fill the gaps between solid surfaces to achieve good heat transfer between solid interfaces. Moreover, the HSN Explanatory Notes in this regard specifically provides that the Chapter 38 covers chemical products and preparations of the chemical or allied industries which are not elsewhere specified or included. The heading at 28182090 does not appear to reflect the parameters and composition of the product under consideration as explained in the para 9.1 in entirety.

10.3 Further Explanatory Notes to 3824 was perused and the same reproduced below: –

10.3.1. As the Thermal Conductive Putty being a mixture of aluminum oxide and silicone polymer is not a chemical which is separately defined in the nomenclature and thus, would fall under Tariff Item 3824 9900 of the Customs Tariff Act, 1975 (“Tariff”) which covers chemical products and preparations of the chemical or lied industries which are not specified covers mainly two groupsfini, prepared binders for foundry Ouvry anal 3824, as per the I ISN Explanatory Notes, products and preparations of the chemical or allied industries which are moulds or cores and second, chemical not elsewhere specified or included, The latter group of the Heading acts as a residuary heading which covers the chemical products or preparations which are not specifically deli. need anywhere elsewhere in the Tariff. In the present ease, Thermal putty is composed of alumina and zinc oxide treated with a combination of different siloxanes and could be classifiable under all 3824 inasmuch as, they are not chemically defined elsewhere and no other specific heading in the Tariff covers the said chemical ion. preparation.

10.3.2 In this regard, reliance is also placed on the US CROSS Ruling NY HQ 144035 dated Apri128, 2011 wherein, it is held that “the products are formulated mixtures used to aid electronic component dissipation in printed circuit boards and other hoard-level electronic components can be classified under Heading 3824.90.7000 under HTSUS, which provides for Prepared binders for foundry molds or cores; chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included: Other: Other: Other: Other: Electroplating chemical and electroless plating solutions and other materials for printed circuit hoards, plastics and metal finishing’s, The rate of duty will be free.”

10.3.3. Keeping the aforesaid as the backdrop, the product under consideration ‘Thermal Putty’ being a Thermal Interface Material (TIM), which is recognized in trade parlance and is used in abundance as the market f t or PCBs has been at the highest owing to multifarious use of electronic gadgets, will be classifiable under Sub-heading 38249900 of the first schedule to the Customs Tariff Act, 1975.

11. 1 rule accordingly.