Case Law Details

Case Name : In re Evans Consoles Corporation (CAAR Delhi)
Appeal Number : Ruling No. CAAR/Del/Evans/02/2022
Date of Judgement/Order : 13/01/2022
Related Assessment Year :
Courts : CAAR

In re Evans Consoles Corporation (CAAR Delhi)

Product under consideration is described as ‘Evans Consoles’ in the product literature, which is equipped with switches, electric motors and other electronic equipment, meant for performing specialized functions. These Consoles will be designed according the requirements of the customers in India as per the contracts, will be manufactured and assembled prior to shipment, but will be presented in disassembled form for assessment before the Customs. Therefore, I find that the disassembled Consoles, even after factoring in the absence of computer monitor with touch screen capabilities, which will be sourced from domestic suppliers to meet local electrical requirement, would have acquired the essential character of the complete article, viz. electrical console. Accordingly, I follow the settled principle of law and rule 2(a) of the General Rules of Interpretation of the Tariff Schedule to hold that the said disassembled Consoles would merit classification under the same heading as would a complete electrical console. Thereafter, I note that the applicant has submitted that consoles are classifiable under heading 8537 and I find that the description of the goods covered under the said heading in the First Schedule to the Indian Customs Tariff Act, 1975, include inter Min, console, equipped with two or more apparatus of heading 8535 or 8536 for electrical control or distribution of electricity. Further, I rely on Explanatory Notes Heading 8537 of HSN, which has also he relied upon by the concerned Commissioner of customs, NS-V, JNCH to conclude dud the consoles of the kind under discussion merit classification under heading 8537 of the First Schedule to the Indian Customs Tariff Act, 1975.

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

M/s Evans Consoles Corporation, 1616-27 Avenue N.E. Calgary, Alberta T2E 8W4, Canada, a company having IEC No. NIL, PAN NIL, (M/s Evans in shod), represented by Mr. S. Muragappan, Advocate. having (ace at No. I, 4th Floor, Cccbros Centre, Old No.45, New No.39, Red Cross Road, Egmore. Chennai — 600 008, has filed an application dated 03.03.2019 seeking advance ruling under section 28-11 of the Customs Act, 1962 before the Authority for Advance Rulings, New Delhi (AAR, in short). The initial application received in the Secretariat of AAR, New Delhi on 11.03.2019 was found to contain certain deficiencies. The O/o AAR vide letter 08.04.2019 requested Mr. S. Murugappan to remove the deficiencies mentioned therein. Thereafter, Mr. Murugappan vide letter dated 17.08.2019 submitted additional documents, etc. to rectify the deficiencies, which was received in the 0/o AAR on 22.03.2019.

2. The said application was being processed in terms of section 284 ibid by the O/o AAR. Thereafter, consequent to the amendments to Chapter V-B of the Customs Act, 1962 and appointment of Customs Authority for Advance Rulings (CAAR, in short) at New Delhi and Mumbai with effect from 04.01.2021, the said application filed by an applicant with address outside the territory of India was transferred to CAAR, New Delhi in terms of section 28-F (3) ibid; and regulation 31 read with regulation 6 (2) of CAAR Regulations, 2021.

3. On perusal thereof, and in view of the time limit of three months for pronouncing its advance rulings from the date of receipt of this application prescribed under section 28-1 (6) ibid, it was held that the aforesaid legacy application received in the o/o AAR, New Delhi on 11.03.2019 had become time barred for this Authority.

4. However, on constructive interpretation of the powers vested with this Authority, vide letter dated 16.07.2021, the applicant and the authorized representative were advised to intimate whether they continued to be interested in obtaining ruling of this Authority, and if so either resubmit their application in the Form CAAR-I appended to CAAR Regulations, 2021, or simply affirm that the declarations made in the earlier application remain valid and unchanged, at the earliest to this Authority. It was also informed that the date of receipt of such resubmitted application or affirmation, as the case may be, shall be taken as the date of receipt of their application under regulation 8(4); and no separate payment of the prescribed fee under regulation 6 (6) of CAAR Regulations, 2021 is required to be made.

5. The authorized representative on behalf of the applicant vide letter dated 21.07.2021 affirmed that the declarations made by them in their earlier application stand valid and unchanged. and informed that they arc interested in obtaining ruling by this Authority.

6. it was noted that the comments of Principal Commissioner of Customs, Nhava Sheva (General) had not been received in response to the request made vide letter dated 26.08.2020. Therefore. this office vide letter dated 09.08.2021 sent a reminder for the same. In this regard, comments from the concerned Commissioner of Customs, Nhava Sheva —V [instead of Principal Commissioner of Customs, Nhavn Shelia (General) ns mentioned in the application) vide letter dated 02/03.12.2021 were received in this office and the same were shared with the applicant.

7. The applicant in his initial application dated 08.03.2019 has submitted the following regarding the product under question:

A. Features & Functionality:

Control room consoles arc consoles incorporating equipment and apparatus for the control and distribution of electricity and for monitoring the affected processes and activities. These are usually produced in Canada. These Consoles are made to order based on the requirements and specifications of the customer. Wiring, power sockets, circuit protection devices, etc. are installed in each console. For shipping purposes, the consoles are in knocked down condition. Final assembly will take place where they are being installed.

Complete consoles require computer monitors with touch screen capabilities. In order to meet local electrical requirements, these are sourced from a supplier near the installation point. In some cases, the customer will instead sources and supply its own computer monitors for installation into the consoles. These are installed in control rooms for various industrial and governmental application. Examples of where the Consoles are used include, inter-alia; Road Traffic Control, Utilities (e.g. electricity and water), Industrial Process Control, Air Traffic Control, Call Centers and Security.

B. Suggested classification of components:

The applicant has mentioned that internal components of the Consoles are classifiable under different sub headings of heading 85.36 when presented separately:

(i) Auto transfer switch: This is a power distribution unit and auto transfer switch. It is designed to automatically switch to an uninterruptible power supply in the event the main power is insufficient. It keeps the power at a constant level. This is a function of connection and protecting electrical circuits by maintain a constant power output. Suggested classification is sub-heading 8536.50.

(ii) Power sockets and universal Serial Bus (“USII”) sockets. These devices provide a power plug in for video monitors and a means to make data connections and electrical connections.

Suggested classification is sub-heading 8536.69.

(iii) The Console’s work surfaces are made to he mechanically raised and lowered. This allows the operator to sit or stand while operation it.

8. The applicant is of the view that the product can be appropriately be classified under heading 8537 of the First Schedule to the Indian Customs Tariff Act, 1975. The heading reads as follows:

Tariff Item Description of Goods
8537 Boards, panels, consoles, desks, cabinets and other bases, equipped with two or more apparatus of heading 85.35 or 85.36, for electric control or the distribution of electricity, including those incorporating instruments or apparatus of Chapter 90, and numerical control apparatus other than switching apparatus of heading 85.17
85371000 For voltage not exceeding 1,000 V
85372000 For voltage exceeding 1,000 V

8.1 A useful reference can be made to the Explanatory Notes to the HSN in this regard. The explanatory Notes (2017 edition) to Heading 8537 read as follows:

“These consist of an assembly of apparatus of the kind referred to in the two preceding heading (e.g. switches and fuses) on a board, panel, console etc., or mounted in a cabinet, desk etc. They usually also incorporate meters, and sometimes also subsidiary apparatus such as transformers, valves, voltage regulators, rheostats or luminous circuit diagrams.

Evans Consoles merit classification under heading 8537

The goods of this heading vary from small switchboard with only a few switches, fuses, etc. (e.g. for lighting installations) to complex control panels for machine-tools, rolling mills, power stations, radio stations etc., including assemblies of several of the articles cited in the text of this heading”.

8.2 In the light of the above, since the goods referred to in Tariff Headings 8535 and 8336 are mounted in a console/desk, the appropriate classification will be only under Heading 8537 in terms of Rule 1 of Interpretative Rules to the Schedule to the Indian Customs Tariff Act, 1975. It is further submitted that these consoles are generally supplied in unassembled or semi assembled format. The applicant submits that even in that condition the goods will be appropriately classifiable only under Heading 8537 referred to above. In this regard, the applicant relies upon the General Rules for the Interpretation of the Tariff Schedule. Rule 2(a) of the above Rules reads as follows.

“2.(a) Any reference in a heading to an article shall be taken to include a reference to the article incomplete or unfinished article 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 (or piling to be classified as complete or finished by virtue of this rue), presented unassembled or disassembled”.

8.3 In view of the above, though these consoles arc presented unassembled and incomplete, they will have the essential characteristics of the complete console. In this connection, the applicant has referred to the Explanatory Notes to General Interpretative Rule 2(a) as contained in the HSN, which reads as follows.

“(I) The first part of the Rule 2(a) extends the scope of any heading which refers to a particular article to cover not only the complete article but also that article incomplete or unfinished, provided that as presented it has the essential character of the complete or finished article.

(V) The second part of Rule 2(a) provides that complete or finished articles presented unassembled or disassembled are to be classified in the same heading as the assembled article. nen goods are so presented, it is usually for reasons such as requirements or convenience of packing, heading or transport.

(VI) This Rule also applies to incomplete or unfinished articles presented unassembled or disassembled provided that they are to be treated as complete or finished articles by virtue of the first part of the first part of this Rule”.

8.4 Thus, although incomplete and unassembled, the console has the essential character of one that is ‘complete and ‘assembled’. In view of the above, the applicant has submitted that the goods are appropriately classifiable under Tariff heading 8537 and sub-heading within 8537 can be determined based on the voltage ratings, for which, these are designed.

9. The concerned Commissioner of Customs, Nhava Sheva-V, JNCH vide letter dated 02/03.12.2021 has, inter-alia, submitted the following:

9.1 Citing reference to the submissions of the applicant, including to the Explanatory Notes (2017) to HSN 8537 and Rule 2(a) of the General Rules of Interpretation of the Tariff Schedule, the contention that these consoles are generally supplied in unassembled or semi- assembled format and even in that condition goods are classifiable under heading 8537, the subject item will be classified under HSN 8537, on the ground that the consoles unassembled and incomplete still have essential characteristics of complete console, the subject item, namely control room console, which is described as a semi-circular console desk with a work surface, vertical mounting arms to accommodate a number of display monitors, and electrical switching apparatus throughout that facilitates the installation of electrical equipment and personal computers, along with wiring, power sockets, circuit protection devices installed therewith, will be classified under HSN 8537. Further sub-classification under HSN 8537 10 00 or 3537 20 00 will depend upon the voltage capacity which has not been specified in the application.

10. During the personal hearing conducted in virtual mode on 21.12.2021, Mr. S. Murugappan, the authorized representative of the applicant re-iterated the above submissions made in their application. On being asked by the Authority, he clarified the following:

10.1 To understand the extent of completeness of the unassembled console in terms of the equipment or components involved at the time of importation, it was clarified that only the monitors to be fitted on the console will be purchased locally by the applicant at the time of assembly of the console in India;

10.2 To ascertain whether the semi-assembled consoles were unassembled or disassembled at the time of import, it has been subsequently clarified vide letter dated 22.12.2021 that the consoles to be shipped will be complete consoles as per the contracts given by the customers and that the consoles are manufactured and assembled prior to shipping and then, they are disassembled only for the purpose of shipping/transport; and

10.3 The applicant wishes to get ruling at the 4-digit HSN classification of the product and the decision on a more specific sub-heading at the eight digit level, which is dependent on the voltage, be left for custom officials at the time of import.

11. I have gone through the details of the foreign applicant, their documents authorizing S. Murugappan and other relevant details and admit the aforesaid application for advance ruling; and thereafter, proceed to examine the matter on merit for pronouncing my ruling on the question of classification of consoles fitted with electrical components proposed to be exported to India by the said foreign applicant.

12. I find that the product under consideration is described as “Evans Consoles” in the product literature, which is equipped with switches, electric motors and other electronic equipment, meant for performing specialized functions. These Consoles will be designed according the requirements of the customers in India as per the contracts, will be manufactured and assembled prior to shipment, but will be presented in disassembled form for assessment before the Customs. Therefore, I find that the disassembled Consoles, even after factoring in the absence of computer monitor with touch screen capabilities, which will be sourced from domestic suppliers to meet local electrical requirement, would have acquired the essential character of the complete article, viz. electrical console. Accordingly, I follow the settled principle of law and rule 2(a) of the General Rules of Interpretation of the Tariff Schedule to hold that the said disassembled Consoles would merit classification under the same heading as would a complete electrical console. Thereafter, I note that the applicant has submitted that consoles are classifiable under heading 8537 and I find that the description of the goods covered under the said heading in the First Schedule to the Indian Customs Tariff Act, 1975, include inter Min, console, equipped with two or more apparatus of heading 8535 or 8536 for electrical control or distribution of electricity. Further, I rely on Explanatory Notes Heading 8537 of HSN, which has also he relied upon by the concerned Commissioner of customs, NS-V, JNCH to conclude dud the consoles of the kind under discussion merit classification under heading 8537 of the First Schedule to the Indian Customs Tariff Act, 1975.

I rule Accordingly.

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