Customs Advance Ruling Inductor classifiable Under CTI 85045090: CAAR Mumbai

In re Sanmina SCI India Pvt Ltd. (CAAR Mumbai)

M/s Sanmina SCI India Private (the applicant), operating from both Special Economic Zone (SEZ) and Domestic Tariff Area (DTA) units, filed an application for advance ruling before the Customs Authority for Advance Rulings (CAAR), Mumbai, on June 16, 2025. The applicant sought an advance ruling on the classification and applicability of Sl. No. 5 of Notification No. 25/2005-Customs dated March 1, 2005 (as amended) for the import of various inductors. The imported goods are Inductors, Chip Inductors, Shielded Power Inductors, Power Inductors, Shielded SMD/SMT Power Inductor, and Molded Power Inductors, intended for use in the manufacture of telecommunication equipment in the DTA unit.

Inductor Description and Use

The imported products, referred to as inductors or the subject goods, are passive electronic components that store energy in a magnetic field when electric current flows through them. They are widely used in power management to smooth current fluctuations and reduce radio-frequency noise. The main property of an inductor is inductance, which measures its ability to temporarily store energy in a magnetic field.

An inductor’s components include a coil (made of conductive wire, usually copper) to create inductance, a core (made from magnetic material like ferrite or iron) to enhance magnetic properties, insulation on the wire, a magnetic shielding layer to reduce electromagnetic interference (EMI), terminations for circuit connection, and a protective housing. While six types of inductors were mentioned by the applicant, their basic features remain the same.

The applicant detailed the importance of inductors in telecommunication apparatus for:

• Impedance Matching: Inductors are used with capacitors in matching networks to ensure maximum power transfer and minimize reflection in RF circuits.
• Filtering: Combined with capacitors to form LC filters, inductors selectively block or pass frequency ranges, which is essential for filtering out unwanted frequencies and noise.
• Oscillation and Tuning: Inductors are key components in resonant LC circuits used to produce and adjust oscillations at specific frequencies for communication systems.
• Signal Integrity: Inductors help maintain signal integrity by smoothing rapid current changes, reducing EMI, and acting as chokes to block high-frequency noise.

Applicant’s Interpretation and Classification Claim

The applicant contended that the inductors should be classified under Chapter 85 (Electrical Machinery & Equipment and Parts thereof) of the Customs Tariff, specifically under Heading 8504 5090 as “Other Inductors.”

• This claim relies on Rule 1 of the General Interpretation Rules (GIR) and Note 2(a) to Section XVI.
• Section XVI covers “Machinery and Mechanical Appliances; Electrical Equipment; Parts Thereof…” and includes Chapters 84 and 85.
• Note 2(a) to Section XVI states that parts which are goods included in any of the headings of Chapter 84 or 85 (with exceptions) are in all cases to be classified in their respective headings.
• The applicant asserted that inductors have a specific heading, 8504 50, which is split into Choke Coils (8504 5010) and Others (8504 5090). Since the imported inductors are not choke coils (which are primarily designed to block high-frequency AC), they fall under “Other Inductors,” 8504 5090.
• The applicant cited case laws to support the principle that a product with a specific heading should be classified there, even if it is a part of a larger machine.

Applicant’s Claim for Nil Rate of Duty

The applicant sought a “nil” rate of Basic Customs Duty under Sl. No. 5 of Notification No. 25/2005-Customs.

• This notification provides a “nil” rate for “Other inductors for power supplies for automatic data processing machines and units thereof and telecommunication apparatus” classifiable under heading 8504 50.
• The applicant argued that since the inductors, classifiable under 8504 50, are being used for the manufacture of telecommunication apparatus, they are eligible for the nil rate of duty.
• The applicant further stated a willingness to comply with the Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022 (IGCR Rules, 2022), which apply when a notification benefit is dependent on the end use of the imported goods. This would involve providing prior information and maintaining records to ensure the inductors are utilized only for manufacturing telecommunication apparatus.

CAAR Findings and Holding

The CAAR considered the application, submissions, and the legal framework, noting that the jurisdictional Commissionerate of Customs had provided no comments despite reminders.

Classification Holding:

The CAAR held that the Inductors are correctly classifiable under CTI 85045090 as “other inductors”.

• This ruling is based on GIR Rule 1 and Note 2(a) to Section XVI, as the inductors have a specific heading, 8504 50, and are not choke coils.
• The CAAR found it unnecessary to discuss the scope under CTH 85177990.

Exemption Holding:

The CAAR held that the imported inductors are not eligible for the nil rate of duty under Sl. No. 5 of Notification No. 25/2005-Customs.

• The notification provides exemption to “Other inductors for power supply for automatic data processing machines and units thereof, and telecommunication apparatus” classifiable under heading 8504 50.
• The CAAR interpreted the wording to mean that only those “other inductors” that are used for the power supply of telecommunication apparatus (and automatic data processing machines and units thereof) qualify for the exemption.
• The imported inductors are intended to be used in the Printed Circuit Board Assemblies (PCBA) of the telecommunication devices, as claimed by the applicant, not for the power supply itself.
• The ruling relied on the principle that exemption notifications should be interpreted strictly.
• Consequently, the imported goods are not eligible for the notification benefit and attract the merit rate of duty.

FULL TEXT OF THE ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, MUMBAI

M/s Sanmina SCI India Private (having IEC No. 0403030714) and 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 16.06.2025 along with enclosures in terms of Section 28H (1) of the Customs Act, 1962 (hereinafter referred to as the ‘Act’ also). The applicant is seeking advance ruling on the classification and Applicability of serial no. 5 of Notification No.25/2005-Customs dated March 1, 2005 (as amended) for import of Inductors, Chip Inductors, Shielded Power Inductors, Power Inductors, Shielded SMD/SMT Power Inductor and Molded Power Inductors intended in the manufacture of telecommunication equipment.

2. The Applicant vide their application dated 16.06.2025 has submitted as follows:

2.1 The Applicant operates from both Special Economic Zone (“SFZ”) as well as Domestic Tariff Area (“DTA”) units. The Imported products Inductors, Chip Inductors, Shielded Power Inductors, Power Inductors, Shielded SMD/SMT Power Inductor and Molded Power Inductors are used in the manufacture of telecommunication equipment in DTA Unit.

2.2 The Applicant specializes in complex high-technology products in market segments including Communications Networks, Automotive, Industrial & Semiconductor, Medical, Defence & Aerospace, Multimedia, Clean Tech and Computing & Storage. The Applicant offers complex PCBA, system integration, Build-to-Order (BTO), Configure-to-Order (CTO) and test services for a variety of products: from state-of-the-art telecommunications equipment to life saving medical equipment modules to blood glucose meters and Automotive products and also provides customers with engineering expertise for product design, technology and test system development.

2.3 The applicant is proposing to import ^–Inductors, Chip Inductors, Shielded Power Inductors, Power Inductors, Shielded SMD/SMT Power Inductor and Molded Power Inductors” (hereinafter referred to as the inductors/the subject goods”). Inductors are passive electronic components that store energy in a magnetic field when electrical current flows through them. They are widely used in power management applications to smooth out current fluctuations and reduce radio-frequency noise. The main property of inductor is inductance i.e., Inductance is a measure of how well an inductor can store energy in a magnetic field when electricity flows through it. It’s like the inductor’s ability to hold onto energy temporarily.

2.4 The Applicant has provided below the various components of Inductors:

• Coil: The core element of the inductor is its coil, which is made of a conductive wire i.e., copper. The wire is wound into a coil to create inductance, the property that allows the inductor to store energy in a magnetic field when the current flows through it. The number of turns and the arrangement of the coil affect the inductance value.
• Core: The inductors include a core made from magnetic material, such as ferrite or iron. The core serves to enhance the inductor’s magnetic properties, increasing its inductance and efficiency. The core’s material and shape can significantly influence the inductor’s performance, including its saturation current and frequency response.
• Insulation: The wire used in the coil is usually coated with insulating material to prevent Short circuits between adjacent turns.
• Shielding: Inductors have a magnetic shielding layer to confine the magnetic field within the component and reduce electromagnetic interference (EMI) with surrounding components.
• Terminations: Inductors have terminals or leads that connect them to the rest of the circuit. These are made from conductive materials like copper or tin-plated copper to ensure good electrical connectivity.
• Housing: Inductors are encased in a protective housing or package to shield the coil and core from physical damage and environmental factors like moisture and dust.

The applicant has mentioned six types of inductors in the above tabulation; however, the basic features remain same for all types of inductors.

2.5 Importance of inductors in telecommunication apparatus — The applicant has provided below the importance of inductors in telecommunication apparatus:

• Impedance Matching: Impedance matching is critical in RF circuits to ensure maximum power transfer between components, such as antennas, transmission lines, and receivers. When impedances are mismatched, a portion of the signal is reflected back, reducing the efficiency of the system. Inductors are used in conjunction with capacitors to form matching networks that adjust the impedance seen by different components. These networks can transform impedances from one level to another, allowing for optimal power transfer and minimizing reflection. Without inductors for impedance matching, there could be significant signal reflection at interfaces (such as between antennas and receivers or transmitters). This reflection leads to reduced signal power reaching the intended destination, resulting in weaker signals, decreased range, and lower data throughput.
• Filtering: RF circuits need to filter out unwanted frequencies and noise to prevent interference and ensure clear signal transmission. This is especially important in crowded frequency bands like those used for Wi-Fi, where multiple devices operate simultaneously. Inductors, combined with capacitors, form LC filters that can selectively block or pass certain frequency ranges. An LC filter (i.e., circuits consisting of a combination of inductors (L) and capacitors (C) to cut or pass specific frequency bands of an electric signal) can be designed as a low-pass, high-pass, band-pass, or band-stop filter, depending on the desired frequency characteristics. In telecommunication apparatus, these filters help isolate the specific frequency band used for communication, improving signal quality and reducing interference from other signals or noise. The absence of inductors in LC filters would make it difficult to effectively filter out unwanted frequencies and noise. This can result in increased interference from other devices and signals, leading to a degraded signal-to-noise ratio (SNR) and causing frequent data errors or packet loss.
• Oscillation and Tuning: Oscillation and tuning are essential for generating and selecting specific frequencies in RF circuits. Wi-Fi systems need to operate on predefined frequency bands (e.g., 2.4 GHz or 5 GHz). Inductors are key components in resonant LC circuits, which are used to produce oscillations at specific frequencies. These circuits can be adjusted (tuned) to resonate at the desired frequency by altering the inductance or capacitance values. This tuning capability is crucial for telecommunication apparatus to accurately lock onto the correct frequency band for communication. ensuring reliable and stable connections. Inductors are essential in circuits for tuning to specific frequencies. This lack of selectivity could cause the system to pick up or interfere with adjacent channels or frequencies, reducing the efficiency and reliability of the telecommunication systems.

• Signal Integrity: Maintaining signal integrity is vital for ensuring that the transmitted and received data is accurate and free from errors. Signal distortion and interference can lead to data loss and communication issues. Inductors help maintain signal integrity by smoothing out rapid changes in current and reducing electromagnetic interference (EMI). They can act as chokes, blocking high-frequency noise and preventing it from contaminating the signal path. This is particularly important in environments with many electronic devices, where EMI can significantly impact Wi-Fi performance. Without inductors, telecommunication signals might suffer from increased noise and distortion, leading to data corruption and unreliable connections, especially in environments with many electronic devices.

Applicant’s interpretation of Law/Facts

3. Classification of Inductors, Chip Inductors, Shielded Power Inductors, Power Inductors, Shielded SMD/SMT Power Inductor and Molded Power Inductors

Chapter 85 of the First Schedule to the Customs Tariff Act, 1975 covers goods, described as “‘Electrical Machinery and Equipment and Parts thereof; Sound Recorders and Reproducers, Television Image and Sound Recorders and Reproducers and Parts and Accessories of Such Articles”.

3.1 The chapter falls under Section XVI, titled “Machinery and Mechanical Appliances, Electrical Equipment; Parts Thereof; Sound Recorders and Reproducers. Television Image and Sound Recorders and Reproducers; and Parts and Accessories of such articles”.

3.2 Chapters 84 and 85 fall under Section XVI of the First Schedule to the Customs Tariff Act.

Therefore, in view of GIR 1, it is necessary to refer to the Notes to Section XVI.

3.3 It is relevant to refer Note 2, which is the principal authority for classification of parts of the goods of Section XVI and the first rule is that a part which is covered as goods in any of the headings of Chapter 84 or Chapter 85, should in all cases be classified under that heading, notwithstanding the fact that the said part is identifiable for use with a particular machine.

3.4 If the first rule does not apply for the reason that a part, identifiable for use with a particular machine, is not specifically covered as goods under any of the headings of Chapter 84 or 85, then such parts should be classified under the heading covering the machine for which the said part is identifiable or under the heading specific to identifiable parts of a group of machines such as 8409, 8431, 8448, 8466, 8473, 8503 8522, 8529 or 8538.

3.5 The Applicant submits the inductors shall be classified under Chapter 85 (“Electrical Machinery & Equipment and Parts thereof’) of the Customs Tariff and more specifically shall be classified under Chapter 85 (“Electrical Machinery & Equipment and Parts thereof’) of the Customs Tariff and more specifically under the heading 8504 5090 as “Other Inductors”.

3.6 As per Rule 1 of General Interpretation Rule, it can be noted that inductors are having specific heading 8504 50. However, heading 8504 50 provides two types of inductors i.e., Choke Coils (chokes) under HSN 8504 5010 and Others under HSN 8504 5090. The inductors imported by the applicant is not a choke coil and hence it will fall under “Other inductors”. The applicant submits that there is a difference between choke coil and other inductors. A choke coil, often simply called a “choke,” is a specific type of inductor designed primarily to block or “choke” high-frequency alternating current (AC) while allowing direct current (DC) or low-frequency signals to pass through. Chokes are commonly used in power supplies and radio frequency (RF) circuits to filter out unwanted AC signals or noise. While the others inductor stores energy in its magnetic field when electric current flows through it. In simple terms, all choke coils are inductors, but not all inductors are choke coils. The inductors imported by applicant is not having specific features of choke coils and hence classification under 8504 5010 is ruled out.

3.7 In terms of Rule 1 of General Rules of Interpretation, relative Section or Chapter Notes is also relevant in determining classification. The Applicant has discussed the section XVI and chapter notes of chapter 85.

Section XVI – MACHINERY AND MECHANICAL APPLIANCES; ELECTRICAL EQUIPMENT; PARTS THEREOF; SOUND RECORDERS AND REPRODUCERS, TELEVISION IMAGE AND SOUND RECORDERS AND REPRODUCERS, AND PARTS AND ACCESSORIES OF SUCH ARTICLES

3.7.1 Note 2 of section XVI provide for classification of ‘parts’ of machines or articles falling under Chapters 84 & 85. Note 2 to Section XVI is reproduced hereunder for ease of reference:-

“2. Subject to Note 1 to this Section, Note 1 to Chapter 84 and Note 1 to Chapter 85, parts of machines (not being parts of the articles of heading 8484, 8544, 8545, 8546 or 8547) are to be 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, 8485, 8503, 8522, 8529, 8538 and 85-18) are in all cases to be classified in their respective headings;

(b) other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 8479 or 8543) are to be classified with the machines of that kind or in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate. However, parts which are equally suitable for use principally with the goods of headings 8517 and 8525 to 8528 are to be classified in heading 8517, and parts which are suitable for use solely or principally with the goods of heading 8524 are to be classified in heading 8529;

(c) all other parts are to be classified in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate or, failing that, in heading 8485 or 8548.”

3.7.2 In terms of note 2(a) to section XVI, it is clearly brought out that ‘parts’ included in any of the headings of Chapter 84 & 85 are in all cases to be classified under the same heading. Therefore, Inductors having a specific heading under 8504 50 as “Other Inductors” would fall under this. More specifically, the present inductors imported by applicant would fall under 8504 50 90 as “Other Inductors” as it is not a choke coils.

3.8 Reliance has been placed on the following case laws:

In the case of ludo Berg Ltd v Commissioner of Central Excise, Delhi -I 2001 (134) E.L.T. 749 (Tri-Del) in the context of classification of powder conveying system used to convey milk powder to milking machine, it was held that the same shall be classifiable under heading 84.28 of Central Excise Tariff Act, 1985 as ‘other lifting, handling, loading or unloading machinery’ even though such product is meant for incorporation in dairy machines finally, and not under sub­heading 8434.90 ibid as ‘parts of dairy machinery’ relying upon note 2(a) to section XVI. The relevant extract is enclosed hereunder:-

Note 2(a) to Section XVI of the Central Excise Tariff Act clearly provides that Parts which are goods included in any of the headings of Chapters 84 and 85 are in all cases to be classified in their respective headings. As the impugned product is included specifically under Heading 84.28 it has rightly been classified there. Accordingly, we find no infirmity in the impugned Order and reject the appeal.

In the case of New Standard Engineering Co Ltd v. Commissioner of Central Excise Mumbai 2003 (153) E.L.T. 329 (Tri-Bom), transmission shafts, crank shafts, bearing housing, gears and gear rings and pulleys were classified under heading 84.83 of Central Excise Tariff Act, 1985 being specifically included therein.

Note 2(a) to Section XVI of Central Excise Tariff specifies the criteria for classification of parts of machinery which fall for classification in any of the chapters of that Section. Clause (a) of this note provides that parts which are goods included in any of the headings of Chapter 84 or Chapter 85 other than those of headings which are specified therein are in all cases to be classified in their respective headings. Heading 84.83 is not among the headings which are excluded in the note. This heading includes within its scope transmission shafts, crank shafts, bearing housing, gears and gear rings and pulleys. Therefore, the goods under consideration, being included in these headings would rightly be classified in that heading.

In the case of Subros Ltd v. Commissioner of Customs, New Delhi 2018 (363) E.L.T. 849 (Tri. – Del), it was held that Thermistors and sub-assemblies thereof imported by the assessee for use in automobiles, find a specific mention under tariff item 8533 40 30 and shall be classifiable therein based on Note 2(a) to Section XVI.

In the case of M/s. Ford India Pvt Ltd v Commissioner of Customs, Chennai 2024 (9) TMI 944 – CESTAT CHENNAI it was held that air compressors used for car air conditioning equipment, are rightly classifiable under its respective heading CTH 8414 8011 as gas compressors of a kind used in air-conditioning equipment as per Note 2(a) to Section XVI.

3.9 Based on the above, the applicant is of the view that inductors shall be classifiable under the specific heading 8504 5090 in terms of note 2(a) to section XVI.

Applicability of Sl No. 5 of Notification No. 25/2005-Customs dated March 1, 2005 (as amended)

3.10 Notification No. 25/2005-Customsdated March 01, 2005 (hereinafter referred to as “the notification”), provides ^–Nil” rate of Basic Customs Duty in relation to “Other inductors for power supplies for automatic data processing machines and units thereof and telecommunication apparatus” classifiable under heading 8504 50.

3.10.2 Under Sl.No.5 of the Notification, Other Inductors classifiable under tariff heading 8504 50 for telecommunication apparatus are eligible for “nil” rate of customs duty.

3.10.3 Not all inductors classified under 8504 50 are eligible for nil rate of customs duty under Sl.No.5 of the notification. Only the inductors classified under 8504 50, where the end use is specifically for telecommunication apparatus would warrant inclusion therein. Since the inductors classifiable under heading 8504 50, is being used by the applicant for the manufacture of telecommunication apparatus, the same shall be eligible for nil rate of duty in terms of Sl.No.5 of the notification.

Port of Import and reply from concerned jurisdictional Commissionerate

4. The applicant in their CAAR-1 indicated that they intend to import the subject goods i.e. various Inductors to be used in telecommunication apparatus at the jurisdiction of Office of the Commissioner of Customs, Import Commissionerate, Chennai-I. The application was forwarded to the Office of the Commissioner of Customs, Import Commissionerate, Chennai-I for their comments vide letter dated 01.08.2025, and again reminders dated 22.08.2025 and 16.09.2025 were issued, however no comments were received from the jurisdictional authorities.

Details of Hearing

5. A hearing was held on 12.09.2025 at 12.30 PM. Shri Debasis Nayak- Chartered Accountant, Shri Aman Goyal- Chartered Accountant, Shri Venkadathri Rajaraman- Chartered Accountant and Shri D. Babu Dinesh Kumar- Sr. Manager Trade Compliance of Sanmina have appeared for the hearing and reiterated the contention submitted with the application. They submitted that the subject goods are “Inductors” which are specifically covered under CTI 850450 more specifically under CTI 85045090 (other). That the GRI-Rule 1 is applicable for classification of the Inductors. As the device is to be used in telecommunication/PCBA therefore GRI rule 3(a) – most specific description is also applicable for classification of the subject goods. They also relied upon Filtronics Ltd. Vs Collector of C. Ex 1989 (43) E.L.T. 457 (Tribunal), Socomec Innovative Power Solutions Pvt. Ltd. Vs CC, Chennai (Tribunal Madras) and Socomec India Pvt. Ltd. (A.A.R-Cus.-Delhi) in support of their claim.

5.1 Further, the applicant made an additional submission on 03.10.2025 wherein it was contended that notification No. 25/2005-Customs dated March 01, 2005 (hereinafter referred to as “the notification”), provides “Nil” rate of Basic Customs Duty in relation to “Other inductors for power supplies for automatic data processing machines and units thereof, and telecommunication apparatus” classifiable under heading 8504 50.

In the instant case, the inductors imported by the applicant are meant for integration with printed circuit board assemblies for the purpose of manufacture of various telecommunication equipment such as wi-fi receivers, wi-fi transmitters etc. The printed circuit board assemblies in which the inductors are integrated would constitute an apparatus for telecommunication equipment/devices. Consequently, it is evident that inductors are meant for the purpose of utilization in telecommunication apparatus.

Since the inductors classifiable under heading 8504 50, are being used by the applicant for the manufacture of telecommunication apparatus, the same shall be eligible for nil rate of duty in terms of Sl.no. 5 of the notification.

The applicant highlighted towards Notification No. 25/2005-Customs which does not provide any specific conditions to be complied. However, applicant wishes to highlight rule 2(b) of Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022. CIGCR Rules, 2022″) which provides that the rules shall be applicable where an importer intends to avail the benefit of any notification and such benefit is dependent upon the use of the goods imported being covered by that notification for the manufacture of any commodity or provision of output service or being put to a specified end use.

In the instant case, since the eligibility of the benefit of the notification is dependent on the imported goods capable of being used for telecommunication apparatus, the IGCR Rules, 2022 shall be applicable to the products imported by the applicant. The IGCR Rules, 2022 have been introduced for tracking and verifying if the imported goods are put to the specified end use for the purpose of which benefit of exemption has been provided.

Under the IGCR Rules, 2022, the applicant would have to submit a continuity bond with surety or security to the Deputy Commissioner of Customs or Assistant Commissioner of Customs having jurisdiction over the premises where the goods imported are to be put to use for manufacture of goods for the specified end use.

The applicant would have to provide one-time prior information on the common portal, in Form IGCR-1 containing the specified particulars of the manufacturing activity, details of the end use of the imported product etc. Further, the applicant would have to separately maintain records in relation to quantity of the goods imported, consumed, remaining in stock etc. and shall submit a quarterly statement on the common portal in Form IGCR-3.

The applicant wishes to submit that they would squarely comply with all the provisions of the IGCR Rules, 2022 in this regard for availing the benefit of Sl. No.5 of Notification No. 25/2005-Customs and for ensuring that the imported goods are utilized only for the specified end use of manufacturing telecommunication apparatus. Considering the applicability of IGCR rules, the imported goods will be used only for specified purposes (i.e., telecommunication apparatus).

5.2 Nobody appeared on behalf of the Department for hearing.

Discussion and findings

6. I have considered all the materials placed before me in respect of the subject goods. I have gone through the submissions made by the applicant during the personal hearing and comments received from the concerned Commissionerate. I proceed to pronounce a ruling on the basis of information available on record as well as existing legal framework.

6.1 At the outset, I find that the issue raised in the question in the Form CAAR-1 is squarely covered under Section 28H(2) of the Customs Act, 1962, being a matter related to classification of goods under the provisions of this Act.

6.2 Before deciding the issue, let me deliberate on the legal framework prescribed in Customs Tariff Act, 1975, Chapter/ Section notes along with HSN explanatory notes. As per Rule 1 of GRI, 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.

6.3 The Applicant stated that Inductors are passive electronic components that store energy in a magnetic field when electrical current flows through them_ They are widely used in power management applications to smooth out current fluctuations and reduce radio-frequency noise. The main property of inductor is inductance i.e. Inductance is a measure of how well an inductor can store energy in a magnetic field when electricity flows through it. It’s like the inductor’s ability to hold onto energy temporarily. Further, Inductors to be imported by the applicant are meant for integration with printed circuit board assemblies for the purpose of manufacture of various telecommunication equipment such as wi-fi receivers, wi-fi transmitters etc. The printed circuit board assemblies in which the inductors are integrated would constitute an apparatus for telecommunication equipment/devices. Consequently, it is evident that inductors are meant for the purpose of utilization in telecommunication apparatus.

Classification of Inductors

6.4 Application of Rule 1— The imported item is having a specific heading as ‘other inductors’ under chapter heading 8504

6.4.1 From a careful perusal of the legal provisions of the Customs Tariff Act, 1975, it transpires that imported goods are to be classified taking into consideration the scope of headings / sub­headings, related Section Notes, Chapter Notes and the General Rules for Interpretation of the First Schedule to the Customs Tariff Act, 1975. For legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes.

6.4.2 Rule 1 of the General Rules for Interpretation provides that the classification of goods shall be determined according to the terms of the headings of the tariff and any relative Section notes or Chapter notes and thus, gives precedence to this while classifying a product. Rules 2 to 6 provide the general guidelines for classification of goods under the appropriate sub-heading. In the event the goods cannot be classified solely on the basis of Rule 1, and if the headings and section or chapter notes do not otherwise require, the remaining Rules 2 to 6 may then be applied in sequential order.

Application of Chapter 85

Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles

6.5 From the above and GRI Rule 1 it is evident that inductors are having specific heading 8504 50. However, heading 8504 50 provides two types of inductors i.e., Choke Coils (chokes) under HSN 8504 5010 and Others under HSN 8504 5090. The inductors imported by the applicant is not a choke coil and hence it will fall under “Other inductors”.

6.6 Further, Note 2 of section XVI provide for classification of ‘parts’ of machines or articles

falling under Chapters 84 & 85. Note 2 to Section XVI is reproduced hereunder for ease of reference:-

“2. Subject to Note 1 to this Section, Note 1 to Chapter 84 and Note 1 to Chapter 85, parts of machines (not being parts of the articles of heading 8484, 8544, 8545, 8546 or 8547) are to be 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, 8485, 8503, 8522, 8529, 8538 and 8548) are in all cases to be classified in their respective headings;

(b) other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 8479 or 8543) are to be classified with the machines of that kind or in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate. However, parts which are equally suitable for use principally with the goods of headings 8517 and 8525 to 8528 are to be classified in heading 8517, and parts which are suitable for use solely or principally with the goods of heading 8524 are to be classified in heading 8529;

(c) all other parts are to be classified in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate or, failing that, in heading 8485 or 8548.”

6.7 In terms of note 2(a) to section XVI, it is evident that ‘parts’ included in any of the headings of Chapter 84 & 85 are in all cases to be classified under the same heading. Therefore, Inductors having a specific heading under 8504 50 as “Other Inductors” would fall under this. More specifically, the present inductors imported by applicant would fall under 8504 50 90 as “Other Inductors” as these are not having choke coils.

6.7.1 The applicant also relied on the judgment in the case of Filironics Ltd v. Collector of C.Ex 1989 (43) E.L.T. 457 (Tribunal), whereinthe Hon’ble Tribunal observed that Tariff Entry 85.04 is comprehensive and covers all types of electrical transformers and inductors the latter being an electromagnetic device consisting bound in a cylindrical or spiral form.

6.7.2 In light of above facts and circumstances of the case, the relevant case laws, I am of the view that the Inductors is classifiable under CTI 85045090 as other inductors, in accordance with the GRI Rulel and provisions of Note 2(a) to Section XVI. As the inductors are rightly classifiable under CTH 85045090 therefore I do not find it necessary to consider and discuss its scope under CTH 85177990.

7. Applicability of SIN°. 5 of Notification No. 25/2005-Customs dated March 1, 2005 (as amended): The relevant excerpts of Notification No. 25/2005-Customs dated March 1, 2005 provides as under:

It is clear that under Sl.No.5 of the said Notification. Other Inductors classifiable under tariff heading 8504 50 for power supplies for automatic data processing machines and units thereof, and telecommunication apparatus are eligible for “nil” rate of customs duty. I fmd that the imported goods are to be used in the PCBA of the telecommunication devices as claimed by the applicant whereas the notification benefit is available to the other inductors used for power supply for ADPM and units thereof, and telecommunication devices.

Power supply is used to provide stable and uninterruptible power to the telecommunication apparatus. There are various technologies that are used in power supply i.e. UPS, DC-DC Converter, Inverters, Rectifiers etc. whereas the subject goods are to be used in manufacturing of telecommunication devices as claimed by the applicant. As it can be seen that the wordings used in • the 3^rd column pertaining to the description of goods is phrased as per follows “Other inductors for power supply for automatic data processing machines and units thereof, and telecommunication apparatus”. The “comma’^. separates the two groups while “and” joins those two large groups under same description/sense. On careful reading of the phrase, it can be safely interpreted to mean that only those other inductors qualify for exemptions which are used for power supply of: (a) Automatic data processing machines and units thereof (b) Telecommunication apparatus.

From the above, I fmd that only those inductors which are to be used in power supply for automatic data processing machines and units thereof, and telecommunication apparatus are exempted from duty whereas the imported goods i.e. inductors to be used in PCBA of telecommunication devices are not eligible for notification benefit and attracts merit rate of duty.

I rely on the judgement of the Hon’ble Supreme Court in the case of Commr. of Customs v. Dilip Kumar & Co. (2018) 9 SCC I. wherein it was observed that

(1) Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification.

(2) When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue.

In the instant case, the applicant has categorically submitted that these indicators are used in the telecommunication devices for impedance matching in RF circuits; filtering unwanted frequencies and to prevent noise interference and to ensure clear signal transmission; causing oscillation and tuning in generation of specific frequencies in RF circuits; and maintaining signal integrity which is different from power supplies function in such telecommunication apparatuses. As established by the Hon’ble Supreme Court in Commr. of Customs v. Dilip Kumar & Co. (2018), exemption notifications must be interpreted strictly. The applicant has not demonstrated that the goods fall within the scope of the exemption under the notification, as the inductors are not being used in power supply units for telecommunication apparatus.

8. In view of the above discussions and findings, my answers in respect of the questions asked in the present application are as follows:

a) Inductors, Chip Inductors, Shielded Power Inductors, Power Inductors, Shielded SMD/SMT Power Inductor and Molded Power Inductors intended in the manufacture of telecommunication equipment are correctly classifiable under CTI 85045090 as “other inductors” under the First Schedule of the Customs Tariff Act, 1975.

b) The nil rate of Basic Custom Duty under sl. No. 5 of notification no. 25/2005-Cus dated 01.03.2025 does not apply to the subject goods, as they are used in PCBA for telecommunication devices as per applicant’s own submission and not for power supply.

9. I rule accordingly.