Case Law Details
In re Holitech India Pvt. Ltd. (CAAR Delhi)
The question under the application for advance ruling relates to classification of goods. Further, it is also observed that Sub-section (b) of section 28E of the Customs Act, 1962 lays down that Advance Ruling means a written decision on any of the questions referred to in section 28H raised by the applicant in his application in respect of any goods prior to its importation or exportation. However, I note that the concerned Principal Commissioner has informed that parts of display assembly are regularly being imported by the importer (applicant), thus seeking ruling on classification of parts of display assembly would not be in accordance with Sub-section (b) of section 28E of the Customs Act, 1962. I also note that the concerned Principal Commissioner has commented that based on the additional submissions made by the applicant, the display and its parts, appear to be classified under 8524 & 8529 respectively, as goods are not equipped with components for converting video signal.
12. In light of the foregoing, I intend to give ruling only on classification of display assembly/module, as described in the application for advance ruling. The applicant has stated that display assembly main structure consist of cover glass, contrast enhancement film, flexible printed circuit & integrated circuit on TFT glass and back light unit. It is relevant to mention that in para 4.1 of CBIC Circular No. 14/2022-Customs dated 18.08.2022, Meity has been quoted stating that what are the constituents of the display assembly. Comparing the list of items mentioned in the circular with that of items declared to be part of display assembly imported by the applicant, I find that these items are mentioned at serial no. b, c, h and j of the list given in para 4.1 of the above circular. It is also clarified that display unit is not equipped with components for converting video signals, decoder IC, scaler IC and any application processor. I have gone through the possible headings viz 8517, 8524 etc. and GRI and HSN Explanatory Notes thereof. I also notice that for the purposes of heading 8524, the declaration of the applicant satisfy conditions of Chapter Note 7 of Chapter 85, thereby Display assembly/module, as described in the application for advance ruling merit classification under Sub-heading 85249100.
FULL TEXT OF ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, DELHI
M/s Holitech India Pvt. Ltd, Plot No. 67, Ecotech-1, Extension-1, Greater Noida, Gautam Budh Nagar, U.P-201310 having IEC No. AAECH5048J and PAN-AAECH5048J (applicant, in short) has filed an application dated 22.03.2022, received in this office on 04.04.2022, seeking advance ruling under section 28-H of the Customs Act, 1962 before the Customs Authority for Advance Rulings, New Delhi (CAAR, New Delhi in short). The application was accordingly registered under Serial No. 08/2022 dated 04.04.2022.
2. The applicant, vide the aforesaid application, has mentioned that manufacturing of display assembly for cellular mobile phone is an activity (proposed/present) on which advance ruling has been sought. It is further stated that, advance ruling is sought on classification of goods under the Tariff Act, 1975. Item of import have been mentioned as FOG-semi display unit, Customs Tariff unit, Cover glass and it stated that they are manufacturing display assembly for cellular mobile phones and they want to check if the finished display or parts of display will fall under 85177990 or 8524.
3.1 The applicant has drawn attention towards Chapter Note 7 of Chapter 85 wherein, it is stated that for the purposes of heading 8524, “flat panel display module” refer to devices or apparatus for the display of information, equipped at a minimum with a display screen, which are designed to be incorporated into articles of other headings prior to use. Display screens for flat panel display modules include, but are not limited to, those which are flat, curved, flexible, foldable or stretchable in form. Flat panel display module may incorporate additional elements, including those necessary for receiving video signals and the allocation of those signals to pixels on the display. However, heading 8524 does not include display modules which are equipped with components for converting video signals (e.g., a scaler IC, decoder IC or application processor) or have otherwise assumed the character of goods of other headings. For the classification of flat panel display modules defined in this Note, heading 8524 shall take precedence over any other heading in the Nomenclature.
3.2 The applicant has also submitted a document explaining display assembly process with Holitech FOG wherein it is outlined that display assembly main structure consist of cover glass, contrast enhancement film, flexible printed circuit & integrated circuit on TFT glass and back light unit which they import from China; the display assembly process with FOG consists of 24 process stages.
4. The applicant has also stated that they used to import parts namely, semi display unit-FOG, backlight and cover glass for manufacturing of display assembly for cellular mobile phones; they are seeking answer to their query by stating that they had come to know that w.e.f 1st January, 2022, a new HS code has been introduced which is 8524 for flat panel display module and as such as to whether the display assembly for cellular mobile phones also fall under 8524 or 8517?; as per their understanding the parts of display assembly for cellular mobile phones shall fall under HS code 85177990 as the use of end product is mobile phones as manufacture of display assembly of cellular mobile phones and mobile phones fall under HS code 85171300.
5. The concerned Principal Commissioner while commenting on the application for advance ruling of the applicant has stated inter-alia that M/s. Holitech Pvt. Ltd. is a valid applicant within the meaning of section 28E(c)(i) of the Customs Act, 1962; as per records, parts of display assembly are being regularly imported by the applicant, at their port; before deciding the classification of the parts of complete display, it is pertinent to decide the classification of the complete display; the classification of goods under the Customs Tariff is governed by the principles as enumerated in the General Rules for Interpretation (GRI, in short) set out in the First Schedule of the Customs Tariff Act, 1975; 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 and, provided such headings or Notes do not otherwise require, according to the following provisions.”; further as per rule 3(a) of GRI, “the heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.”; as per Note 7 of Chapter 85, it is evident that the flat panel display modules should be equipped at a minimum with display screen and should be designed to be incorporated into articles of other headings prior to use; in this regard, since the complete display stated by the importer has a display screen and would be incorporated into a mobile phone before its use, it appears that the complete display falls under this category; it is also noticed that these goods are also parts of mobile phones and thus 85177990 also appears to be a possibility for the purpose of classification; however, since the above note states that the heading 8524 takes precedence over any other heading, if all the conditions are satisfied, the appropriate CTH would be 8524; the above note also states that the heading 8524 does not include display modules which are equipped with components for converting video signals (e.g. a scaler IC, decoder IC or application processor) or have otherwise assumed the character of goods of other headings. It is also stated that the data submitted by the applicant does not provide any information regarding the presence or absence of the components for converting video signals; in this regard, with the information submitted by the importer, the classification of the complete display cannot be decided, if such components are present the display would be classified under 85177990 (as parts of mobile) and consequently, the parts of display would be classified under 85177990; on the other hand if such components are not present, the display would be classified under 8524 (as a flat panel display module) and consequently, the parts of display would be classified under 8529; with the information submitted by the importer, classification of the complete display cannot be decided, consequently, the classification of parts of the display also cannot be decided.
6. First personal hearing in the matter was held on 21.06.2022 wherein, at the onset of the hearing, Authority noted that the applicant had submitted a set of items that are imported to manufacture the finished product, viz. display assembly, a sample of which was placed before the Authority. The Authority requested the Authorized Representative (AR) to list out items that are required to make finished goods i.e. display assembly and processes involved in making the display assembly at their place of production in India from the items proposed to be imported. In this regard, the AR referred to PPT print-outs, which were submitted by them during the hearing, stating that the said print-outs contains requisite information in reference to the above question regarding the raw materials and processes required to make finished goods. The Authority also requested the AR to furnish copies of a few invoices which they raise for local sale of finished goods under the provisions of law relating to GST, reflecting inter alia the classification under GST regime. The AR confirmed that they are regularly importing parts of the display assembly for which advance ruling has been sought and such goods are being assessed and cleared by them under heading 8517. The AR was also informed by the Authority that the concerned Principal Commissioner while referring to Chapter Note 7 of Chapter 85 has stated that the details provided by the applicant do not give information regarding presence or absence of the components for converting video signals; therefore, classification of complete display and consequently its parts cannot be decided. The Authority directed the Secretariat to hand-over copy of the relevant Chapter Notes of Chapter 85 to the AR and advised the applicant to furnish their comments vis-a-vis said Chapter Note, at the earliest in order to enable the Secretariat of CAAR to obtain the comments of the concerned Principal Commissioner so that the Authority may proceed further to pronounce his ruling, including holding another PH, if required.
7. The Directorate of Revenue Intelligence (DRI) vide letter dated 02.09.2022 has informed that, investigation by the Directorate against the applicant is still going on, although it appears that query in the application for advance ruling is not part of the investigation by their office.
8. Accordingly, another personal hearing, in the matter was held on 15.11.2022 wherein, the representative of the applicant explained the reason for filing of application for advance ruling. The Authority referred to letter dated 22.07.2022 of the Secretariat of CAAR wherein clarification/records had been sought from the applicant; however, reply/documents have not been submitted, so far; the applicant sought time of 2-3 days to submit the same, the authority asked them to submit the requisite record/reply so that ruling can be issued at the earliest.
9. The applicant vide their letter dated 22.11.2022 submitted copies of five local sale e-invoice dated 15.07.2022, 22.07.2022 & 28.07.2022 regarding sale of items, Full fit screen and Display Assembly classified under 85177990 and 85249100 respectively; copies of Bill of Entry dated 19.09.2021 & 12.07.2022 for import of semi display unit-FOG & back light under 85177090 & 85177990 respectively. Further vide Bill of Entry dated 19.09.2021, cover glass had been classified under Sub-heading 85177090 & protective film under Sub-heading 85177090. Another letter dated 24.11.2022 has also been submitted by the applicant wherein it is stated that display unit is not equipped with components for converting video signals, decoder IC, scaler IC and any application processor. The declaration of the applicant & submission of documents vide their letter dated 16.11.2022 and 24.11.2022 had been forwarded to the concerned Principal Commissioner of Customs and comments have been sought in view of the additional submissions. In this regard, vide letter dated 07.12.2022, the concerned Principal Commissioner in continuation of their earlier comments vide letter dated 27.05.2021 commented that based on the additional submissions made by the applicant, the display and its parts, appear to be classified under 8524 & 8529 respectively, as goods are not equipped with components for converting video signal.
10. Finding that the application is valid in terms of the provisions of the Customs Act and the CAAR Regulations, 2021, having heard the applicant, and recognizing the importance of timely pronouncement of rulings, I proceed to examine the question on merits.
11. The question under the application for advance ruling relates to classification of goods. Further, it is also observed that Sub-section (b) of section 28E of the Customs Act, 1962 lays down that Advance Ruling means a written decision on any of the questions referred to in section 28H raised by the applicant in his application in respect of any goods prior to its importation or exportation. However, I note that the concerned Principal Commissioner has informed that parts of display assembly are regularly being imported by the importer (applicant), thus seeking ruling on classification of parts of display assembly would not be in accordance with Sub-section (b) of section 28E of the Customs Act, 1962. I also note that the concerned Principal Commissioner has commented that based on the additional submissions made by the applicant, the display and its parts, appear to be classified under 8524 & 8529 respectively, as goods are not equipped with components for converting video signal.
12. In light of the foregoing, I intend to give ruling only on classification of display assembly/module, as described in the application for advance ruling. The applicant has stated that display assembly main structure consist of cover glass, contrast enhancement film, flexible printed circuit & integrated circuit on TFT glass and back light unit. It is relevant to mention that in para 4.1 of CBIC Circular No. 14/2022-Customs dated 18.08.2022, Meity has been quoted stating that what are the constituents of the display assembly. Comparing the list of items mentioned in the circular with that of items declared to be part of display assembly imported by the applicant, I find that these items are mentioned at serial no. b, c, h and j of the list given in para 4.1 of the above circular. It is also clarified that display unit is not equipped with components for converting video signals, decoder IC, scaler IC and any application processor. I have gone through the possible headings viz 8517, 8524 etc. and GRI and HSN Explanatory Notes thereof. I also notice that for the purposes of heading 8524, the declaration of the applicant satisfy conditions of Chapter Note 7 of Chapter 85, thereby Display assembly/module, as described in the application for advance ruling merit classification under Sub-heading 85249100.
13. I rule accordingly.
