In re Sanmina-SCI India Private Limited (CAAR Mumbai)
The Customs Authority for Advance Rulings, Mumbai, examined an application by Sanmina-SCI India Private Limited concerning the customs classification of five storage server models and the eligibility of imported manufacturing inputs for exemption from Basic Customs Duty under Serial No. 39 read with Serial No. 8 of Notification No. 24/2005-Customs dated 01.03.2005.
The applicant proposed classification of all five models under CTH 8471 70 90 as other storage units. The jurisdictional Commissionerate distinguished passive JBOD storage enclosures from servers having independent computing capabilities.
The Authority classified Crestone Model-1 and Crestone Model-2 under CTH 8471 70 90, while La Jolla, Coronado and Mlk Mavericks were classified under CTH 8471 50 00 as processing units. All five models consequently fell within Heading 8471.
The Authority further held that imported goods actually used to manufacture these storage servers could qualify for the Nil rate of Basic Customs Duty under Serial No. 39, subject to the specified exclusions and compliance with the IGCR Rules, 2022. Goods falling under Chapter 74 and specified solar tempered glass are excluded. The exemption does not extend to integrated tax or other duties outside the First Schedule.
The ruling does not determine the classification of individual imported inputs. Their classification remains subject to assessment, and any material change in the configurations described in the application may affect the ruling’s applicability.
Cases Discussed
- M/s. Samsung Display Noida Pvt. Ltd. v. Pr. Commissioner/Commissioner of Customs, Delhi, 2025 (12) TMI 1681 — cited in support of the end-use exemption
- M/s. Arktron Electronics v. Commissioner of Customs (Preventive), New Delhi, 2025 (11) TMI 1369 — cited on exemption for PCB inputs
- Principal Commissioner of Customs (Preventive), New Delhi v. M/s. B.S. Electronics (P) Ltd., 2025 (5) TMI 416 — cited on exemption for PCB inputs
- Commissioner of Customs, Nhava Sheva-V v. BenQ India Private Limited, 2025 (2) TMI 1303 — cited by the applicant on classification
- M/s. Viewsonic Technologies India Private Limited, (2024) 15 Centax 517 — cited by the applicant
- Pagari Infotech Ventures LLP, (2023) 7 Centax 17 — cited by the applicant
- Ingram Micro India Pvt. Ltd. v. Principal Commissioner of Customs (Import), New Delhi, 2022 (2) TMI 308 — considered on storage peripherals
- M/s. Audio Distribution House Pvt. Ltd. v. Commissioner of Customs, Nhava Sheva-V, 2022 (2) TMI 1647 — cited by the applicant
- Sudha Enterprises v. Commissioner of Customs, Hyderabad, 2016 (342) ELT 113 — considered on storage peripherals
- Schenectady Herdillia Ltd. v. Commissioner of Central Excise, 2007 (208) ELT 110 — relied on by the applicant for interpretative rules
FULL TEXT OF THE ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, MUMBAI
1. M/s. Sanmina-SCI India Private Limited (IEC No.: 0403030714) (“the Applicant”) filed an application (CAAR-1) for advance ruling in the Office of Secretary, Customs Authority for Advance Ruling (CAAR) Mumbai. The said application was received in the secretariat of the CAAR, Mumbai on 21.04.2026 along with its enclosures in terms of Section 28H (1) of the Customs Act, 1962 (hereinafter referred to as “the Act”), seeking advance ruling in respect of classification of the storage-servers and the applicability of Serial No. 39 of Notification No. 24/2005-Customs dated 01.03.2005. for the proposed import of goods for the manufacture of said storage-server products.
2. Question(s) on which Advance Ruling is required:
Question 1: The classification of the following storage servers:
1. VDS41022 Enterprise SAS-4 High Density High Availability JBOD (Crestone Model-1)
2. Turnkey VDS41022 JBOD (“Crestone Model-2”)
3. VSS2249RQ 2U 24 NVMe PCI Gen 4 drive Storage Server (“La Jolla”)
4. VSS2320 2U NVMe PCIe 5.0 High Availability Shared Storage Server (“Coronado”)
5. NSS2561-CS-09 (“Mlk Mavericks”)
Question 2: The applicability of Serial No. 39 of Notification No. 24/2005-Customs dated 01.03.2005 (as amended) for import of all goods for the manufacture of the said storage servers:
1. VDS41022 Enterprise SAS-4 High Density High Availability JBOD (Crestone Model-1)
2. Turnkey VDS41022 JBOD (“Crestone Model-2”)
3. VSS2249RQ 2U 24 NVMe PCI Gen 4 drive Storage Server (“La Jolla”)
4. VSS2320 2U NVMe PCIe 5.0 High Availability Shared Storage Server (“Coronado”)
5. NSS2561-CS-09 (“Mlk Mavericks”)
3. Applicant’s eligibility for Advance Ruling: The applicant holds a valid IEC No. 0403030714 and therefore qualifies as an “applicant” under Section 28E(c) of the Customs Act’ 1962. The questions on which the advance ruling is sought relate to the classification of goods and to the applicability of Serial No. 39 of Notification No. 24/2005-Customs dated 01.03.2005, and therefore fall within clauses (a) and (b) of Section 28H(2). The relevant Section of the Customs Act 1962 has been reproduced below:
Section 28E. Definitions. —
(c) “applicant” means any person, –
N holding a valid Importer-exporter Code Number granted under section 7 of the Foreign Trade (Development and Regulation) Act, 1992; or
Section 28H. Application for advance ruling. –
(1) An applicant desirous of obtaining an advance ruling under this Chapter may make an application in such form and in such manner and accompanied by such fee as may be prescribed, stating the question on which the advance ruling is sought.
(2) The question on which the advance ruling is sought shall be in respect of – (d) applicability of notifications issued in respect of tax or duties under this Act or the Customs TariffAct, 1975 (51 of 1975) or any tax or duty chargeable under any other law for the time being in .force in the same manner as duty of customs leviable under this Act or the Customs Tariff Act
The applicant has declared that no proceedings involving the same issue are pending before any Customs authority, Appellate Tribunal or any Court of Law. Accordingly, the application appears admissible under Section 28-I (2) of the Customs Act, 1962.
4. Applicant’s Submissions:
4.1 The Applicant is a company incorporated in India, having its registered office located at 1, SIPCOT Industrial Growth Centre, Mathur Village, Oragadam, Chennai 602105. The Applicant is a contract manufacturer of electronic components. The Applicant is a joint venture between Reliance Strategic Business Ventures Limited and Sanmina-SCI Systems Singapore Pte. Ltd. The applicant further states that Sanmina Group is among the world’s largest electronic manufacturing service (EMS) with operations in 21 countries on six continents and Sanmina Corporation designs, manufactures and repairs some of the most complex and innovative optical, electronic and mechanical products in the world.
4.2 The Applicant proposes to import the goods listed below for the manufacture of the five types of storage servers, namely (1) VDS41022 Enterprise SAS-4 High Density High Availability JBOD (“Crestone Model-1”), (2) Turnkey VDS41022 JBOD (“Crestone Model-2”), (3) VSS2249RQ 2U 24 NVMe PCI Gen 4 drive Storage Server (“La Jolla”), (4) VSS2320 2U NVMe PCIe 5.0 High Availability Shared Storage Server (“Coronado”) and (5) NSS2561-CS-09 (“Mlk Mavericks”)
| Sr. No. | Item | Sr. No. | Item | Sr. No. | Item |
|---|---|---|---|---|---|
| 1 | PCBs | 15 | Diodes | 29 | Fuses |
| 2 | Capacitors | 16 | Sockets | 30 | IC Logics |
| 3 | Connectors | 17 | Heat Sinks | 31 | IC Linear |
| 4 | Screws | 18 | Switches | 32 | Digital ICs |
| 5 | Hardware | 19 | Memories | 33 | Inks |
| 6 | ICs | 20 | Ferrite Beads | 34 | MOSFET |
| 7 | Doc Labels | 21 | Inductors | 35 | Nuts |
| 8 | Optoelectronics | 22 | LED | 36 | PCB Sub-assemblies |
| 9 | Magnetics | 23 | Stand offs | 37 | Discrete components |
| 10 | Sheet Metal | 24 | Filters | 38 | Fasteners |
| 11 | Plastics | 25 | RF Devices | 39 | Machined metals |
| 12 | Frequency Control | 26 | Crystals | 40 | Cable Harness and assemblies |
| 13 | Resistors | 27 | Oscillator | 41 | Fans |
| 14 | Transistors | 28 | Power supplies and regulators | 42 | Batteries |
4.3 Technical Specifications and Functionality of the Finished Product Manufactured Using the Imported Inputs – Storage Servers
4.3.1 As described by the applicant, Storage servers are specialized computer systems designed to store, manage, and provide access to large volumes of data within a network. They centralise data storage, ensuring that information is securely stored and easily accessible by multiple users or applications. The primary use of storage servers is for data storage and backup. They safeguard critical information and facilitate backup solutions that help prevent data loss due to hardware failure or other issues. In addition to storage, the storage servers enable file sharing, allowing multiple users or devices across a network to access and share files seamlessly. Storage servers support high-performance data access needs. They are essential for fast data retrieval and processing, requiring high-performance computing. Furthermore, they play a critical role in disaster recovery, to recover data and maintain business continuity in the event of system failures or data corruption.
4.3.2 VDS41022 Enterprise SAS-4 High Density, High Availability ,IBOD (“Crestone Model -1”)
The applicant submitted that the VDS41022 is a high-density data-storage server designed to accommodate up to 102 large 3.5-inch hard drives, with the drives connected through 12 Gb/s SAS (Serial Attached SCSI) interfaces and the server itself interfaces with other servers or other storage systems through high-speed 24 Gb/s SAS-4 ports. The product is housed in a 4U rack-mount enclosure. The server supports both 3.5-inch hard disk drives and smaller 2.5-inch solid-state drives (SSDs) with SAS interfaces and incorporates two I/O controller modules each with four 4-wide mini- SAS HD ports for expansion and host connections.
The applicant further submitted that the dual I/O modules provide failover capability and the system supports drive partitioning or split-bus zoning options, allowing administrators to segment the drive array into up to four zones or other custom configurations. The system is also equipped with two 1600-watt redundant and hot-swappable power supplies. Additionally, the server includes two +5V power regulators dedicated to powering the hard drives. The system’s components—including drives, controller cards, fan modules, and power supplies—are hot-pluggable.
The applicant submitted that the system further provides SAS point-to-point connections to each drive and supports daisy-chaining, enabling multiple VDS41022 servers or compatible devices to be connected in series for expanded capacity.
4.3.3 Turnkey VD541022 JBOD (“Crestone Model -2′)
The applicant submitted that the VDS41022 is a high-density SAS-4 JBOD (Just a Bunch of Disks) server designed to hold and manage a large number of hard drives with high performance and reliability.
The applicant further submitted that the system operates on 200 and 240V AC power at 50-60 Hz and incorporates two power supplies (called n+l redundancy), along with two +5V regulators dedicated to powering the hard drives. The system can accommodate up to 102 disk drives in its main drive bay, supporting both large form• factor (3.5-inch) and small form factor drives. The Applicant stated that the system uses SCSI Enclosure Services (SES) 3.0 firmware for management, monitoring and diagnostics of the drives and system.
The applicant submitted that the system supports drive partitioning/split-bus zoning and can split the large set of drives into four zones or partitions using predefined configurations. It also provides failure notifications through over the data connection (in-band interface) and physically via LEDs on the . system and field-replaceable units (FRUs). The applicant further submitted that the VDS41022 incorporates two SAS-4 JBOD I/O modules, each having four 24 Gb/s mini-SAS HD expansion ports, that allow the server to connect to other servers or daisy-chain to other storage devices.
The applicant submitted that the system accepts 3.5-inch hard disk drives and 2.5-inch solid-state drives with SAS interfaces. The product is housed in a 4U rackmount enclosure.
4.3.4 VSS2249RQ 2U 24 NVMe PCI Gen 4 drive Storage Server (“La Jolla’)
The applicant submitted that the VSS2249RQ “La Jolla” is a 2U rack-mount storage server designed for reliability, scalability and performance. The server operates on a nominal AC input of 200-240V at 50-60 Hz and incorporates dual redundant 1600W power supply units, enabling continued operation in the event of failure of one power supply.
The applicant further submitted that the server incorporates hot-swappable components. The server includes two server modules and six fans configured with 5+1 redundancy—five fans operate normally, and a sixth can take over if one fails. The two 1600W power modules and U.2 (SFF-8639) SSDs are also hot-swappable. It is equipped with drives, the CMA (Carrier Management Assembly), and rail kit. Optional accessories include a rail kit for rack mounting with the CMA and a TPM (Trusted Platform Module) for hardware-based security features that protect sensitive data and cryptographic keys. The Firmware management capability includes IPMI (Intelligent Platform Management Interface) and Redfish.
The applicant submitted that the system supports up to 24 drives, each with dual-port drive connections allowing multiple paths for data access to increase redundancy and bandwidth. As per the product brief placed on record (Exhibit-2), each of the two server modules includes an AMD EPYC Milan CPU, four x16 PCIe Gen 4 slots and up to 8 DIMMs, and each CPU has access to all 24 drives.
4.3.5 VSS2320 2U NVMe PCIe 5.0 High Availability Shared Storage Server (“Coronado’)
The applicant submitted that the VSS2320 “Coronado” is a 2U high-performance storage server designed to provide high availability. It supports 32 hot-pluggable EDSFF (Enterprise and Data Center SSD Form Factor) E3.S SSDs (Solid State Drives) using the latest Gen 5 PCIe (Peripheral Component Interconnect Express) NVMe (Non-Volatile Memory Express) technology and is powered by dual AMD EPYC 4th generation processors. Each server module features four PCIe Gen 5 slots and up to 12 channels of DDR5 (Double Data Rate 5) memory, enabling powerful processing and data throughput with low latency
The applicant further submitted that it is built with hot-swappable components—including drives, power supplies, and fans—allowing maintenance and upgrades without downtime. Robust management tools and interfaces such as OpenBMC (Open Baseboard Management Controller), IPMI (Intelligent Platform Management Interface), and Redfish facilitate easy provisioning, monitoring, and control of the drives and system status.
The applicant further submitted that the system incorporates redundancy in power supplies, fans and network ports to ensure uninterrupted service. It supports up to 6 TB of DDR5 memory.
4.3.6 NSS2561-CS-09 (“Mlk Mavericks’)
The applicant submitted that the product is a high-capacity storage and compute platform. The server supports NVDIMMs (Non-Volatile Dual In-line Memory Modules) and has two PCIe (Peripheral Component Interconnect Express) slots for half- height, half-length (HHHL) add-in cards. The system can house up to 56 NVMe (Non-Volatile Memory Express) U.2 (Universal 2) drives, each connected to the server modules via Gen 3 x2 PC1e interfaces, ensuring high-speed data transfer. Each drive slot includes individual power control and supports hot-plugging and removal, enhancing operational flexibility.
NSS2561-CS-09 integrates extensive NVMe (Non-Volatile Memory Express) storage, redundant power and management systems, and modular, serviceable components for a comprehensive enterprise-level solution. The product is engineered to provide high throughput, reliability, and ease of maintenance, ideal for environments needing robust storage density. The system architecture balances compute and storage with sophisticated power and thermal management, enabling sustained performance under heavy workloads while minimizing downtime and operational risk.
4.4 Manufacturing process undertaken by the applicant in relation to the inputs imported for Storage Servers
4.4.1 The applicant has enumerated the manufacturing process applied in this regard in relation to the imported inputs. The process begins with component procurement and inspection. The applicant receives a wide range of imported components, including printed circuit boards (PCBs), integrated circuits (ICs), capacitors, resistors, connectors, screws, sheet metal parts, plastics, fans, batteries, and other discrete electronic and mechanical elements. Each batch of components undergoes strict quality inspection and testing to verify that they meet the required technical specifications and standards. Reels/trays of components (ICs, capacitors, resistors, transistors, diodes, memories, MOSFETs, crystals, oscillators, LEDs, connectors with SMT terminations) are received, verified against specifications and stored under controlled conditions.
4.4.2 The applicant further states that bare PCBs are loaded onto an SMT (Surface Mount Technology) line. A stencil is aligned over the board; solder paste is squeezed through openings to deposit precise amounts of paste onto each bare PCB where a component will be placed. High-speed pick and place machines pick SMT components (resistors, capacitors, ICs, MOSFETs, oscillators, etc.) from reels or trays and place them onto the solder-pasted pads according to the placement program. Assembled boards travel through a temperature-profiled reflow oven. The solder paste melts, wets the component leads and PCB pads, then cools to form solder joints. This step permanently attaches surface-mount devices. Automatic Optical Inspection (A0I) checks for component presence, polarity/orientation, solder bridging, tombstoning, etc. X-Ray inspection is deployed as necessary. Electrical testing follows to confirm circuit integrity and proper functionality. Electrical contact is made to test points; each component’s electrical value and connections are checked.
4.4.3 The applicant states that PCB assembly is followed by sub-assembly stage, which involves building modular components and fabricating mechanical parts. This includes assembling cable harnesses, integrating PCB sub-assemblies, preparing power supplies, mounting fans, and other related modules. At the same time, sheet metal parts and chassis components are machined and fabricated according to design specifications, providing structural support for the final product. Heat sinks, standoffs, screws, and other mechanical hardware are also prepared during this stage to facilitate smooth assembly thereafter.
4.4.4 The applicant states that the final phase brings together all sub-assemblies into the complete storage server unit. The assembled PCBs and electronic modules are installed onto the chassis or server frame. Storage media such as NVMe or SAS drives are inserted, memory modules are installed, power supplies connected, and cable harnesses routed. Once the hardware assembly is complete, firmware and software are loaded onto the storage servers. This step includes programming essential firmware, loading necessary drivers, and performing initial diagnostics and configuration to prepare the server for operation. The firmware ensures that the hardware components communicate effectively and operate according to specifications.
4.4.5 As per the applicant, the storage servers undergo rigorous quality assurance and testing. Functional tests such as power-on self-tests, port connectivity checks, and performance benchmarks validate that each server operates correctly. Environmental and stress testing simulates conditions like temperature extremes and prolonged use to assess reliability and durability.
4.5 Applicant’s Interpretation of the Questions Raised
Applicant’s Interpretation on Question 1: The Applicant submits that, under Rule 1 of the General Rules for the Interpretation and relying on Schenectady Herdillia Ltd. v. Commissioner of Central Excise, 2007 (208) ELT 110 (Tri.), goods falling under a sub-classification must satisfy the description of the single-dash entry preceding it and accordingly as the storage servers function primarily as specialised storage devices, holding, managing and providing high-capacity data storage through large arrays of HDDs and SSDs, with drive zoning, component redundancy, SES-3.0 monitoring and SAS host-expansion interfaces. The applicant has further stated that the storage servers store programmes on internal SSDs and the data immediately necessary for execution in DIMMs. Connected to a host server, they store operating systems, application binaries and the data those programmes require, and thus satisfy Note 6(A) to Chapter 84. The HSN Explanatory Notes to heading 8471 include, among the constituent units of automatic data processing systems, additional storage external to the central processing unit. They are therefore “storage units” of subheading 8471 70. Not being specifically covered by any of tariff items 8471 70 10 to 8471 70 70, all the storage servers fall under the residuary tariff item 8471 70 90. The Applicant has relied upon various case laws including:
i. Sudha Enterprises v. Commissioner of Customs, Hyderabad. 2016 (342) ELT 113 (Tri.-Hyd.)
ii. Ingram Micro India Pvt. Ltd. v. Principal Commissioner of Customs (Import), New Delhi,
iii. 2022 (2) TMI 308 (CESTAT, New Delhi)
iv. M/s. Audio Distribution House Put. Ltd v. Commissioner of Customs, Nhava Sheva-V 2022 (2) TMI 1647 (CAAR, Mumbai)
v. M/s. Viewsonic Technologies India Private Limited (2024) 15 Centax 517 (A.A.R. – Cus. Mum.)
vi. M/s. Commissioner of Customs, Nhava Sheva-V v. BenQ India Private Limited – 2025 (2) TMI 1303 – CESTAT MUMBAI
vii. Pagari Infotech Ventures LLP (2023) 7 Centax 17 (A.A.R. – Cus. Mum)
viii. CBIC ‘s Circular No. 28/2005-Cus., dated 1-7-2005
ix. US Cross Rulings NY N342790, HQ 962912, NY B82375, NY N239932, NY N03535, NY G81598
Applicant’s Interpretation on Question 2: The Applicant submits that Serial No. 8 of the Notification No. 24/2005-Customs dated 01.03.2005 covers all goods falling under heading 8471. Serial No. 39 exempts all goods of any Chapter except Chapter 74, other than solar tempered glass, imported for the manufacture of goods covered by Serial Nos. 1 to 38, subject to the prescribed end-use procedure. Further, the applicant declares that none of the inputs proposed to be imported falls under Chapter 74, and none is solar tempered glass. It further submits that the inputs are used for the manufacture of the storage servers, i.e., a new product (distinguishable from the imported inputs) having a distinct name, character and use. The processes undertaken by the applicant undisputably amount to “manufacture”.
The applicant undertakes to comply with the Customs (Import of Goods at Concessional Rate of Duty or for Specified. End Use) Rules, 2022 (“the 1GCR Rules, 2022”). This includes furnishing prior information in Form IGCR-1, executing a continuity bond, declaring the IGCR Identification Number in the Bill of Entry, maintaining records and filing statements in Form IGCR-3.
The applicant has submitted that the inputs imported for the manufacture of the storage servers are eligible for the Nil rate of Basic Customs Duty under Serial No. 39, read with Serial No. 8, of Notification No. 24/2005-Customs.
5. Port of Import and reply from jurisdictional Commissionerate:
The applicant in their CAAR-1 indicated that they intend to import the subject goods at the jurisdiction of Office of the Commissioner of Customs, Chennai-VII (Import Commissionerate), New Custom House, GST Road, Meenambakkam, Chennai. Accordingly, the application was forwarded to the concerned Commissionerate for their comments on 23.04.2026 and 20.07.2026. The Office of the Principal Commissioner of Customs, Chennai-VII (Import Commissionerate) furnished its comments vide letter dated 01.09.2026. The comments are summarised below:
5.1. Comments On Preliminary Aspects
i. Eligibility of the Applicant under Section 28E(c): The Applicant holds a valid Importer-Exporter Code Number (IEC No. 0403030714) and is accordingly covered under Section 28E(c)(i) of the Customs Act, 1962, as an importer of goods (and not as an exporter under Section 28E(c)(ii)). No infirmity is noticed on this count.
ii. Applicability of proviso to Section 28-1(2): Nothing adverse is on record with this office to indicate that the questions raised in the application are already pending before any officer of Customs, the Appellate Tribunal or any Court in the Applicant’s case, or that they have already been decided in a like manner by the Appellate Tribunal or any Court.
iii. Nature of activity: The activity is correctly stated to be proposed, i.e., in respect of future imports of parts by the Applicant for use in the manufacture of storage servers, an order for which has already been received from its customer.
iv. Pendency before any Court/Tribunal: No such pendency is on record with the said jurisdictional Commissionerate office.
5.2. Description Of Subject Goods
As per Annexure I to the application, the applicant is a contract electronics manufacturer proposing to import various electronic and mechanical parts (PCBs, capacitors, connectors, ICs, memories, power supplies and regulators, cable harnesses, fans, batteries, machined metal parts, sheet metal, plastics, fasteners, etc.) for use in the manufacture of five types of storage servers, being high-capacity systems designed to store, manage and provide network access to large volumes of data, and, in certain configurations, to also process such data.
The manufacturing process as described comprises: (a) inspection and controlled storage of imported components; (b) SMT assembly of bare PCBs (solder-paste application, pick-and-place, reflow soldering, AOI/X-ray and electrical testing); (c) sub-assembly of cable harnesses, power supplies, fan modules and machined chassis parts; (d) final assembly of the complete unit, including installation of storage media, memory modules and power supplies; (e) loading of firmware/software and initial diagnostics; and (f) functional, environmental and stress testing of the finished storage server.
5.3. Functional Characteristics of the Goods
The five storage server variants are not functionally homogeneous, and fall into two distinct categories:
a. Crestone Model-1 and Crestone Model-2 (VDS41022 JBOD): These are disk enclosures (“Just a Bunch of Disks”) housing up to 102 SAS/SATA drives, connected to a host system through 24 Gb/s SAS-4 ports, with dual I/O controller modules providing failover and SCSI Enclosure Services (SES 3.0) for health monitoring and diagnostics. On the facts stated, these products do not possess an onboard general-purpose processor capable of independently executing user programs; they function purely as passive storage/expansion peripherals dependent on a host automatic data processing (“ADP”) system for all data processing.
b. La Jolla (VSS2249RQ), Coronado (VSS2320) and Mlk Mavericks (NSS2561): These products, by contrast, are described as incorporating “server modules”, “compute platform” capability, IPMI/ Redfish/ OpenBMC-based remote management, and, in the case of Coronado, expressly “dual AMD EPYC 4th generation processors” together with up to 612B of DDR5 memory and four PCIe Gen 5 slots per module. These features indicate the presence of independent, general-purpose processing capability going beyond that of a passive storage peripheral.
Since the residuary tariff item CTH 8471 70 90 (“Other storage units”) is, by its scheme, meant for peripheral storage devices of an ADP system, and not for complete data-processing machines that happen to offer large storage capacity.
5.4. Legal Framework
Chapter Note 5(A) to Chapter 84 (referred to in the application, apparently on account of an OCR/transcription variance in the copy furnished, as “Note 6A”) defines “automatic data processing machines”, for the purposes .of heading 8471, as machines capable of (i) storing the processing programme and the data immediately necessary for its execution; (ii) being freely programmed in accordance with the requirements of the user; (iii) performing arithmetical computations specified by the user; and (iv) executing, without human intervention, a processing programme which requires them to modify their execution by logical decision during the processing run.
Chapter Note 5(B) to Chapter 84 clarifies that ADP machines may be in the form of systems consisting of a variable number of separate units, and the HSN Explanatory Notes to heading 8471 further clarify that the heading covers such systems as well as their separately presented constituent units, including, as illustrative “other units”, “additional storage external to the central processing unit”. The scheme of the sub-headings under 8471 accordingly distinguishes between complete automatic data processing machines (8471 41/8471 49), processing units other than those of 8471 41/49 (8471 50), input or output units (8471 60), storage units (8471 70) and other units (8471 80) — a storage unit being, on this scheme, a peripheral device that stores data for use by a central processing unit, and not itself a device performing the four-fold function described in Note 5(A).
5.5. Classification Analysis
Crestone Model-1 and Crestone Model-2 answer the description of “storage units” in the sense contemplated by CTH 8471 70: they are peripheral, drive-holding enclosures without independent processing capability, connectable to and dependent upon a host ADP machine, and their claimed classification under CTH 8471 70 90 appears to be supportable, consistent with the ratio of the decisions relied upon by the Applicant in Ws. Sudha Enterprises v. Commissioner of Customs, Hyderabad, 2016 (342) E.L.T. 113 (Tri. – Hyd.); M/s. Ingram Micro India (P) Ltd. v. Pr. Commissioner of Customs (Import), New Delhi, 2022 (2) TMI 308 – CESTAT New Delhi; and CBEC Circular No. 28/2005-Cus. dated 01.07.2005 (pen drives), each of which concerns storage peripherals without independent, general-purpose processing capability.
La Jolla, Coronado and Mlk Mavericks, however, stand on a different footing. In particular, Coronado is stated to incorporate dual AMD EPYC processors, DDRS memory of up to 6TB and multiple PCIe Gen 5 slots per server module — features which independently satisfy the four-fold test under Chapter Note 5(A) to Chapter 84 and answer the description of a complete automatic data processing machine (or, at the least, a processing unit) in its own right, rather than a passive storage unit dependent upon an external host. The presence of “server modules” in La Jolla and of a “compute platform” description for Mlk Mavericks similarly suggests independent processing capability, though the technical particulars furnished do not identify the specific processor employed in these two models with the same clarity as for Coronado; verification of the part-wise technical datasheet is accordingly necessary before their classification can be conclusively determined.
The precedents relied upon by the Applicant for storage devices without independent processing capability (Sudha Enterprises, Ingram Micro, and the pen-drive Circular) are, with respect, of limited assistance for the compute-integrated variants, since those decisions did not deal with multi-processor server platforms of the kind under consideration in respect of Coronado and, subject to verification, La Jolla and Mlk Mavericks. It is accordingly recommended that classification of the finished storage servers be determined product-wise/model-wise, rather than uniformly, as detailed in the Annexure to these comments.
It is, however, reiterated that regardless of whether a given model is classifiable under the residuary entry CTH 8471 70 90 (storage unit) or under CTH 8471 41 00/49 00 (automatic data processing machine) or CTH 8471 50 00 (processing unit), all such classifications fall within Heading 8471, and none of the five models, on the facts furnished, exhibits the character of goods of any other heading (such as apparatus for transmission/reception of data under Heading 8517); the I PMI/ Redfish/ OpenBMC-based network management ports are, consistent with standard industry practice for data-centre equipment, ancillary to the storage/data-processing function of the goods.
5.6. Eligibility For Exemption Under Si. No. 39 Read with Si. No. 8 Of Notification No. 24/2005-Customs
Si. No. 8 of Notification No. 24/2005-Customs dated 01.03.2005 (as amended) covers “all goods” falling under Heading 8471, without restriction to any particular tariff item under that heading. Si. No. 39 of the said Notification exempts all goods (other than goods falling under Chapter 74, and other than solar tempered or solar tempered anti-reflective coated glass) imported for the manufacture of goods covered by Si. Nos. 1 to 38 of the Notification, which includes Sl. No. 8, subject to the importer following the procedure set out in the Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022 (“IGCR Rules, 2022 (” IGCR Rules, 2022“).
Since Sl. No. 8 is a heading-level entry, the precise 8-digit tariff item under which a given storage server model is ultimately classified within Heading 8471 (whether CTH 8471 70 90 as claimed by the Applicant, or CTH 8471 41 00/49 00/50 00 as discussed at Paragraph 5.5 above) would not, by itself, affect the availability of the exemption under Sl. No. 39 in respect of the inputs used for its manufacture, provided the finished storage server remains classifiable within Heading 8471. Accordingly, subject to (i) the imported goods not being classified under Chapter 74; (ii) the imported goods not being solar tempered or solar tempered anti-reflective coated glass; (iii) each finished storage server model being verified to fall within Heading 8471 (and not any other heading) at the relevant time; and (iv) compliance with the IGCR Rules, 2022 (including obtaining an IGCR Identification Number, furnishing a continuity bond, and submission of periodical returns in Form IGCR-1/IGCR-3), the exemption claimed under Si. No. 39 read with Si. No. 8 of Notification No. 24/2005-Customs would prima facie be available to the parts imported by the Applicant for manufacture of all five storage server variants.
The reliance placed by the Applicant on the ruling of the Hon’ble CAAR, Delhi in M/s. Samsung Display Noida Pvt. Ltd. v. Pr. Commissioner/Commissioner of Customs, Delhi, 2025 (12) TMI 1681 (allowing the benefit of Sl. No. 39 in respect of inputs for OLED displays supplied for manufacture of goods covered under Si. No. 8), and the decisions of the Hon’ble CESTAT in M/s. Arktron Electronics v. Commissioner of Customs (Preventive), New Delhi, 2025 (11) TMI 1369, and Principal Commissioner of Customs (Preventive), New Delhi v. M/s. B.S. Electronics (P) Ltd., etc., 2025 (5) TMI 416 (allowing the benefit of Sl. No. 39 for PCB inputs), supports the principle that Si. No. 39 is to be construed as a chapter-neutral, end-use based exemption not restricted to inputs that are themselves “parts” of the goods covered by Sl. Nos. 1 to 38.
5.7. Findings
The Crestone Model-1 and Crestone Model-2, which are passive drive enclosures without independent processing capability, merit classification under the single residuary tariff item CTH 8471 70 90. In respect of La Jolla, Coronado and Mlk Mavericks, the technical particulars furnished indicate independent, general-purpose processing capability, and these models may more appropriately merit classification under CTH 8471 41 00/49 00 (automatic data processing machines) or CTH 8471 50 00 (processing units), rather than under the residuary storage-unit entry claimed by the Applicant, subject to verification of the complete technical datasheetlBill of Material for each such model.
This distinction, while relevant to the precise tariff item at the 8-digit level, does not detract from the Applicant’s core claim for exemption under Si. No. 39 read with Sl. No. 8 of Notification No. 24/2005-Customs, since Sl. No. 8 covers Heading 8471 in its entirety. It is accordingly recommended that, if the ruling is issued in the Applicant’s favour, it be qualified to require verification, at the Bill of Entry stage and/or through the technical datasheets to be furnished under the IGCR Rules, 2022, that each storage server model manufactured using the imported parts is in fact classifiable within Heading 8471 (whether under CTH 8471 70 90, 8471 41 00, 8471 49 00 or 8471 50 00, as applicable), so that the benefit under Sl. No. 39 is not extended in respect of any product that, upon closer technical scrutiny, is found to fall outside Heading 8471.
5.8. Recommendation
| Sl. No. | Question raised by the Applicant | Comments/Recommendation |
|---|---|---|
| 1 | Whether the storage servers manufactured by the Applicant using the imported parts merit classification under CTH 8471 70 90 as “Other Storage Units” | May be classified within Heading 8471, subject to model-wise verification at the time of import of the actual configuration of each variant; CTH 8471 70 90 may be accepted for the passive JBOD enclosures (Crestone Model-1 and Model-2), while the compute-integrated variants (La Jolla, Coronado and Mlk Mavericks) require verification as to whether they merit classification as “automatic data processing machines”/“processing units” under CTH 8471 41 00/8471 49 00/8471 50 00 rather than as “storage units” under CTH 8471 70 90, as detailed in the Annexure to these comments. |
| 2 | Whether the parts imported by the Applicant for manufacture of the storage servers are eligible for “Nil” rate of Basic Customs Duty under Sl. No. 39 read with Sl. No. 8 of Notification No. 24/2005-Customs dated 01.03.2005 (as amended) | Available in principle, since Sl. No. 8 of the Notification covers Heading 8471 generically and is not confined to any particular tariff item, subject to (i) each storage server variant being classifiable within Heading 8471 and not under any other heading; (ii) the imported goods not falling under Chapter 74; (iii) the imported goods not being solar tempered/anti-reflective coated glass; and (iv) compliance with the Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022. |
This office has no objection, in principle, to the ruling being issued in terms sought by the Applicant, subject to the qualification recorded at Paragraph 5.7 above and the product-wise observations recorded in the Annexure to these comments.
5.9 Additional Submission by the Applicant in reply of the comments received from the jurisdictional Commissionerate
5.9.1 The applicant submitted that the Commissionerate’s observations on the eight-digit classification of the finished servers do not prejudice that claim, since the Commissionerate itself records that all models fall within heading 8471, whether classified as storage units, automatic data processing machines or processing units and even if the precise classification of the compute-integrated models must be determined model-wise or configuration-wise, this does not affect the exemption, so long as the finished goods remain classifiable under heading 8471. The Commissionerate has accepted that Crestone Model-1 and Model-2 are storage units under tariff item 8471 70 90, and has placed La Jolla, Coronado and Mlk Mavericks within heading 8471.
5.9.2 Serial No. 8 covers all goods of heading 8471 and is not restricted to any eight-digit item. The Commissionerate has expressly observed that the classification within heading 8471, whether under 8471 70 90, 8471 41, 8471 49 or 8471 50, does not by itself affect the exemption. The classification within the heading is therefore not determinative of the claim.
5.9.3 The imported goods do not fall under Chapter 74 and do not comprise solar tempered glass. The applicant undertakes to comply with the IGCR Rules, 2022, including obtaining an IGCR Identification Number, executing a continuity bond and filing the prescribed returns in Forms IGCR-1 and IGCR-3.
5.9.4. The applicant further undertakes to maintain records and technical documentation establishing the identity, use and utilisation of the imported goods in the manufacture of the eligible storage servers. It has no objection to reasonable verification of the actual configuration, technical datasheets and bills of material at the time of import or during end-use verification.
5.9.5. The applicant submits that the comments concur with the application, and prays that the Authority hold that goods imported for use in the manufacture of the storage servers are eligible for the Nil rate of Basic Customs Duty under Serial No. 39 read with Serial No. 8 of Notification No. 24/2005-Customs, and pass such other order as it deems fit.
6. Details of Personal Hearing:
A personal hearing in the matter was held on 10.06.2026. During the personal hearing, Shri Aman Goyal from PWC LLC, the authorised representative, appeared on behalf of the applicant and made submissions on classification of storage servers and eligibility of “Nil” rate of Basic Customs Duty under Sl. No. 39 read with Sl. No. 8 of Notification No. 24/2005-Customs dated 01.03.2005 (as amended) for the parts imported by the Applicant for the manufacture of the storage servers.
6.1No representative appeared on behalf of the Department at the time of the personal hearing.
7. Discussion and Findings
7.1. I have carefully considered the application, the written submissions of the applicant, the comments of the jurisdictional Commissionerate, the applicant’s additional submissions in reply, the submissions made at the personal hearing, and the technical literature and other documents placed on record.
7.2. The issues raised in the Question 1 and 2 in the Form CAAR-1 are covered under Section 28H (2) of the Customs Act, 1962, being matter of classification and of applicability of import duty benefit notification. The questions posed for advance ruling are:
Question 1: The correct classification of the following storage servers
1. VDS41022 Enterprise SAS-4 High Density High Availability JBOD(Crestone Model-I)
2. Turnkey VDS41022 JBOD (“Crestone Model-2′)
3. VSS2249RQ 2U 24 NVMe PCI Gen 4 drive Storage Server (“La Jolla”)
4. VSS2320 2U NVMe PCIe 5.0 High Availability Shared Storage Server (“Coronado’)
5. NSS2561-CS-09 (“Mlk Mavericks’)
Question 2: The applicability of Serial No. 39 of Notification No. 24/2005-Customs dated 01.03.2005 (as amended) for import of all goods for the manufacture of the said storage servers..
1. VDS41022 Enterprise SAS-4 High Density High Availability 1130D (Crestone Model-1)
2. Turnkey VDS41022 JBOD (“Crestone Model-2′)
3. VSS2249RQ 2U 24 NVMe PCI Gen 4 drive Storage Server (“La Jolla’)
4. VSS2320 2U NVMe PCIe 5.0 High Availability Shared Storage Server (“Coronado’)
5. NS`S2561-CS-09 (“Mlk Mavericks’)
7.3. Classification of Storage Servers
7.3.1. The applicant proposes tariff item 8471 70 90 for all five models i.e. 1) VDS41022 Enterprise SAS-4 High Density High Availability JBOD (Crestone Model-1), 2) Turnkey VDS41022 JBOD (“Crestone Model-2”), 3) VSS2249RQ 2U 24 NVMe PCI Gen 4 drive Storage Server (“La Jolla”), 4) VSS2320 2U NVMe PCIe 5.0 High Availability Shared Storage Server (“Coronado”) and 5) NSS2561-CS-09 (“Mlk Mavericks”).
7.3.2 The jurisdictional Commissionerate accepts classification under the tariff item 8471 70 90 for models (1) and (2) i.e. VDS41022 Enterprise SAS-4 High Density High Availability JBOD (“Crestone Model-1”) and Turnkey VDS41022 JBOD (“Crestone Model-2”), and suggests subheading 8471 41, 8471 49 or 8471 50 00 for models (3), (4) and (5) i.e. VSS2249RQ 2U 24 NVMe PCI Gen 4 drive Storage Server (“La Jolla”), VSS2320 2U NVMe PCIe 5.0 High Availability Shared Storage Server (“Coronado”) and NSS2561-CS-09 (“Mlk Mavericks”), subject to verification.
7.3.3. Under Rule 1 of the General Rules of Interpretation, classification is determined according to the terms of the headings and any relative Section or Chapter Notes. Under Rule 6, classification in the subheadings of a heading is determined according to the terms of those subheadings and any related Subheading Notes, and, mutatis mutandis, the preceding Rules, only subheadings at the same level being comparable. The relevant tariff entries of heading 8471 are extracted below for reference:
| Tariff Item | Description | ||
|---|---|---|---|
| Automatic data processing machines and units thereof; magnetic or optical | |||
| 8471 | readers, machines for transcribing data onto data media in coded form and machines for processing such data, not elsewhere specified or included | ||
| 8471 | 30 | – Portable automatic data processing machines, weighing not more than 10 kg, consisting of at least a central processing unit, a keyboard and a display | |
| 8471 | 30 | 10 | – – – Personal computer |
| 8471 | 30 | 90 | – – – Other |
| – Other automatic data processing machines: | |||
| 8471
8471 8471 8471 8471 |
41
41 41 41 49 |
10
20 90 90 |
– – Comprising in the same housing at least a central processing unit and an input and
output unit, whether or not combined: – – – Micro computer – – – Large or main frame computer – – – Other – – Presented in the form of systems |
| 8471 | 50 | 00 | – Processing units other than those of sub-headings 8471 41or 8471 49, whether or not containing in the same housing one or two of the following types of unit: storage units, input units, output units |
| 8471 | 60 | – Input or output units, whether or not containing storage units in the same housing | |
| 8471 | 60 | 10 | – – – Combined input or output units |
| – – – Printer: | |||
| 8471 | 60 | 24 | – – – – Graphic printer |
| 8471 | 60 | 25 | – – – – Plotter |
| 8471 | 60 | 29 | – – – – Other |
| 8471 | 60 | 40 | – – – Keyboard |
| 8471 | 60 | 50 | – – – Scanners |
| 8471 | 60 | 60 | – – – Mouse |
| 8471 | 60 | 90 | – – – Other |
| 8471 | 70 | – Storage units | |
| 8471 | 70 | 10 | – – – Floppy disc drives |
| 8471 | 70 | 20 | – – – Hard disc drives |
| 8471 | 70 | 30 | – – – Removable or exchangeable disc drives |
| 8471 | 70 | 40 | – – – Magnetic tape drives |
| 8471 | 70 | 50 | – – Cartridge tape drive |
| 8471 | 70 | 60 | – – – CD-ROM drive |
| 8471 | 70 | 70 | – – – Digital video disc drive |
| 8471 | 70 | 90 | – – – Other |
| 8471 | 80 | 00 | – Other units of automatic data processing machines |
| 8471 | 90 | 00 | – Other |
7.3.4. Also, the Note 6 to Chapter 84 is:
(A) For the purposes of heading 8471, the expression ‘automatic data processing machines’ means machines capable of storing the processing programme or programmes and at least the data immediately necessary for the execution of the programme;
i. being freely programmed in accordance with the requirements of the user:
ii. performing arithmetical computations specified by the user: and
(iv) executing, without human intervention, a processing programme which requires them to modi6, their execution, by logical decision during the processing run.
(B) Automatic data processing machines may be in the form of systems consisting of a variable number ((separate units.
(C) Subject to paragraphs (D) and (E) below, a unit is to be regarded as being part of an automatic data processing system if it meets all of the following conditions:
i. it is of a kind solely or principally used in an automatic data processing system;
ii. it is connectable to the central processing unit either directly or through one or more other units: and
iii. it is able to accept or deliver data in a Ibrm (codes or signals) which can be used by the system.
Separately presented units of an automatic data processing machine are to be classified in heading 8471.
However, keyboards, X-Y co-ordinate input devices and disk storage units which satisfy the conditions of paragraphs (ii) and (iii) above, are in all cases to be classified as units of heading 8471.
(D) Heading 8471 does not cover the following when presented separately, even if they meet all of the conditions set forth in paragraph (C):
(i) printer, copying machines, facsimile machines, whether or not combined;
(h) apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network):
(iii) loudspeakers and microphones;
(iv) television cameras, digital cameras and video camera recorders:
M monitors and projector, not incorporating television reception apparatus.
(E) Machines incorporating or working in conjunction with an automatic data processing machine and per forming a specific function other than data processing are to be classified in the headings appropriate to their respective functions or, failing that, in residual headings.
7.3.5. Also, Subheading Note 2 to Chapter 84 provides that For the purpose of sub-heading 8471 49, the term “systems” means automatic data processing machines whose units satisfy the conditions laid down in Note 6(C) to Chapter 84 and which comprise at least a central processing unit, one input unit for example, a keyboard or a scanner) and one output unit (for example, a visual di,splay unit or a printer).
7.3.6. Models — (1) VDS41022 Enterprise SAS-4 High Density High Availability JBOD (Crestone Model-1) & (2) Turnkey VDS41022 JBOD (“Crestone Model-2”): As per applicant’s submission, it is stated that both models of VDS41022 contain drives, controller cards, fan modules, and power supplies but do not contain central processing unit. The products are disk storage unit, capable of housing up to 102 SAS/SATA drives, connected to a host system through SAS-4 ports and incorporating I/O controller modules and SCSI Enclosure Services for monitoring. Both models are connectable to the central processing unit of a host server through its SAS-4 ports are dependent upon a host system for data processing, satisfying Note 6(C)(ii), and accept and deliver data in a form usable by the system, satisfying Note 6(C)(iii). By the last sentence of Note 6(C), these models cases a unit of heading 8471. These models are not described by any named tariff item and falls under the residuary tariff item 8471 70 90.
7.3.7 Models — (3) VSS2249RQ 2U 24 NVMe PCI Gen 4 drive Storage Server (“La Jolla”),
VSS2320 2U NVMe PCIe 5.0 High Availability Shared Storage Server (“Coronado”) & NSS2561-CS-09 (“Mlk Mavericks”): As per the product brief of “La Jolla” placed on record as Exhibit-2, states that server module includes an AMD EPYC Milan CPU and DIMMs and that each CPU sees all 24 drives. Similarly, for the model “Coronado”, it is stated that it is powered by AMD EPYC processors with DDR5 memory. The processors of both the models are thus identified on the record. The applicant for the model “Mlk Mavericks” describes the product as a “high-capacity storage and compute platform” whose architecture “balances compute and storage”, with each drive “connected to the server modules” and support for NVDIMMs, which are memory modules installed in a processor’s memory channels. Hence, all of the models incorporate server modules carrying a central processing unit and system memory. A server module so configured may run an operating system and may have applications installed by the user, may also perform arithmetical computations and execute programmes by logical decision without human intervention. It satisfies all four conditions of Note 6(A).
7.3.8 Further, Subheading 8471 41 requires, in the same housing, at least a central processing unit and an input unit and an output unit. None of these models has an input unit or an output unit in its housing. Their host, network and management ports are means of connecting the machine to other apparatus; they are not input or output units. Subheading 8471 41 is therefore excluded.
7.3.9 Subheading 8471 49 covers machines “presented in the form of systems”, which, by Subheading Note 2, must comprise at least a central processing unit, an input unit and an output unit. Each model is presented on its own, without any input or output unit. Subheading 8471 49 is therefore excluded.
7.3.10. Subheading 8471 50 00 covers processing units other than those of 8471 41 or 8471 49, “whether or not containing in the same housing” storage units, input units or output units. Its terms expressly state a processing unit housed together with storage units. The Models “La Jolla”, “Coronado” and “Mlk Mavericks” contain processing units (the server modules) housed together with storage units. Therefore, tariff item for the models “La Jolla”, “Coronado” and “Mlk Mavericks” is 8471 50 00.
7.3.11 I also agree with the Commissionerate that the authorities cited by the applicant do not assist in respect of the mentioned storage servers. Sudha Enterprises concerned compact discs, Circular No. 28/2005-Cus. concerned pen drives and the U.S. rulings concerned tape libraries, flash storage cards, card readers and optical disc drives. None of those goods incorporated a central processing unit. The passage of the Explanatory Notes relied upon refers to additional storage external to the central processing unit, whereas these models incorporate it. In its additional submissions, the applicant has not contested the Commissionerate’s view on the merits.
7.4. Eligibility under Serial No. 39 of Notification No. 24/2005-Customs
7.4.1 The applicant and the Commissionerate agree that the goods imported by the applicant for the manufacture of the five storage servers are, in principle, eligible for exemption from Basic Customs Duty under Serial No. 39 oNotification No. 24/2005-Customs dated 01.03.2005 , as amended (“the Notification”), subject to conditions.
7.4.2 TheNotification No. 24/2005-Customs dated 01.03.2005, exempts goods of the description in column (3) of its Table, falling under the heading, sub-heading or tariff item in column (2), from the whole of the duty of customs leviable under the First Schedule. The relevant entries read:
| SI. No. | Heading, sub-heading or tariff item | Description |
|---|---|---|
| 8 | 8471 | All goods |
| 39 | Any Chapter except Chapter 74 | All goods except solar tempered glass or solar tempered (anti-reflectivecoated) glass for the manufacture of goods covered by S. Nos. 1 to 38 above, provided that the importer follows the procedure set out in the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2022 |
7.4.3 The language of Serial No. 39 is plain, and the claim is examined against each of its conditions:
a. the goods are goods of any Chapter other than Chapter 74;
b. the goods are not solar tempered glass or solar tempered (anti-reflective coated) glass;
c. the goods are imported for the manufacture of goods covered by Serial Nos. 1 to 38 of the Notification; and
d. the importer follows the prescribed end-use procedure set out in IGCR, 2022.
7.4.4 Condition (a): exclusion of goods of Chapter 74: The applicant states that none of the inputs is of copper, subject to verification at the time of assessment, this condition is satisfied. The classification of individual inputs is not before this Authority and will be determined at the time of assessment. However, by Note 1(g) to Section XVI and Note 2 to Section XV, such parts of general use of base metal are not classified as parts of machines of Section XVI. Hence, articles of copper such as screws, bolts, nuts, springs etc. would ordinarily fall under Chapter 74, and would not be eligible under Serial No. 39 whatever their end use.
7.4.5 Condition (b): exclusion of solar tempered glass: None of the proposed inputs is solar tempered glass or solar tempered (anti-reflective coated) glass.
7.4.6 Condition (c): manufacture of goods covered by Serial Nos. 1 to 38: It has been held above that all five storage servers fall under heading 8471: models “Crestone Model-1” and “Crestone Model-2” under tariff item 8471 70 90, and models “La Jolla”, “Coronado” and “Mlk Mavericks” under tariff item 8471 50 00. Serial No. 8 covers “All goods” of heading 8471, without limitation to any subheading or tariff item. All five storage servers are therefore goods covered by Serial No. 8.
The process described by the applicant converts bare printed circuit boards, discrete components, metal and plastic parts and other inputs into printed circuit board assemblies, server modules and enclosures, and then into finished, programmed and tested storage servers. The resulting products have a name, character and use which is distinct from the inputs. The activity amounts to manufacture within the meaning of the Para 3(i) of IGCR Rules, 2022 which defines that the term “manufacture” as the processing of raw materials or inputs by the importer in any manner that results in emergence of a new product having a distinct nature or character or use or name. The Commissionerate also has not disputed this.
7.4.7 Condition (d): End-use procedure: Serial No. 39 refers to the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2022, which apply wherever the benefit of a notification depends on the use of the imported goods for a specified end use. The benefit shall be available only if the applicant, inter alia:
i. furnishes the one-time prior information in Form IGCR-1 on the common portal and obtains an IGCR Identification Number;
ii. executes a continuity bond, with such surety or security as may be required, before the jurisdictional Deputy or Assistant Commissioner of Customs;
iii. declares the IGCR Identification Number and continuity bond details in every Bill of Entry in which the benefit is claimed;
iv. maintains the account prescribed by the Rules of goods imported, received, consumed, sent for and received back from job work, re-exported and remaining in stock;
v. furnishes statements in Form IGCR-3, and intimation in Form IGCR-2 in case of non-receipt or short receipt, within the prescribed time; and
vi. pays duty with applicable interest on any goods not put to the intended use, or re-exports them, as the Rules provide.
7.5. Scope of the exemption: Serial No. 39 exempts only duty leviable under the First Schedule, that is, Basic Customs Duty. It does not exempt integrated tax under Section 3(7) of the Customs Tariff Act, 1975, or any other duty, tax or cess not leviable under the First Schedule. This ruling concerns goods imported for manufacture at the applicant’s premises at No. 1, S1PCOT Industrial Growth Centre, Oragadam, as stated in the application.
8. Ruling
8.1. In view of the foregoing discussion and findings, I rule as follows on the storage servers, in the configurations described in the application, are classifiable as under:
| SI. No. | Model | Tariff’ item |
|---|---|---|
| ( I ) | VDS41022 Enterprise SAS-4 High Density, High Availability | 8471 70 90 |
| JBOD (“Crestone Model-1”) | ||
| (2) | Turnkey VDS41022 JBOD (“Crestone Model-2”) | 8471 70 90 |
| (1) | VSS2249RQ 2U 24 NVMe PCI Gen 4 drive Storage Server (“La | 8471 50 00 |
| (4) | VSS2320 2U NA/Me PCIe 5.0 High Availability Shared Storage Server (“Coronado”) | 84715000 |
| (2) | NSS2561 -CS-09 (“Mlk Mavericks”) | 84715000 |
8.2. I further rule that above that all five storage servers, being goods falling under heading are 8471, are covered by Serial No. 8 of theNotification No. 24/2005-Customs dated 01.03.2005 , as amended, irrespective of the tariff item within that heading. Goods imported by the applicant and actually used in the manufacture of the said storage servers are eligible for exemption from Basic Customs Duty under Serial No. 39 of the Notification, subject to the following:
a. the goods are not classifiable under Chapter 74 of the First Schedule;
b. the goods are not solar tempered glass or solar tempered (anti-reflective coated) glass;
c. the applicant complies with the Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022;
d. the goods are used in the manufacture of the storage servers in the configurations described in this ruling, which fall under heading 8471, failing which duty with interest shall be payable as provided in the said Rules; and
e. the exemption is confined to Basic Customs Duty and does not extend to integrated tax or any other duty, tax or cess not leviable under the First Schedule.
8.3. This ruling does not determine the classification of any individual input, which shall be determined at the time of assessment.
8.4. The ruling is pronounced on the facts furnished by the applicant, and under Section 28J(3) of the Act a ruling ceases to apply where those facts change. If any model is manufactured in a configuration different from that described, for example without server modules incorporating a central processing unit, the classification in this ruling will not apply to it. Such a product would require classification on its own facts.
8.5. I rule accordingly.
