Case Law Details

Case Name : In re Gulf Oil Lubricants India Limited (CAAR Mumbai)
Appeal Number : Ruling Nos. CAAR/Mum/ARC/28/2022
Date of Judgement/Order : 04/08/2022
Related Assessment Year :

In re Gulf Oil Lubricants India Limited (CAAR Mumbai)

M/s. Gulf Oil Lubricants India Ltd. (the applicant, in short) has filed an application for an advance ruling before the Customs Authority for Advance Rulings, Mumbai (CAAR, in short) and the said application was received in the secretariat of the CAAR on 03.06.2022 along with enclosures in terms of section 28H (1) of the Customs Act, 1962 (the Act, in short). The applicant is seeking an advance ruling on the classification of the “Indra Smart Pro” EVSE (Electrical Voltage Supply Equipment) proposed to be imported.

2. The applicant has indicated that they propose to import “Indra Smart Pro” The device provides electric power to the charger on board an EV which will, in turn, re-charge the vehicle’s batteries. As per the applicant, the product is akin to EVSE (Electrical Voltage Supply Equipment). EVSE systems include electrical conductors, related equipment, software, and communication protocols that deliver energy efficiently and safely to an electric vehicle. It has many other features, e.g., all-weather functioning, controlled by app, smart scheduling, solar charging, off-peak charging, house fuse protection, quick boost and over-the-air (OTA) updates. There is two-way communication between the charger and the car. It helps to check the maximum current the charger can provide as well as the maximum current the car can receive. As per the applicant, the closest heading of the product is 8543. They stated that chapter 85 as a whole covers all the electrical equipment and parts thereof. However, if for electrical equipment there is no specific HSN, then such goods may be classified into heading 8543. EVSE can be said to be having an individual function of supplying electricity to the charger inside the EVs. Such equipment cannot be used for other purposes. Further, since EVSE is not specifically covered under any of the chapters it shall be classified under the heading 8543.

3. The applicant has stated that they intend to import the said goods through the seaports/airport at Nhava-Sheva, New Custom House, Mumbai; and Air Cargo Complex, Sahar, Mumbai. Accordingly, comments from the jurisdictional commissioners of customs were invited in respect of the application for advance ruling.

3.1 The comments of the Commissioner of Customs (Import), Air Cargo Complex, Sahar are on record. In the said comments, it is opined that while the applicant has prayed that the device should be classified under tariff entry 85437099 (Electrical machines and apparatus having individual functions, not specified or included elsewhere in this chapter), as per the catalogue provided with the application, the product is the smartest AC electric vehicle charger available on the market and appears to be a feature-rich EV charger. Further, the website on the link: Smart PRO EV Charger/ Electric Vehicle Home Charging/ INDRA  (www.indra.co.uk), also describes the device as the smartest electric vehicle charger. Therefore, the device intended to be imported is an EV charger and there is a specific tariff entry 85044030 for battery chargers and EV battery chargers are not excluded from the scope of chapter 85. Besides, heading 8543 is a residual heading and in the presence of a specific heading, residual heading cannot be considered. In view of the aforesaid, the jurisdictional commissioner has suggested that the device being an EV charger appears to be appropriately classifiable under tariff heading 85044030 under merit rate of duty @ 20%.

4. The comments from the jurisdictional commissionerate were forwarded to the applicant for any rejoinder. The applicant made an additional submission on 18.07.2022. In their submission, the applicant reiterated the features of the product. They also stated that the product is most akin to EVSE. Commenting on the jurisdictional commissionerate’s suggested heading 8504, the applicant stated that as per explanatory notes, the apparatus of this group are used to convert electrical energy in order to adapt it for further use. They incorporate converting elements (e.g., valves) of different types. They may also incorporate various auxiliary devices (e.g., transformers, induction coils, resistors, command regulators, etc.). Their operation is based on the principle that the converting elements act alternately as conductors and non-conductors. The fact that these apparatus often incorporate auxiliary circuits to regulate the voltage of the emerging current does not affect their classification in this group, nor does the fact that they are sometimes referred to as voltage or current regulators. This group includes: (A) Rectifiers by which alternating current (single or polyphase) is converted to direct current, generally accompanied by a voltage change. (B) Inverters by which direct current is converted to alternating current. (C) Alternating current converters and cycle converters by which alternating current (single or polyphase) is converted to a different frequency or voltage. (D) Direct current converters by which direct current is converted to a different voltage. The applicant stated that in devices of heading 8504 there is an element of conversion. While in the impugned case, the product is basically a relay/contactor to switch mains AC power on and off to the vehicle, inside EVS there are active electronics to monitor the safe operation of the relays/contactors and switch on/off power when the vehicles charger needs to be powered. therefore, as the impugned device only supplies the electricity and does not convert the current or do not make any alteration in the frequency, it will not fall under heading 8504.

5. The personal hearing in the matter was held on 19.07.2022 in hybrid mode to accommodate their foreign partners. Shri Anoop Kalavath, partner, Deloitte along with Ms. Komal Sampat and Shri Aman Gorasiya were present in-person while Shri Ashish Navalkar, GM, Gulf Oil Lubricants India Ltd.; Shri Shailesh Mehendale, Finance Manager, Gulf Oil Lubricants India Ltd.; Shri Gagan Mathur, Product Development Manager, Gulf Oil Lubricants India Ltd.; and Mr. Michael flatlet, Senior Technical Professional Person, Indra represented the applicant virtually. No one was present for the jurisdictional commissioners. The representatives of the applicant explained that the device supplies the AC supply from the grid to the charger in the vehicle. They reiterated that the device doesn’t convert the AC supply to DC supply. They explained the additional features of the device which make it a smart device. On a question being asked, they stated that the device will not start supplying electricity to a vehicle charger on its own without manual intervention. On the issue of the devices being able to draw its supply from a solar module instead of a grid, it was clarified that the device can draw its power source from a solar supply after the same is duly converted from DC to AC. On being asked about the difference between the device and a 50-kilowatt quick charger, it was explained that, unlike the latter, their device doesn’t include a converter.

6. I have considered the submissions of the applicant as well as the comments of the commissioner of customs. I have also referred to its website of Indra and obtained relevant information from reliable open sources. The issue before me is the classification of the Indra Smart Pro. It is gathered that the device in question is used primarily for providing power to the charger onboard an electric vehicle. In addition, the device has additional features, which make it a smart device. It is also on record that the device supplies AC power supply from the grid/solar module to the charger onboard the vehicle and it doesn’t convert the AC supply to DC supply before supplying to the on-board charger. The difference between the device and a 50-kilowatt quick charger is that unlike the latter it doesn’t include a converter. While the applicant has explained the functions of the device they have not provided the list of parts and/or components of the said device. It is merely stated that EVSE systems include electrical conductors, related equipment, software, and communication protocols that deliver energy efficiently and safely to the vehicle. To determine the classification of the device, reliance has to be placed on the description of headings, sub-heading as well as relevant section/chapter notes. The device in question provides power and has certain other additional features as already described hereinbefore. The device, besides providing power to the on-board battery charger of an EV, also provides protective earth and neutral faults, earthling faults, simultaneous contact risks, touch voltage risks, DC leakage and load curtailment. It appears that to carry out such functions, the device would need to incorporate necessary additional apparatus such as a circuit board, relays and contactors. Relays are electrical devices by means of which the circuit is automatically controlled by a change in the same or another circuit. Contactors, which are also considered relays, are devices for making and breaking electrical circuits, which automatically reset without a mechanical locking device or hand operation. They are generally operated and maintained in an active state by an electric current. Since, the device also incorporates a mechanism for protection against voltage surge wherein normally a length of fuse wire is incorporated (or can be incorporated) so that, when they are inserted in the circuit, the fuse wire will melt, and hence, break the circuit if the current increases dangerously. The said device apparently also incorporates a plug, socket and or other contacts for connecting a movable lead or apparatus to an installation which is usually fixed. The applicant has suggested heading 8543 for classification, whereas as per the jurisdictional commissionerate, the product merits classification under heading 8504. GRI 1 provides that the classification of goods shall be “determined according to the terms of the headings and any relative section or chapter notes.” In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, GRIs 2 through 6 may be applied in order.

6.1 Heading 8504 contains electrical transformers and static converters (for example, rectifiers) and inductors. From the description of the product, it is certain that it is neither a transformer nor an inductor. It needs to be examined whether the product is a static converter. As per the explanatory notes to the heading, static convertors of the heading 8504 covert electrical energy in order to adapt it for further use by incorporating converting elements of various types and may also incorporate various auxiliary devices. Their operation is based on the principle that the converting elements act alternatively as conductors and non-conductors. In so far as the device under consideration is concerned, it is incapable of converting electrical energy and merely supplies the AC power supply from the grid to the charger on-board of an EV. Therefore, I find it difficult to concur with the views of the learned commissioner that heading 8504 would be a suitable tariff entry for the device.

6.2. The applicant is claiming the classification of the device under heading 8543 as electrical machines and apparatus having individual functions, not specified or included elsewhere in this chapter. As per the HSN explanatory notes, this heading covers all electrical appliances and apparatus, not falling in any other heading of this Chapter, nor covered more specifically by a heading of any other Chapter of the Nomenclature, nor excluded by the operation of a Legal Note to Section XVI or to this Chapter. The electrical appliances and apparatus of this heading must have individual functions. The introductory provisions of Explanatory Note to heading 84.79 concerning machines and mechanical appliances having individual functions apply, mutatis mutandis, to the appliances and apparatus of this heading. The device under consideration does have an individual function. Therefore, the introductory provisions of explanatory notes to heading 8479 are referred to analyse the applicability of heading 8543. As per the HSN explanatory note to heading 8479, the heading is restricted to machinery having individual functions, which:

(a) Is not excluded from this Chapter by the operation of any Section or Chapter Note. and

(b) Is not covered more specifically by a heading in any other Chapter of the Nomenclature. and

(c) Cannot be classified in any other particular heading of this Chapter since:

(i) No other heading covers it by reference to its method of functioning, description or type. and

(ii) No other heading covers it by reference to its use or to the industry in which it is employed. or

(iii) It could fall equally well into two (or more) other such headings (general purpose machines).

'Indra Smart Pro' EVSE merits classification under subheading 85371000

The above-mentioned note applies, mutatis mutandis, to the appliances and apparatus of heading 8543. Therefore, if any heading covers the product by reference to its method of functioning, description or type then such product will not be classifiable under 8543. On a careful analysis of the functioning of the product along with the features, it appears that it’s functions find mention in the heading 8537. Therefore, it is necessary to examine the suitability of the heading 8537 to the device and only if the said heading is inapplicable the heading 8543, a residual heading can be considered.

6.3 Heading 8537 covers boards, panels, consoles, desks, cabinets and other bases, equipped with two or more apparatus of heading 8535 or 8536, for electric control or the distribution of electricity, including those incorporating instruments or apparatus of chapter 90, and numerical control apparatus, other than switching apparatus of heading 8517. The basic function of the device under consideration is control of electricity and its distribution along with safety features providing protection against any electrical leakage or surge suppression. Apart from that the device also consists of certain smart functionalities such as app control, smart scheduling, online updates, solar charging, etc. From the specifications provided by the manufacturer on their website, the device operates on 230V, AC ± 10%. The suitable heading for the products having above mentioned essential function appears to be 8537. As per the HSN explanatory notes. the heading 8537 consists of an assembly of apparatus of the kind referred to in the headings 8535 and 8536 on a board, panel, console, etc., or mounted in a cabinet, desk etc. They usually also incorporate meters, and sometimes also subsidiary apparatus such as transformers, valves, voltage regulators, rheostats or luminous circuit diagrams. The goods of this heading vary from small switchboards with only a few switches, fuses, etc. (e.g., for lighting installations) to complex control panels for machine-tools, rolling mills, power stations, radio stations, etc., including assemblies of several of the articles cited in the text of this heading. Heading 8536 and 8537 contain electrical apparatus for switching or protecting electrical circuits, or for making connections to or in electrical circuits for voltage exceeding 1,000 volts and voltage not exceeding 1,000 volts, respectively. The device under consideration consists of an assembly of apparatus such as switches, fuses, relays, contactors and a surge suppressor of heading 8536 on a console. The applicant has submitted that the device consists of certain smart features such as smart scheduling, over-the-air update, app control etc. As per the HSN explanatory notes, the heading also covers:

(1) Numerical control panels with built-in automatic data processing machine, which are generally used to control machine-tools.

(2) Programmed switchboards to control apparatus; these permit variations in the choice of operations to be followed. They are normally used in domestic electrical appliances, such as washing machines and dish washers.

(3) “Programmable controllers” which are digital apparatus using a programmable memory for the storage of instructions for implementing specific .fiinctions such as logic, sequencing, timing, counting and arithmetic, to control, through digital or analog input/output modules, various types of machines.

Therefore, the smart programmable features, present in the product under consideration, fall within the ambit of this heading as per explanatory notes. Accordingly, the device merits classification under heading 8537. More specifically the device is classifiable under six-digit entry 853710 which covers a device akin to the one under consideration operating on voltage below 1000V.

6.4 The US Customs in its cross-ruling no. N313573 for tariff classification of similar electric vehicle charging station gave following observations: –

“The merchandise under consideration is identified as the EV Box Iqon, which is described as an electric vehicle charging station consisting of an outdoor enclosure, insulated electrical cables with charging connectors, internal control electronics, a user display interface, and a metering system. Internally, the EV Box Iqon is equipped with numerous DIN rail mounted electrical apparatus, such as terminal blocks, relays, and contacts. Also incorporated into the charging station are multiple printed circuit board assemblies that control the distribution of electricity to one or more vehicles, supply network communications to a host system, communicate with the vehicle being charged, and control of the user interface. Lastly, the EV Box Iqon has an integrated electrical protection feature that is identified as the Charging Circuit Interruption Device, which detects and halts vehicle charging functions when electrical faults are present. In use, the EVBox Iqon is attached through the charging cables to the vehicle charge port. Based on the information provided, the EVBox Iqon does not convert, alter, or recta the electricity supplied to the vehicle. While there is an internal power supply that converts mains AC input power to 12 VDC, this electricity is used to power the internal control circuitry and user interface and is not supplied to the attached vehicle. In our view, the EVBox Iqon’s function is to control and distribute electricity while providing electrical protection measures throughout the charging process. As such, classification of the EVBox Iqon under subheading 8504.40, HTSUS, is not appropriate” and ruled that “the applicable subheading for the EVBox Iqon will be 8537.10:9170, TITSUS, which provides for “Boards, panels, consoles, desks, cabinets and other bases, equipped with two or more apparatus of 8535 or 8536, for electric control or the distribution of electricity…: For a voltage not exceeding 1,000 V: Other: Other: Other”.

7. In view of the aforesaid observations, it emerges that heading 8537 squarely covers the device involved in this application for advance ruling. Under such circumstances, the device under consideration does not merit classification under heading 8543, as suggested by the applicant, which is a residual entry and cannot take precedence over a specific heading. Therefore, I rule that “Indra Smart Pro” (Electrical Voltage Supply Equipment) merits classification under subheading 85371000 of the first schedule to the Customs Tariff Act, 1975.

Download Judgment/Order

Join Taxguru’s Network for Latest updates on Income Tax, GST, Company Law, Corporate Laws and other related subjects.

Join us on Whatsapp

taxguru on whatsapp GROUP LINK

Join us on Whatsapp

taxguru on whatsapp GROUP LINK

Join us on Whatsapp

taxguru on whatsapp GROUP LINK

Join us on Whatsapp

taxguru on whatsapp GROUP LINK

Join us on Whatsapp

taxguru on whatsapp GROUP LINK

Join us on Whatsapp

taxguru on whatsapp GROUP LINK

Join us on Whatsapp

taxguru on whatsapp GROUP LINK

Join us on Whatsapp

taxguru on whatsapp GROUP LINK

Join us on Whatsapp

taxguru on whatsapp GROUP LINK

Join us on Whatsapp

taxguru on whatsapp GROUP LINK

Join us on Telegram

taxguru on telegram GROUP LINK

Review us on Google

More Under Custom Duty

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Posts by Date

September 2022
M T W T F S S
 1234
567891011
12131415161718
19202122232425
2627282930