Case Law Details

Case Name : In re Vivo Mobile India Pvt. Ltd. (CAAR Delhi)
Appeal Number : Advance Ruling No. CAAR/Del/Vivo/34/2023/607
Date of Judgement/Order : 13/12/2023
Related Assessment Year :

In re Vivo Mobile India Pvt. Ltd. (CAAR Delhi)

CAAR note that the MEMS microphones come in IC-like packages for surface mount assembly. However, they are not integrated circuit of heading 8542. Thus, the rulings and judgements quoted by the applicant, referring to devices performing multiple functions or where the goods in questions are integrated circuit in itself, are not applicable in the instant case. Though, it has been stated that last part of the Note 12 to the Chapter 85 states that, for classification of the articles defined in the above-mentioned note, heading 8542 shall take precedence over any other heading in the nomenclature and referring to the Explanatory Notes (Volume 5) to the Harmonized Commodity Description and Coding System (2022, Edition Seventh) and it is also stated that the above explanation clearly states that the MCOs can be used in variety of applications but still would be covered under the CTH 8542 if they fulfil the meaning of MCO provided in the Explanatory Notes but, the applicant has missed an important provision under the said explanatory notes of heading 8542 wherein, it is inter-alia unambiguously stated that all separate (tradeable) units, which are not classifiable under 8504, 8532, 8533, 8541 or which do not fall under the definition of silicon based sensors, actuators, oscillators and combination thereof are excluded from the definition of an MCO. Thus, the product in question which appears to be an assembly, constitute a complete machine or device i.e microphone, hence, it merits classification as a complete machine or device.

Without going into the discussion as to whether end-use is relevant for classification or not, it is pertinent to mention that the applicant has stated that in the present case, the product is used as microphone component for installation onto a PCB of mobile phones and other electronic devices. Lastly, CAAR note that rule 1 of the GRI lays down that 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. Further, rule 6 of GRI provides that for legal purposes, the classification of goods in the sub-heading of a heading shall be determined according to the terms of those sub-headings. Moreover, since the applicant has repeatedly mentioned that the product in question perform the function of a microphone and the since Micro-Electro Mechanical Systems, or MEMS is a technology and also a MEMS (micro-electromechanical system) microphone is a miniature machine that has both mechanical and electronic components. Thus, by application of rule 1 and 6 of GRI, the product under consideration i.e. MEMS Microphone is classifiable under Sub-heading 85181000 of the First Schedule to the Customs Tariff Act, 1975.

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

M/s. Vivo Mobile India Pvt. Ltd., 10th & 11th Floor, Palm Springs Plaza (Complex), Village Wazirabad, Sector-54, Gurugram (Haryana)-122003, having [EC number 0514053739 (applicant, in short) has tiled an application dated 22.09.2023, received in this office on 22.09.2023, seeking advance ruling under section 28-11 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. 25/2023 dated 22.09.2023.

2. The applicant has stated that they are engaged in import of Integrated Circuit Micro Electro Mechanical System (MEMS) Microphone and they have sought ruling on classification of the said goods under the Customs Tariff Act, 1975, on question: Whether MEMS Microphone can be classified under Tariff Item 85423900?

3.1 The applicant is seeking advance ruling on the issue of classification of Micro Electro Mechanical System (MEMS) Microphone under the Schedule to the Customs Tariff Act, 1975. The applicant has inter-alia stated that, they are engaged in the business of manufacturing mobile phones and for the said purpose, they import various parts and equipments; earlier, they were importing traditional microphones which were bulky and have since become outdated and replaced by high performance and highly sensitive silicon based integrated circuit MEMS Microphones which are the subject matter of the present application.

3.2 Further, the applicant has stated that, the product for which advance ruling has been sought, is a miniature, high-performance, low-power, matched sensitivity silicon microphone; it is characterised as a Micro Integrated Circuit Microphone which is composed of MEMS silicon sensor components, Application-Specific Integrated Circuit amplifier chip, PCB substrate, shell, Gold wire, and other components; additionally, a Land Grid Array packaging method is used to package the above components inseparably.

3.3 As regard functioning of the product, it is stated that, it is an integrated circuit which acts as an energy conversion device that performs the function of converting sound signals into electrical signals; it functions, as the sound is transmitted to the diaphragm of the MEMS to cause vibration, and the capacitance between the electrodes changes, thereby realizing the conversion from the acoustic signal to the electrical signal; the product can be installed on the PCB boards of electronic products such as mobile phones, tablet computers, and notebook computers through conductive voltage points to realize the function of converting sound signals into electrical signals; the product is suitable for applications such as headsets, portable electronics, cell phones, laptop computers, tablets, portable music recorders and other portable electronic devices where excellent wideband audio performance and RF immunity are required.

4.1 The applicant has also stated that, the product was being classified under Tariff item 85181000 which classifies “Microphones and Stands therefor”; however, since the product is silicon based and is an integrated circuit which works on the surface of the PCB, it can be more appropriately classified under CTH 85423900; now they intend to import the product in the future under Customs Tariff Item 85423900 by availing exemption granted under Notification 024/2005-Cus dated 01.03.2005 which exempts ‘electronic integrated circuit’ from whole of the Customs Duty.

4.2 The product is a Multi-Component Integrated Circuit which falls within CTH 8542 as per Chapter Notes to Chapter 85; the product is an Integrated Circuit MEMS Microphone which has a silicon-based sensor, ASIC amplifier chip, PCB substrate, shell, gold wire, and other components which are formed for the purpose of converting sound signal into electrical signals, indivisibly into a metal body; the product being Multi-Component Integrated Circuit as per the definition given under the Note 12 of Chapter 85, will be covered as an integrated circuit and appropriately classifiable under the CTH 8542; Chapter Note 12 to Chapter 85 states that for the purposes of headings 85.41 and 85.42:——– (b) Electronic Integrated Circuits are:————— (iv) Multi-component integrated circuits (MCOs) : a combination of one or more monolithic, hybrid, or multi-chip integrated circuits with at least one of the following components : silicon-based sensors, actuators, oscillators, resonators or combinations thereof or components performing the functions of articles classifiable under heading 85.32, 85.33, 85.41, or inductors classifiable under heading 85.04, formed to all intents and purposes indivisibly into a single body like an integrated circuit, as a component of a kind used for assembly onto a printed circuit board (PCB) or other carrier, through the connecting of pins, leads, balls, lands, bumps, or pads. For the purpose of this definition: I. “Components” may be discrete, manufactured independently then assembled onto the rest of the MCO, or integrated into other components, 2. “Silicon based” means built on a silicon substrate, or made of silicon materials, or manufactured onto integrated circuit die, 3. (a) “Silicon-based sensors” consist of microelectronic or mechanical structures that are created in the mass or on the surface of a semiconductor and that have the function of detecting physical or chemical phenomena and transducing these into electric signals, caused by resulting variations in electric properties or displacement of a mechanical structure. “Physical or chemical phenomena” relates to phenomena, such as pressure, acoustic waves, acceleration, vibration, movement, orientation, strain, magnetic field strength, electric field strength, light, radioactivity, humidity, flow, chemicals concentration, etc. (b) “Silicon based actuators” consist of microelectronic and mechanical structures that are created in the mass or on the surface of a semiconductor and that have the function of converting electrical signals into physical movement. (c) “Silicon based resonators” are components that consist of microelectronic or mechanical structures that are created in the mass or on the surface of a semiconductor and have the function of generating a mechanical or electrical oscillation of a predefined frequency that depends on the physical geometry of these structures in response to an external input. (d) “Silicon based oscillators” are active components that consist of microelectronic or mechanical structures that are created in the mass or on the surface of a semiconductor and that have the function of generating a mechanical or electrical oscillation of a predefined frequency that depends on the physical geometry of these structures.

4.3 In terms of the explanation provided for MCO under the above-mentioned note, MCO is a combination of monolithic, hybrid, or multi-chip integrated circuits with silicon-based sensors, formed indivisibly into a single body like an integrated circuit, as a component of a kind used for assembly onto a PCB through the connecting of pins. In the present case, the product is an MCO composed of MEMS silicon-based sensor, ASIC amplifier chip, PCB substrate, shell, gold wire, and other components, all formed for the purpose of converting sound signal into electrical signals, indivisibly into a metal body. The product is used as microphone component used for installation onto a PCB of mobile phones and other electronic devices. Therefore, the product is covered under the Chapter Note 12 (b) (iv) of the Chapter 85. Further, the Explanatory Notes (Volume 5) to the Harmonized Commodity Description and Coding System (2022, Edition Seventh), at page XVI-8542-3 explains the scope of HS Code 8542 as under:

“The MCOS are of en intended for mounting with their terminals or leads in, or on, a supporting carrier (e.g., printed circuit hoards (PCBs) or other carriers, such as thick-film, thin-film, insulated metal substrates, etc.) or connecting to an electric interface, Packages of the MCOS can be made of several materials, have various designs and forms, and can protect the unit from mechanical and environmental influences.

The MCOS can have different features (e.g., a package can be solid, or have holes, windows or membranes) or attachments that are necessary for specific functions. The MCOS use these different features and attachments to receive input from outside supplied physical or chemical quantities and process these data for output in relation with silicon- based sensors, actuators, oscillators, resonators.

They can be used in variety of applications, including computer, communication (e.g, telephones for cellular networks), consumer, industrial or automotive applications.”

The above explanation clearly states that the MCOs can be used in variety of applications but still would be covered under the CTH 8542 if they fulfil the meaning of MCO provided in the Explanatory Notes. The above explanation squarely applies on the product in question as the manufacturing and technical specification of the product states that, it is intended for installation on the PCB of the mobile phones, tablets etc. to perform the desired function. Moreover, the product contains a feature which is a hole in its body as an input for this MCO to perform its function of converting sound signal into electric signal. Thus, the classification of the product shall be under heading 8542 on the basis of its technical features.

4.4 In support of their claim for classification of the said product, the applicant has also stated that,

4.4.1 US Customs and Border Protection in its classification ruling, (US CROSS Ruling NY H83168 dated July 30, 2001), has held devices with similar technical characteristics and similar functioning to the present case to be classified under CTH 8542, mentioning that, The merchandise is described in your letter as a Photodetector/Transimpedance Amplifier Product #VSC7807. The item is a monolithic analog integrated circuit, which has mixed signals (digital/analog) and does not contain logic or memory. It is composed of Gallium Arsenide. It is part of Vitesse’s Optoelectronics Group providing three different varieties of transimpedance amplifiers (TIA r) — stand alone TIA devices plus two highly integrated device solutions that convert light from a fiber-optic communications channel directly into a differential output signal.

The applicable subheading for the Photodetector/Transimpedance amplifier Integrated Circuit will be 8542.30.0090, Harmonized Tar yf Schedule of the United States (HTS), which provides for “Electronic integrated circuits and micro assemblies; parts thereof Other monolithic integrated circuits: Other: Other, including mixed signal (analog/digital): Other” The rate of duty will be free.

Thus, it is held that a monolithic analog integrated circuit will be classified under HS Code 8542. Even in the above Ruling, a device which converted light from optic communications was held to be covered under HS Code 8542. Therefore, even in the present case where the product in question converts the sound signal into electrical signals and is essentially an MCO having silicon-based sensors, the same will be classifiable under CTH 8542.

4.4.2 US Customs and Border Protection in its classification ruling, (US CROSS Ruling N281202 dated December 6, 2016), held that the concerned products are ICs constructed of circuit elements that are created in the mass on the surface of a silicon semiconductor wafer, inseparably in a single package and performing various functions shall be classifiable under CH 8542.

4.4.3 Binding Tariff Information (“BTI”) reference no. DEBTI13690/19-1 of European Commission for Taxation and Customs Union, dated 03/06/2019, classified MEMS Microphone under CH 8542. The classification under CH 8542 shall take precedence over CH 8518.

4.4.4 last part of the Note 12 to the Chapter 85 states that, for classification of the articles defined in the above-mentioned note, CH 8542 shall take precedence over any other heading in the nomenclature. Therefore, the Product being an MCO, its classification under CTH 85423900 will take precedence over classification under Sub-heading 85181000. The relevant part of chapter note is extracted below:

“For the classification of the articles defined in this Note, headings 85.41 and 85.42 shall take precedence over any other heading in the Nomenclature, except in the case of heading 85.23, which might cover them by reference to, in particular, their function.”

In this regard they have relied upon the case of Anjaleem Enterprises Pvt. Ltd. Versus Commissioner of C. Ex., Ahmedabad [2006 (194) E.L.T. 129 (S.C.)], where it was held that even a programmed IC is classifiable under Heading 85.42 and that the essential character of an IC does not change with the programme being embedded therein. Further, on application of Note 2(a) to Section XVI of the Tariff under which Chapters 84 and 85 fall, the ICs in question will remain classifiable under Heading 85.42 as, although they may be parts of franking machines, they are specifically enumerated/included in Heading 85.42. Further, according to Note 5 to Chapter 85, the classification of ICs under CTH 85.42 will take precedence over any other heading in the Schedule which may cover ICs by reference to their function etc. and therefore, even if the ICs can be treated as parts of franking machines, by virtue of the above Note 5, their classification under Chapter Heading 85.42 will take precedence over classification under CTII 8470.90. The relevant paragraphs of the judgement are extracted below:

16. The controversy on classification, therefore, is : whether the essential character of the programmed EPROM in the present case, as an IC changed to become a “recorded media” or a software under CH 85.24.

17. The main components of a computer system are central processing unit, memory and disk store [See: Oxford Illustrated Encyclopedia of Invention and Technology- 1992 Edition, page 183]. A floppy is a dumb storage box. It is different from a chip or an integrated circuit which performs intelligent functions. An integrated circuit (IC) is often referred to as a micro-chip or a chip. It is a miniaturized electronic circuit consisting of semi-conductor devices. A ‘memory’ is the most regular type of integrated circuit [See: en.wikipedia.org]. According to www.whatis.com, an ‘IC’, sometimes called a chip or micro-chip, is a semi-conductor wafer on which thousands of capacitors and transistors, are fabricated. Unlike a floppy or a disk (which is removable from the system) an ‘IC’ can function as an amplifier, timer, counter, computer memory and as a microprocessor. It is not easily removable. Therefore, an ‘IC’ or a chip cannot be compared to a floppy which is merely a storage device similar to an empty box or a suitcase.

30. Before concluding, we reiterate that in the present case, the levy Is on a computer based embedded system, The slipware embedded In the programmed EPROM, which is an IC chip, constitutes the “brain” of the systemic. Tow programmed EPROM Is an integral part of the system. The levy is on the unit. The levy is not on the programmed EPROM. The programme embedded is not an easily removable. Hence, it will not fall In the category of recorded media under tariff item 85.24 and remains an IC under tariff Item 85.42.

4.4.5 Further the Hon’ble Tribunal in the Commissioner of Cus., Bangalore vs Instrument Research Associates, 2004 (170) E.L.T. 321 (Tri. – Bang.) has taken the similar view. The relevant extract of the judgement is extracted below:

On a careful consideration, it is seen from the Commissioner’s order that the item is electronic micro assemblies. Electronic Micro Assemblies are clearly classifiable under Heading 8542. Note 5 of Chapter 85 also clearly lays down as to what are electronic integrated circuits and electronic micro assemblies and it states that for the classification of the articles defined in this Note, Headings 8541 and 8542 shall take precedence over any other heading in this Schedule, which might cover them by reference to, in particular, their function’. The Commissioner has gone into great detail on all the technical aspects of the matter and has overruled the classification adopted by the lower authorities under sub-heading 8531.90 as parts of electric sound or visual signalling apparatus. The Heading itself gives the examples like bells, sirens, indicator panels, burglar or fire alarms. It is very clear that the item in question is not the part of bells, sirens, indicator panels or fire alarms. The experts have clarified that LEDs are discrete active devices. The interconnecting conductors connecting elements on substrates are discrete passive elements with passive electrical function. The entire assembly of LEDs connecting elements and substrate are enclosed in a moulded plastic casing. It also states that they are inseparable and the components cannot be taken out and used individually. They have clearly given an opinion that the items are electronic micro assemblies. When it is specifically covered by a heading with a description ‘Electronic integrated circuits and micro assemblies’ then it cannot be considered as part of electric sound or visual signalling apparatus. Note 5 of Chapter 85 also supports the assessee’s case, as it has been clearly laid down therein that for classification of the articles defined in this Note, Heading 8541 and 8542 shall take precedence over any other Heading in this Schedule which might cover them by reference to, in particular, their function. We have noticed from the experts’ opinion that the function of this item is of micro assemblies and not electrical sound or visual signalling apparatus. Therefore, it cannot be classified as its parts. Hence, the Order passed by the Commissioner is legal and proper and there is no merit in this appeal and the same is rejected

Therefore, in light of the above, in view of the specific provisions of Chapter Notes to Chapter 85, the product will be classified under heading 8542 irrespective of its usage as a microphone.

4.5 The applicant has also stated that the product cannot be classified under CTH 85181000 as classification of the product under heading 8518 is not supported by well settled principles of classification; rule 1 of the General Rules of Interpretation (GRI, in short) lays down that 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; the heading 8518 covers Microphones and stands therefor; loudspeakers, whether or not mounted in their enclosures; headphones and earphones, whether or not combined with a microphone, and sets consisting of a microphone and one or more loudspeakers; audio-frequency electric amplifiers; electric sound amplifier sets; however, in terms of Chapter Notes to Chapter 85, ICs will be classified under heading 8542 and the same will take precedence over any other entry in the Schedule; therefore, irrespective of the description of the heading in 8518, the subject product being a MCO and being covered within the meaning of ICs, will be covered under CTH 8542 alone.

In this regard, in the case of Commissioner of Central Excise, Nagpur vs Simplex Mills Co. Ltd. [2005 (181) E.L.T. 345 (SC)], it is held that classification of a product is determined according to the terms of the Headings and any relative Section or Chapter Note. GRI 1 also provides that titles of Sections, Chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification is determined according to the terms of the Headings and any relative Section or Chapter Notes. It is only when such Headings or Notes do not otherwise require that the provisions (2),(3),(4),(5) and (6) of GRI would apply. The subsequent rules can be resorted to only when no clear picture emerges by application of rule 1. Insofar as the present case, given that Chapter Notes to Chapter 85 expressly includes MCOs coupled with the fact that the subject Product is an IC having silicon based sensors, the same will be classified under CTH 8542.

4.6 The applicant is also of the view that the product’s end use is irrelevant for classification as it is settled law that the end use of goods is irrelevant in interpretation of tariff or for the purpose of classification under CTH 8542. Therefore, merely on account of end-use of the product being of microphone, the same cannot be classified under Sub-heading 85181000. In this regard, in the case of Glaxo Laboratories (India) Ltd. vs Union of India and Others 1985 (21) E.L.T. 72 (Born.), it is held that:

14. Moreover; the end-use of a product is irrelevant for the purpose of interpretation of a tares entry. The Supreme Court in the case of Dunlop India Ltd v. Union of India and others reported in A.I.R. 1977 S.C. 597 on p. 607 was required to consider whether VP. Latex should be classified as “rubber raw” or as a “synthetic resin”. The Court held that the end-use of an article is absolutely irrelevant for the purpose of its classification under a tariff’ entry where there is no reference to the end-use of the article in the entry itself The article must be judged on the basis of its nature at the time of its importation. Its ultimate use is not relevant. The use of PVP in pharmaceutical preparations is, therefore, strictly speaking, not relevant for its classification unless it could be shown that there is something in the nature of PVP per se which would entitle it to be classified as a ‘drug’. Such is not the present case.

In light of the above, the product under consideration merits classification under heading 8542 irrespective of the end use of the said Product.

5. Comments in the matter have been received from the concerned Commissionerate wherein, it is inter-alia stated that,

(1) the applicant is seeking advance ruling for classification from CTH 85181000 in which they are already importing the same product to CTH 85423900. It appears that the applicant does not fulfil the provisions of Section 28E(b) of the Customs Act, 1962 to seek advance ruling in respect of the goods which are already being imported by them in commercial quantity before any written decision of the Authority. In view of the above, it appears that the application filed by M/s. Vivo Mobile India Pvt. Ltd. merits rejection in terms of Section 28E(b) of the Customs Act, 1962,

(ii) the microphones are rightly classifiable under heading 851810 and its parts are classified under 851890. Definition of MEMS microphone as available in common trade parlance is as follows:

A MEMS microphone is an electro-acoustic transducer housing a sensor MEMS (Micro Electro Mechanical System) and an application specific integrated circuit (AS1C) in a single package. The usage targets all audio applications and converts variable incoming sound pressure to capacitance variations that the ASIC transforms into analog or digital output. Accordingly, the MEMS is a type of feature or add-on to the microphone which doesn’t change the identity of the Microphone to be classifiable under CTH 8542 which basically covers electronic integrated circuits,

(iii) the applicant has mentioned that the said product is silicon based and is an integrated circuit which works on the surface of PCB, it is more rightly classifiable under CTH 85423900, However, the applicant has failed to mention that the said technology is an application specific design and is one of the varieties of the microphone. The application of MEMS doesn’t encompass specifically to microphone and that the former has various applications in other technologies also such as inkjet printers accelerometers, MEMS barometers, optical switching technology, MEMS gyroscope etc. As such, if the applicant’s moot point is to be considered that since its product is silicon based and is an IC which works on PCB, then all the devices as mentioned earlier which also employed the techniques of MEMS in their functioning in terms of applicant’s understanding of the product will be classified under 85423900 instead of their respective specific headings or CTSH,

(iv) as per the description of the goods as submitted by the importer i.e. MEMS microphone, it is evident that the microphone to be imported are enabled with MEMS technology and as such w.r.t. rule 3(a) of the General Rules for Interpretation of Import Tariff, the most specific description to the said goods are covered under heading 8518 which covers ‘Microphones and stands therefor; loudspeakers, whether or not mounted in their enclosures; headphones and earphones, whether or not combined with a microphone, and sets consisting of a microphone and one or more loudspeakers: audio frequency electric amplifiers: electric sound amplifier sets’ and vis-a-vis CTSH 851810 specifically covers ‘Microphones and stands therefor’. Moreover, as per reading of rule 3(a) and the description of the product as amplified by the applicant, this is also not a case where two headings refer to part only of the material/items in a set put up for retail sale, as MEMS is a technology to be used in microphone and therefore is inseparable from the microphone. It is not a case wherein MEMS has an identity of its own and provides an identity to the microphone to merit classification under 854239. Accordingly, in terms of rule 3(a) of GRI, the description against which the advance ruling is being sought, there is no iota of doubt that the same are identified as Microphone, amplified or technologically added by the MEMS application.

(v) a similar matter of monitors has been examined and decided in the case of Commissioner of Customs, Mumbai v. Viking Integration Projects (P) Ltd. reported in 2003 (155) E.L.T. 179 (Tri-Mumbai) by CEGAT West Zonal Bench, Mumbai.

6. In response to the comments of the concerned Commissionerate, the applicant while reiterating the submissions already made in the application for advance rulings, has also inter-alia stated that in light of the rulings issued by the CAAR, the instant application for advance ruling is maintainable and cited that section 28E(b) does not preclude any applicant from raising a question merely because similar goods have been imported in the past. As long as there is no dispute that the question raised is not pending before any officer, Authority or Court and will be applicable only with respect to the future proposed imports, the application cannot be held to be not maintainable. Vis-a-vis the comments of the concerned Commissionerate, the applicant has also stated that integrated MEMS microphone is appropriately classifiable under CTH 8542 and not under CTH 8518 as the product is Multi-component Integrated Circuit. It is also stated that in the comments of the concerned Commissionerate, HSN Explanatory Notes, Chapter Notes, Rulings and judgements have been ignored, also department’s reliance on rule 3 of GRI is misplaced and the product’s end-use is irrelevant for classification.

7. Personal hearing in the matter was held on 22.11.2023 wherein, advocate representing the applicant started by giving brief technical explanation of the goods in question. He further explained the goods in question with the help of pictorial description and also shown sample of a component said to be miniature high power low sensitivity microphone. Reiterating the submissions made in the application for advance ruling, he mentioned that the goods in question are ‘multi component integrated circuit’ and the same merit classification under Sub-heading 85423900 in terms of the Section Notes. IISN Explanatory Notes and relied upon Ell Ruling. Ile further referred to comments of the concerned Commissionerate and cited a number of instances’ wherein the Authority has issued Rulings, in the interest of certainty in respect of classification of goods even if there were instances of prior import. Ile also staled that they have been accepting the classification under heading 8518 to meet the production timelines as going for provisional assessment or, filingolameal after obtaining assessment order is a time taking process which might have delayed clearance of the imported goods in question.

8. As regards maintainability of the application in light of the prior imports of the goods in question, of commercial nature, already made by the applicant, I intend to adopt a view, similar to the one earlier adopted in a number of rulings issued by CAAR, New Delhi. It is noted that the present application has posed a question for advance ruling related to the on-going activity, however, I note that CAAR, New Delhi, had already held that, ‘though the application for advance ruling relates to the on-going activity. However, a ruling by the Authority shall impart certainty to the issue of appropriate classification, provided that the jurisdiction of this Authority is not ousted by proviso to section 28-1 (2) of the Customs Act, I962.’. Reiterating the earlier stand taken by the CAAR, New Delhi, in the interest of certainty in the matter of classification of goods, I intend to issue ruling in the instant application, recognising the fact that the subject goods had earlier been imported by the applicant.

9. Finding that the application is valid in terms of the provisions of the Customs Act, 1962 and the Customs Authority for Advance Rulings Regulations, 2021, having gone through submissions of the applicant, comments of the concerned Commissionerate and having heard the applicant, I proceed to examine the question on merits. Further, since the question under the application for advance ruling relates to classification of goods, guidance of the Harmonized Commodity Description and Coding System of the World Customs Organization, to which India is a signatory, would be useful.

10. I also note that the technical literature of M/s MEM Sensing Microsystems submitted by the applicant described the product as MSM381A2718Z9DM2E (Analogue Output MEMS microphone) and states that it is an omnidirectional, bottom-ported, analog output MEMS microphone. It has performance and reliability with enhanced RF immunity performance. Another technical literature of M/s Knowles Electronics, USA, submitted by the applicant describes the product as SPV0842LR5H-1 (Analog Bottom Port SISONIC Microphone) and states that it is a miniature high performance, low power matched sensitivity bottom part silicon microphone, using Knowles proven high performance SiSonicTM MEMS technology, the SPV0842LR5H-lconsists of an acoustic sensor, a low-noise input buffer and an output amplifier.

In the said technical literature, the product in question has been described as ‘microphone’ or MEMS microphone but not ‘Integrated circuit MEMS microphone’.

11. I have also observed that technical material in detail is available in various internet websites available in the public domain. Illustratively, following internet websites describes the product in question as below:

https://www.mems-exchange.org/MEMS/what-is.html

Micro-Electro-Mechanical Systems, or MEMS, is a technology that in its most general form can be defined as miniaturized mechanical and electro-mechanical elements (i.e., devices and structures) that are made using the techniques of microfabrication. Over the past several decades MEMS researchers and developers have demonstrated an extremely large number of microsensors for almost every possible sensing modality including temperature, pressure, inertial forces, chemical species, magnetic fields, radiation, etc. Remarkably, many of these micromachined sensors have demonstrated performances exceeding those of their macroscale Counterparts. That is, the micromachined version of, for example, a pressure transducer, usually outperforms a pressure sensor made using the most precise macroscale level machining techniques.. The real potential of MEMS starts to become fulfilled when these miniaturized sensors, actuators, and structures can all be merged onto a common silicon substrate along with integrated circuits (i.e., microelectronics). While the electronics are fabricated using integrated circuit (IC) process sequences (e.g., CMOS, Bipolar, or BICMOS processes), the micromechanical components are fabricated using compatible “micromachining” processes that selectively etch away parts of the silicon wafer or add new structural layers to form the mechanical and electromechanical devices. It is even more interesting if MEMS can be merged not only with microelectronics, but with other technologies such as photonics, nanotechnology, etc. This is sometimes called “heterogeneous integration.”

https://www.techtarget.com/iotagenda/definition/micro-electromechanicalsystemsMEMS

A MEMS (micro-electromechanical system) is a miniature machine that has both mechanical and electronic components. The physical dimension of a MEMS can range from several millimeters to less than one micrometer, a dimension many times smaller than the width of a human hair. & in Japan, MEMS are more commonly known as micromachines, and in European countries, MEMS are more commonly referred to as microsystems technology (MST). Unlike conventional mechatronic devices, MEMS are often manufactured with the same batch fabrication techniques used to create integrated circuits (ICs) and many commercial MEMS products are integrated and packaged together with ICs.

12. In light of the foregoing, I note that the MEMS microphones come in IC-like packages for surface mount assembly. However, they are not integrated circuit of heading 8542. Thus, the rulings and judgements quoted by the applicant, referring to devices performing multiple functions or where the goods in questions are integrated circuit in itself, are not applicable in the instant case. Though, it has been stated that last part of the Note 12 to the Chapter 85 states that, for classification of the articles defined in the above-mentioned note, heading 8542 shall take precedence over any other heading in the nomenclature and referring to the Explanatory Notes (Volume 5) to the Harmonized Commodity Description and Coding System (2022, Edition Seventh) and it is also stated that the above explanation clearly states that the MCOs can be used in variety of applications but still would be covered under the CTH 8542 if they fulfil the meaning of MCO provided in the Explanatory Notes but, the applicant has missed an important provision under the said explanatory notes of heading 8542 wherein, it is inter-alia unambiguously stated that all separate (tradeable) units, which are not classifiable under 8504, 8532, 8533, 8541 or which do not fall under the definition of silicon based sensors, actuators, oscillators and combination thereof are excluded from the definition of an MCO. Thus, the product in question which appears to be an assembly, constitute a complete machine or device i.e microphone, hence, it merits classification as a complete machine or device.

13. Without going into the discussion as to whether end-use is relevant for classification or not, it is pertinent to mention that the applicant has stated that in the present case, the product is used as microphone component for installation onto a PCB of mobile phones and other electronic devices. Lastly, I note that rule 1 of the GRI lays down that 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. Further, rule 6 of GRI provides that for legal purposes, the classification of goods in the sub-heading of a heading shall be determined according to the terms of those sub-headings. Moreover, since the applicant has repeatedly mentioned that the product in question perform the function of a microphone and the since Micro-Electro Mechanical Systems, or MEMS is a technology and also a MEMS (micro-electromechanical system) microphone is a miniature machine that has both mechanical and electronic components. Thus, by application of rule 1 and 6 of GRI, the product under consideration i.e. MEMS Microphone is classifiable under Sub-heading 85181000 of the First Schedule to the Customs Tariff Act, 1975.

14. I rule accordingly

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