Power Distribution Function Classifiable Under Heading 8537: CAAR Delhi

In re Starlink Satellite Communication Private Limited (CAAR Delhi)

In In re Starlink Satellite Communication Private Limited, the Customs Authority for Advance Rulings, Delhi examined an application seeking an advance ruling on the classification and applicable customs duty for “Racks” (such as Rack V2.2) proposed to be imported into India. The applicant proposed to enter the business of internet distribution services and intended to import Racks for captive consumption at its gateway sites. These Racks, housed in aluminium enclosures, function as power distribution systems supplying electricity to antennas and networking equipment. They include components such as power distribution units (PDUs), uninterrupted power supply (UPS) systems, circuit breakers, plugs, connectors, sensors, and controllers, and are imported as complete units without networking equipment installed.

The applicant sought clarity on whether the Racks were classifiable under Customs Tariff Heading (CTH) 8537 10 90 and whether they were eligible for concessional basic customs duty (BCD) at 7.5% under the relevant exemption notification. The Authority examined the nature, components, and principal function of the Racks, emphasizing that classification must be determined based on the condition and function of the goods at the time of import.

After considering competing tariff headings—8504 (static converters), 8517 (telecommunication apparatus), 8543 (residual electrical apparatus), and 8537 (boards, panels, cabinets for electric control or distribution)—the Authority found that the principal function of the Racks was distribution of electricity. Although the Racks incorporated a UPS system, this was held to be an ancillary function and not determinative of classification. The Racks did not perform any networking or telecommunication function in their imported condition, ruling out classification under Heading 8517.

Applying the General Rules for Interpretation, Section Notes, Chapter Notes, and Harmonized System Explanatory Notes, the Authority concluded that the Racks satisfied all conditions of Heading 8537, being cabinets equipped with two or more apparatus of Headings 8535 or 8536 and meant for electric control or distribution of electricity, while not being switching apparatus of Heading 8517. The Authority further determined that, as the operating voltage was below 1,000 volts and the goods were not meant for use in aircraft, ships, or arms, the correct classification was under tariff item 8537 10 90.

On the question of exemption, the Authority noted that the earlier Notification No. 50/2017 had been superseded by Notification No. 45/2025. Under Serial No. 281 of the latter notification, all goods falling under Heading 8537, other than those suitable for use in motor vehicles, motor cars, or motorcycles, attract concessional BCD at 7.5%. Since the Racks were intended for fixed gateway installations and not for motor vehicles, the Authority held that the concessional rate was applicable.

Accordingly, the advance ruling held that the Racks are classifiable under CTH 8537 10 90 and are eligible for concessional basic customs duty at the rate of 7.5% under the applicable exemption notification.

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

M/s. Starlink Satellite Communications Private Limited, 5th floor, Caddie Commercial Tower Atrocity (DIAL)„ New Delhi – 110037 (herein referred to as “applicant”), having EEC No. ABHCS2098H submitted an application dated 02.09.2025 before the Customs Authority for Advance Rulings, New Delhi (CAAR, New Delhi in short) for obtaining Advance Ruling under Section 28H of the Customs Act. 1962. to seek clarity on the classification on the import of some items to India. The application was accordingly registered under Serial No. 126/2025 and 127/2025 dated 04.09.2025.

1.1 The application is being preferred by the Applicant. company having its registered office at 5th floor, Caddie Commercial Tower Aerocity (DIAL). New Delhi – 110037.

1.2 The Applicant is proposing to enter into the business of provision of internet distribution service in India and sale of Starlink Kits and related accessories to be used for Starlink Satellite Internet for identified customers.

1.3 In furtherance to its proposed activity. the Applicant will import Racks for captive consumption at its gateway site. Racks are being imported for the purpose of distribution of electricity to the equipment installed at the gateway site. Further, Racks will be imported by the Applicant from Air Cargo Complex and Nhava Sheva, Mumbai.

1.4 The said proposed activity is duly stated in the object clause of Memorandum of Association of the Applicant. The relevant excerpt of the Memorandum of Association is reproduced below: ^–

To establish, build, lease, finance, promote, participate, market, deal, distribute, engage in, and carryon the business of telecommunication services including satellite broadband interne! services, satellite services, satellite phones, ….”

1.5  In this regard. the Applicant’s request is to obtain clarity from the Customs Authority for Advance Ruling for classification of Racks and eligibility to obtain benefit of concessional rate of BCD 7.5% under S. No. 490 of the Notification No. 50/2017.

Overview of the Racks (such as Rack V2.2) to be imported by the Applicant in India.

1.6 The Racks to be imported by the Applicant arc a hub or power distribution system which will be located outdoor on a specific gateway site of the Applicant. The Racks are housed within an aluminium enclosure. Further, it functions to provide electricity to the Antenna and networking equipment installed at the gateway site.

1.7 The Racks has two types of outlets –

(a) With power supply and over current protection – These outlets are mainly connected to Starlink Antennas. The outlets provide Alternating Current (`AC’) mains supply to Antenna and basic protection from electrical overloads.

(b) With power supply and ‘online double-conversion’ or ‘no breakup’ back up ­These outlets are connected to the networking equipment which may be installed in the Racks upon importation into India or networking equipment installed at the gateway site to provide electricity and power backup in case of power outage.

1.8 The di Iferent components of the Racks include Power Distribution Unit (‘PDU’). Uninterrupted Power Supply (‘UPS’) system. temperature and humidity sensor for rack. circuit breakers. plugs. connectors for optical fiber, optical fiber cable insulators. controllers. etc. amongst others. However, it is relevant to mention here that the Racks are imported as a complete unit.

Principal Function of the Product

1.9 The principal function of the Racks is to distribute electricity to the Antenna and networking equipment which may be installed in the Racks upon importation into India or at the gateway site. This principal function of the Racks is accomplished in the following manner:

Power Distribution to Antenna

1,10 The Racks provide AC mains supply to the Antenna (at the gateway site) with the help of a Panel board/ load centre installed inside the Rack. The panel board serves as the intermediary between the main electrical supply and the antenna, ensuring a direct and efficient power connection.

1. 11 Within the Panel board, there are circuit breakers installed to safeguard the antenna from overcurrent situations during power distribution. These circuit breakers automatically disconnect the power supply in case of an overload or short circuit. thereby protecting the Antenna from over current and potential damage at the time of power distribution.

Power Distribution to Networking Equipment

1.12 Electricity is provided to the networking equipment with the help of PDU and UPS system mounted on the Rack. Two separate PDUs are connected to two separate UPS systems. The PDU distributes AC mains power supply to the networking equipment which is sourced from the respective UPS system.

1.13 Further, the UPS system is connected to the utility outlet from which it sources direct AC mains supply. As a double conversion UPS system, it first converts incoming AC power to DC and then converts it back to AC before supplying it to PDU. This process ensures stable power supply to the networking equipment thereby protecting it from power fluctuations and interruptions.

1.14 Additionally, as an ancillary function, the PDU and UPS system work together to ensure that continuous power is supplied to the networking equipment in cases of power outage as well. When the main AC input fails, the UPS system utilizes the DC power stored in its battery (viz. the Eaton Extended Battery Module), converting it into AC power. This converted power is then delivered to the PDU, which in turn powers the networking equipment, maintaining uninterrupted operation even during electrical disruptions.

The Racks in its imported form do not have the networking equipment

1.15 The Racks proposed to be imported into India, will not be in the form or condition to perform any networking function nor will it have any pre-installed networking equipment such as network switches, etc. at the time of its importation. Post-importation, certain networking equipment may be installed in the Racks which will also be provided with electricity and power backup.

1.16 For better reference, the pictorial depiction of the Racks to be imported for India, is as under:

1.17 Thus, it can be summarised that, the principal function of the Racks is to distribute electricity to the Antenna and networking equipment. Further, the Racks are made of different electrical apparatus which help in power distribution and making connections to the electrical circuit. Some of such electrical apparatuses are circuit breakers, plugs, connectors for optical fiber, optical fiber cable, amongst others.

The Applicant Qualifies as an ‘applicant’ under Section 28E(c) of the Customs Act, 1962  (`Customs Act’)

1.18 Section 28E(c) of the Customs Act reads as under:

“(c). “applicant” means any person —

(i)  holding a valid Importer-exporter Code Number granted under section 7 of the Foreign Trade (Development and Regulation) Act, 1992; or

(ii) exporting any goods to India; or

(iii) with a justifiable cause to the satisfaction of the Authority, who makes an application for advance ruling under section 28H; “

1.19 The Applicant is a company registered in India and is holding a valid Importer-Exporter Code (`IEC’) Number ABHCS2098H. Thus, the Applicant is rightly covered under the definition of `applicant’ as provided under Section 28E(c)(i) of the Customs Act for making this application.

Question raised in the application for advance ruling by the Applicant squarely falls within the ambit of Section 28H(2)(a) of the Customs Act

1.20 Section 28H of the Customs Act provides for the questions in respect of which an advance ruling may be sought by an applicant. Section 28H of the Customs Act reads as under:

“281-I. 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 –

(a) classification of goods under the Customs Tariff Act, 1975 (51 of 1975);

(b applicability of a notification issued under sub-section (1) of section 25, having a bearing on the rate of duty;

(c) the principles to be adopted for the purposes of determination of value of the goods under the provisions of this Act.

(d) applicability of notifications issued in respect of tax or duties under this Act or the Customs Tariff Act, 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;

(e) determination of origin of the goods in terms of the rules notified under the Customs Tar/’Act, 1975 (51 of 1975) and matters relating thereto.

(f) any other matter as the Central Government may, by notification, specific).”

(Emphasis supplied)

1.21 The Applicant wishes to obtain the advance ruling on questions relating to classification of goods and applicability of exemption notification issued under the Customs Act or Customs Tariff Act on import of Racks. Therefore, the question raised by the Applicant falls within the purview of the provisions of Section 28H(2) (a), (b) and (d) of the Customs Act.

1.22 Hence, the application for advance ruling is being filed in conformity with the provisions of Section 28H of the Customs Act.

Question raised under the present advance ruling application is not before any officer of customs, the Appellate Tribunal or any Court.

1.23 As per Section 281 (2)(a) of the Customs Act regarding procedure on advance ruling application, no application for advance ruling will be accepted if the question raised in the application is already pending before any forum. Relevant extracts of the provision are reproduced below:

“281. Procedure on receipt of application. —

(1) …………..

(2) The Authority may, after examining the application and the records called for, by order, either allow or reject the application:

Provided that the Authority shall not allow the application where the question raised in the application is —

(a) already pending in the applicant’s case before any officer of customs, the Appellate Tribunal or any Court,

(b) the same as in a matter already decided by the Appellate Tribunal or any Court.” (Emphasis supplied)

1.24 The Applicant submits that question raised in the Application (as in Annexure II) is not already pending before any officer of Customs, the Appellate Tribunal, or any court in relation to the Applicant. Further, the question raised in the present case, have not already been decided by the Appellate Tribunal or any court in the Applicant’s case.

1.25 Accordingly, the present application should not be considered as pending before any Court as neither the show cause notice has been issued nor the bill of entries has been provisionally assessed.

1.26 Thus, relying on the above the facts of the current case, Applicant submits that in its case, the application shall be accepted for hearing on merits by the Hon’ble CAAR.

1.27 The Applicant wishes to obtain the advance ruling on the question listed down in form CAAR -1 (as also appearing in Annexure II). Hence, the Applicant has proceeded to file this application before the Hon’ble CAAR, New Delhi for kind consideration.

1.28 The Applicant humbly submits that the Hon’ble CAAR may kindly grant an opportunity of personal hearing at earliest convenient and issue the advance ruling addressing the questions of law raised in the present application at an early date.

1.29 The Applicant reserves its rights to add, delete, modify, withdraw any of the above submissions. The Applicant shall be pleased to provide any additional documents/ information in support of the submissions if required by your good office.

STATEMENT CONTAINING APPLICANT’S INTERPRETATION OF LAW AND/ OR FACTS, AS THE CASE MAY BE, IN RESPECT OF THE QUESTION(S) ON WHICH ADVANCE RULING IS REQUIRED

1.30 The Applicant is proposing to enter into the business of provision of internet distribution service in India and sale of Starlink Kits and related accessories used for Starlink Satellite Internet for identified customers.

1.31 In furtherance to its proposed activity, the Applicant will import Racks for captive consumption at its gateway site. The purpose of importing Racks is distribution of electricity to the equipment installed at the gateway site of the Company.

1.32 The questions in respect of which an advance ruling has been sought by the Applicant are as under:

a. Whether the Racks (such as Rack V2.2) imported by the Applicant merit classification under CTH 8537 10 90 of the First Schedule of the Customs Tariff?

b. Whether benefit of concessional rate of BCD @ 7.5% under S. No. 490 of the Notification No. 50/2017 is available to such Racks imported by the Applicant?

QUESTION I: CLASSIFICATION OF RACKS IMPORTED BY THE APPLICANT

1.33 For the Racks to be imported by the Applicant, the proposed classification and Applicant’s interpretation to reach to the proposed classification is discussed as under.

1.34 The import and export of goods into and out of India is regulated by the Customs Act, 1962 (‘the Customs Act’). Section l2 of the Customs Act is the charging section which stipulates that duties of customs shall be levied on all goods imported into India or exported out of India at such rates as may be specified under the Customs Tariff.

1.35 Section 2 of the Customs Tariff provides that the rates at which BCD shall be levied under the Customs Act are specified in two schedules, namely, the First Schedule and the Second Schedule. First Schedule of the Customs Tariff deals with the applicable duty structure on import of goods and the Second Schedule deals with the applicable duty structure on export of goods.

1.36 To determine the said rates of BCD applicable on the imported good it is important to identify the tariff heading in which the good would fall under the First Schedule of the Customs Tariff. For this purpose, classification of goods under a particular tariff entry becomes a crucial aspect.

1.37 Classification of goods covered under the Customs Tariff is done as per the General Rules of Interpretation (`GIR’). GIR 1 to 5 lay down the principles for determining classification of goods under a specific Heading whereas GIR 6 is applicable if the objective is to determine the classification of goods in the Sub-headings of a Heading.

1.38 GIR 1 stipulates that the goods under consideration should be classified in accordance with the terms of the Headings and any relevant Section or Chapter Notes. These Section or Chapter Notes and Sub-Notes give detailed explanation as to the scope and ambit of the respective Sections and Chapters. These Notes have been given statutory backing and have been incorporated at the beginning of each Section / Chapter. For ready reference, Rule 1 is extracted herein below:

“Classification of goods in this Schedule shall be governed by the following principles:

1. The titles of Sections, Chapters and Sub-Chapters are provided for ease of reference only; for legal purposes. classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions …”

1.39 The Larger Bench of the Hon’ble Tribunal in the matter of Saurashtra Chemical, Porbandar vs. Collector of Customs, 1986 (23) E.L.T. 283 (Tri. -Del.) had held that the tariffs must be interpreted in the light of relevant Section and Chapter Notes which are statutorily binding like the Headings themselves. Thus, the Section and Chapter Notes have an overriding force on the respective Headings. This judgment was approved by the Hon’ble Supreme Court of India in the case of Saurashtra Chemicals vs. Collector of Customs, 1997 (95) E.L.T. 455 (S.C.).

Harmonized System of Nomenclature

1.40 The Customs Tariff in India is based on Harmonized Commodity Description and Coding System, generally referred to as Harmonized System of Nomenclature (`HSN’) developed by the World Customs Organization (`WCO’) which is applied uniformly by more than 137 countries of the world. Under the HSN, various goods are classified under different headings, sub-headings and tariff items. For the purposes of the uniform interpretation of the HSN, the WCO has published detailed explanatory notes to HSN which have long been recognized as a safe guide to interpret the Tariff Schedule.

1.41 In the case of 0. K. Play (India) Ltd. vs. C.C.E. Delhi III, 2005 (180) E.L.T. 300 (S.C.) COK Play Case’), a 3-member bench of the Hon’ble Supreme Court of India made the following observations:

(a) There cannot be a static parameter for correct classification.

(b) HSN along with the explanatory notes provide a safe guide for interpretation of an Entry.

(c) Functional utility, design, shape and predominant usage have also got to be taken into account while determining the classification of an item.

(d) Aforementioned aids and assistance are more important than the names used in the trade or common parlance in the matter of correct classification.

1.42 It was held by the Hon’ble Supreme Court in L.M.L Limited vs. Commissioner of Customs, 2010 (258) E.L.T. 321 (S.C.) that in order to resolve a dispute on tariff classification, internationally accepted nomenclature emerging from HSN Explanatory Notes is a safe guide. Further, HSN Explanatory Notes are also dependable guide for interpretation of Customs Tariff. Some other judicial pronouncements wherein this proposition was also affirmed, upheld and followed have been enumerated below:

i. CC vs. Gujarat Perstorp Electronics Ltd., [(2005)7 SCC 118, (2005) 186 E.L.T. 532 (3-member S.C. bench)];

ii. CCE vs. Phil. Corporation Ltd, [(2008) 223 E.L.T. 9 (S.C.)]

1.43 Therefore, the HSN Explanatory Notes are an important aid for ascertaining the classification of a good, in addition to the GRI and corresponding Chapter Notes and Section Notes.

1.44 In the light of above legal provisions, to analyze the classification of above product following needs to be kept in mind:

a. General Rules of Interpretation (GIR).

b. Heading/sub-heading of the First Schedule in conjunction with Section/Chapter/Explanatory notes.

c. Principal function of the subject good.

1.45 Hence, upon application of GIR 1, since the nature of the Racks appears to be electrical in nature, the Applicant submits that Chapter 85 of the Customs Tariff is relevant for the classification of Rack. The relevant heading of the Chapters has been reproduced below:

Chapter 85: “Electrical machinery and equipment and parts thereof sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles.”

Analysis of Chapter 85

1.46 The Applicant submits that on an analysis of the various headings of Chapter 85, primarily the following headings appear relevant for reaching to the appropriate classification of Rack:

• Heading 8504 — ‘Electrical Transformers, Static Converters (For Example, Rectifiers) And Inductors ‘
• Heading 8537 — `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′
• Heading 8543 — ‘Electrical Machines and Apparatus Having Individual Functions, Not Specified or Including Elsewhere in This Chapter’

1.47 Before analysing the above-mentioned headings, it is pertinent to rule out the applicability of Heading 8517 in determining the classification. In this regard, our reasoning for excluding Heading 8517 is captured below:

Racks are not a networking equipment in “as imported” condition and therefore excluded from  classification under Heading 8517

1.48 Heading 8517 covers ‘Telephone Sets, Including Smartphones and Other ‘Telephones for Cellular Networks or for Other Wireless Networks: Other 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), Other than Transmission or Reception Apparatus of Heading 8443, 8525, 8527 Or 8528’.

1.49 The Applicant submits that on a mere perusal of Heading 8517, it is understood that products with networking functions, i.e., which are capable of transmission or reception of voice, images or other data are covered under its ambit. This understanding is also supported by the explanatory notes to HSN 8517. The HSN Explanatory Notes to CTH 8517 provides that:

“This heading covers apparatus for the transmission or reception of speech or other sounds, images or other data between two points by variation of an electric current or optical wave flowing in a wired network or by electro-magnetic waves in wireless network. The signal may be analogue or digital. The networks, which may be interconnected, include telephony, telegraphy, radio-telephony, radio-telegraphy, local and wide area networks.

(G) Other communication apparatus includes apparatus which allows for the connection to a wired or wireless communication network or the transmission or reception of speech or other sounds, images or other data within such a network “

1.50 However, in the instant case, no network connection is established by Racks in as imported condition. Thus, at the time of importation, the said Racks cannot perform any networking function. To this extent, classification of subject good is not possible under CTH 8517.

Classification to be determined based on the form and condition of goods at the time of import

1.51 Further, as discussed above, post-importation, certain networking equipment may be installed in the Racks. However, it is a settled principle of law that classification is to be determined based on the form and condition of the goods at the time of import.

1.52 In this regard, reliance is placed on the decision of Hon’ble Supreme Court in Dunlop India Ltd. vs. Union of India [1983 (13) E.L.T. 1566 (S.C.)] wherein it was held that the condition of the article at the time of importing is a material factor for the purpose of classification. The relevant extract of the judgement is reproduced as under:

“30. The relevant taxing event is the importing into or exporting from India. Condition  of the article at the time of importing is a material factor for the purpose of classification  as to under what head, duty will be leviable. The reason given by the authority that V.P. Latex when coagulated as solid rubber cannot be commercially used as an economic proposition, as even admitted by the appellants, is an extraneous consideration in dealing with the matter. We are, therefore, not required to consider the history and chemistry of synthetic rubber and V.P. Latex as a component of SBR with regard to which extensive arguments were addressed by both sides by quoting from different texts and authorities.”

(Emphasis supplied)

1.53 Reliance is also placed in the decision of the Hon’ble Supreme Court in the decision of Commissioner of Central Excise, Delhi Vs. Carrier Aircon Ltd. [2006 (199) E.L.T. 577 (S.C.)] wherein it was held that end use of a product cannot determine its classification. The relevant extract of the judgement is reproduced as under:

“15. End use to which the product is put to by itself cannot be determinative of the classification of the product. See Indian Aluminium Cables Ltd. v. Union of India and Others, 1985 (3) S.C.C. 284. There are a number of factors which have to be taken into consideration for determining the classification of a product. For the purposes of classification the relevant factors inter alia are statutory fiscal entry, the basic character,  function and use of the goods. When a commodity falls within a tariff entry by virtue of the  purpose for which it is put to, the end use to which the product is put to, cannot determine  the classification of that product. ”

(Emphasis supplied),

1.54 Additionally, reliance is also placed on the decision in the case of Commissioner of Customs (Appeals Vs. Larsen & Toubro Ltd [(2024) 15 Centax 19 (Tri.-Bang)] wherein while analyzing the classification of a programmable processor under Heading 8517 and Heading 8537, it was observed that ‘it is a settled fact that the principles of classification endorses that any classification  should be based on the description and function of an item as it is imported and not based on its end-use as held by the Supreme Court in number of cases. ‘ Further it was held that the same cannot be classified under CTH 8517 just because the imported item is to be used in the manufacturing of modem which is classified under CTH 8517. The Tribunal accordingly classified the goods under CTH 8537.

1.55 From the above judgements, it can be deduced that the classification of imported goods should be determined on the basis of the condition or state in which the products are presented for clearance. In the instant matter, at the of importation Racks cannot perform any networking function nor will it have any networking equipment installed. Hence, Racks cannot merit classification under Heading 8517.

1.56 Now, we proceed to discuss the relevant Headings in the order of sequence as mentioned in Para 17 above to appropriately determine the classification of the Racks.

Racks do not merit classification under the heading 8504 as ‘static converters’

1.57 Heading 8504 covers ‘Electrical transformers, static converters (for example, rectifiers) and inductors’.

1.58 Reference is made to Section XVI of the CTA which covers CTH 8504. This Section provides for ‘Machinery and mechanical appliances; electrical equipment; parts thereof sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles. ‘

1.59 Since Racks consists of UPS system which is a static converter it becomes relevant to analyse this heading. UPS system inside the Racks performs conversion of electrical energy from AC to DC and then back to AC. Because of conversional capabilities and function of providing power backup, UPS typically qualifies as a static converter under 8504.

1.60 However, by virtue of Note 3 to Section XVI and HSN Explanatory Notes VII, Racks is a multi-functional or composite machine, and it merits classification basis its principal function i.e., distribution of electricity. As already submitted, Racks consist of different parts which simultaneously perform separate functions. These functions are complementary to each other to achieve the principal function of distribution of electricity.

1.61 For Racks to be classified as a UPS, its principal function should be that of conversion of electrical energy and providing power back up. However, the principal function of Racks is  distribution of electricity to antenna and networking equipment and not merely providing power  backup or conversion of electrical energy. Providing power back up to the network equipment is only  an ancillary or additional function of the Racks and not its primary function. Further, the Racks cannot be classified on the basis of one of its components, rather it is required to be assessed as a whole unit consisting of different components.

1.62 In this regard, reliance is placed on the decision in the case of Xerox India Ltd. Vs. Commissioner of Customs, Mumbai [2010 (260) E.L.T. 161 (S.C.)] (`Xerox India Case’) wherein, Xerox Regal 5799, a multi-functional machine consisting of different components was classified basis its principal function as per Note 3 to Section XVI. In this case, the product was capable of being used as a printer, fax machine, copier as well as scanner. However, it was classified based on its principal function which was that of printing. The relevant extract of the decision is reproduced below:

“It is not in dispute that the Multi-Functional Machines in question, Xerox Regal 5799 has about 85% of the its total parts and components along with manufacturing cost allocated to printing, as does 74% of the Xerox XD155df model. This clearly shows that the printing function emerges as the principal function and gives the Multi-Functional Machines its essential character. Having such a nature, it also clearly meets the three-fold requirement of Chapter Note 5(B), as it is to be used principally in ADPM, it is connectable to the Central Processing Unit, and it is able to accept data in a form (codes or signals) which can be used by the system. Further, there would be no application of Chapter Note 5(E) as correctly pointed out by the learned counsel for the appellants, as the Multi-Functional Machines are presented independently. Moreover, since predominant components are related to printing function, Chapter Note 5(D) also becomes relevant which includes printers under Heading 84.71.”

[Emphasis supplied]

1.63 Further, reliance is also placed in the decision of Hon’ble Supreme Court in case of OK Play Case (supra) wherein a 3-member bench of the Hon’ble Supreme Court of India held that “Functional utility, design, shape and predominant usage have also got to be taken into account while determining the classification of an item.”

1.64 In the instant matter, UPS system is one of the many components of the Racks which performs the ancillary function as a static converter to provide power back up to the networking equipment. Its ancillary nature is also established from the fact that the UPS only provides backup to the networking equipment and no double conversion or power backup facility is provided by the Racks for antenna. Whereas all the components and parts come together to contribute to the principal function of power distribution which gives the Racks its essential character. In this background, Racks do not merit classification under CTH 8504 as UPS which provides ancillary support to the principal function of the Rack.

1.65 It is to be noted that it is a settled principle of law that an additional purpose cannot alter the primary character or functionality of a product for the purpose of ascertaining the correct  classification. In this regard, reliance is being placed on the decision of the Hon’ble Supreme Court in the case of Thermax Ltd Vs. Commissioner of Central Excise, Pune-I [2022 (382) E.L.T. 442 (S.C.)]. The relevant extract of the same is reproduced below:

However, what is important to keep in mind is that the additional purpose does not alter the primary character/functionality of the product, which is to function as a vapors absorption  chiller, used to produce chilled water for the purpose of refrigeration and air-conditioning.  This is how the product is recognized in the market. The incidental output from the machine cannot therefore justify classification of the product in the category of heat pump.”

[Emphasis supplied j

1.66 Basis the above judicial precedents, the Applicant submits that clearly Racks cannot be classified under CTH 8504 as a static converter based on its ancillary function of providing power backup rather it merits classification as per its principal function of power distribution.

Racks merit classification under the heading 8537 based on its principal function of power distribution

1.67 CTH 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”

1.68 On the perusal of various headings of Chapter 85, it is understood that the different components of the Racks such as circuit breakers, plugs, optical fiber connector, optical fiber cables, insulators, controllers, UPS etc. merit classification under different headings of Chapter 85. However, given the fact that the whole Racks are imported as a complete unit and basis the Note 3 to Section XVI, the Racks merit classification in heading appropriate to its principal function i.e., power distribution.

1.69 Given the above, the Applicant submits that CTH 8537 appears to be the most appropriate heading for classification of the Racks. From bare reading of the description of heading 8537, it appears that CTH 8537 covers boards, panels, consoles, cabinets, etc. provided such a product satisfies the following three conditions:

a) Equipped with two or more apparatus of heading 8535 or 8536;

b) Product is meant for electric control or the distribution of electricity; and

c) Should not be switching apparatus of Heading 8517.

1.70 Equipped with two or more apparatus of Heading 8535 or 8536 (Condition a)

(i) CTH 8535 and 8356 covers electrical apparatus for switching or protecting electrical circuits, or for making connections to or in electrical circuits. The difference in Heading 8535 and 8536 is that electrical apparatus for a voltage exceeding 1000 Volts is covered under Heading 8535 and electrical apparatus for a voltage not exceeding 1000 Volts is covered under Heading 8536.

(ii) CTH 8535 and 8536 both cover electrical apparatuses such as circuit breakers, optical fiber cables, connectors for optical fibers, plug, etc. The Racks are equipped with all these components. Hence, the f►rst condition, i.e., the product should be equipped with two or  more apparatus of Heading 8535 or 8536 is satisfied.

1.71 Product is meant for electric control or the distribution of electricity.

(i) As already discussed above, the principal function of the Racks is that of a power distribution system which provides power supply to the networking equipment and Antenna installed at the gateway site. Hence, the second condition, i.e., the product is meant for electrical control or distribution of electricity is also satisfied.

1.72 Not a switching apparatus of Heading 8517

(i) As already mentioned above, the product under consideration does not perform any networking function nor is it imported with any networking equipment embedded in it. Hence, it is excluded from the ambit Heading 8517. Hence, the third condition that a product should not be a switching apparatus of Heading 8517 is also satisfied.

1.73 Since the Racks satisfy all the three conditions envisaged under Heading 8537, it appropriately merits classification under Heading 8537.

1.74 Additionally, reference is made to the HSN Explanatory Notes to HSN 8537, relevant extract which is reproduced below:

“These consists of ‘an assembly of apparatus of the kind referred to in the two preceding headings (e.g., switches and fuses) 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. “(Emphasis supplied)

1.75 On perusal of Explanatory Notes to Heading 8537, it is understood that the heading covers assembly of apparatus of Heading 8535 and Heading 8536 such as switches, fuses, etc. mounted on the board, panel, etc. The product may also incorporate articles of other Headings such as transformers, voltage regulators etc. The Heading covers small switchboards for lighting installations to complex control panels for radio stations, etc.

1.76 In view of the HSN Explanatory Notes, the product under consideration squarely falls within Heading 8537. The Racks are an assembly of electrical apparatuses of Headings 8535 or 8536 including articles of other Headings such as UPS System (static converter). Further, this is not a simple switch board rather a complex power distribution system for providing electricity to the networking equipment and antenna at the gateway site.

1.77 In this regard reliance is placed in the decision of collector of Central Excise, Cochin Vs. BPL Systems & Projects Ltd. [1994 (69) E.L.T. 688 (Tribunal)] affirmed by the Hon’ble Supreme Court in the Collector v. BPL Systems & Projects Ltd. – 1996 (84) E.L.T. A50 (S.C). The issue pertained to classification of Power Line Carrier Communication Equipment (PLCC). Basis the predominant and general use of the PLCC panel, the Tribunal held that it is for electric control and only the distribution of electricity to Electricity Board in high voltage transmission line and therefore merits classification under CTH 8537. The relevant extract of this case law is reproduced as under:

“On going through the nature and description and in view of the finding of Kerala Sales Tax Appellate Tribunal, it is clear that the main function of the equipment is transmission of various signals and it cannot be said to be a sound transmitting equipment. We also take note of the observation made by the Kerala Sales Tax Tribunal that telephone is not part of the system and it has to be attached for sending transmission.  By taking into consideration  the predominant and general use of the PLCC panel is for electric control and only the  distribution of electricity used by Electricity Board in high voltage transmission line, we are  of the view that it cannot be called as an electrical apparatus for line telephony or line  telegraphy or similar apparatus.

When once the item is ruled out under 8517 further classification of the item either under 8537 or 8541 is not of much significance since there is no duty difference as rate of duty is one and the same under both the tariff entries. However, taking into consideration the nature and functional character of the item as predominant and general use is for electric control and distribution of electricity in high voltage transmission and in view of the description  given in Tariff Entry 8537, it is more appropriately classifiable under Heading 8537.”

(Emphasis supplied)

1.78 To buttress the submission above, reliance is placed on US CROSS Ruling No. N020452 dated 19.12.2007 wherein the power distribution panel boards designed to provide power and over-current protection to various network devices and other similar applications were classified under HTSUS 8537.10.9050. The relevant extract of the ruling is reproduced below:

“The three panels are wall or rack mounted distribution boards designed to provide power and over current protection to various network devices and other similar applications.  Each panel consists of a metal housing with mounting ears and several terminal strips located on the back for connecting a supply source of electricity (line voltage) and feed (load voltage) for delivering power to other devices. Over current protection is provided by either fuses or magnetic circuit breakers located on the face of the panel boards. Additionally, each panel distribution board provides status lights and alarms to alert when a circuit disruption occurs. The power distribution panels are manufactured in various configurations depending on the complexity, product features and the number of devices they will distribute power to. The panels are rated for a maximum voltage of 48 Volts (V) and 350 Amps (A).

The applicable subheading for the GMT, KLM/KTK TPA and TPC Fuse Panels will be 8537.10.9050, HTSUS, which provides for “Boards, panels, consoles…and other bases, equipped with two or more apparatus of heading 8535 or 8536, for electric control or the distribution of electricity…: For a voltage not exceeding 1,000 V. Other: Other: Panel boards and distribution boards.” The general rate of duty will be 2.7 percent ad valorem.”

1.79 Further, reliance is placed on US CROSS Ruling No. NY 187330 dated 15.11.2002 wherein electrical distribution panel were classified under HTSUS 8537.10.9070. The relevant extract of the ruling is reproduced below:

“The applicable subheading for the electrical distribution panel (Models CJ-10H-A02 and CH-2H-A01) and the hand-held remote control (Model 2110H) will be 8537.10.9070, HTS, which provides for other boards, panels, …, and other bases, …, for electric control or the distribution of electricity, …: For a voltage not exceeding 1,000 V. The rate of duty will be 2.7 percent ad valorem.”

1.80 In view of the above judicial precedents and US CROSS Rulings, it is clear the Racks which works as a power distribution unit merits classification under Fleading 8537.

Racks cannot merit classification under the residual heading 8543 as electrical equipment and  machines not specified or included elsewhere in the Chapter 85

1.81 Lastly, it is relevant to rule out the applicability of Heading 8543 which covers ‘Electrical Machines And Apparatus Having Individual Functions, Not Specified Or Including Elsewhere in this Chapter’.

1.82 Reference is drawn to HSN Explanatory Notes to Heading 8543 which provides that the heading covers all electrical appliances and apparatus, not falling in any other heading of Chapter 85,  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.

1.83 Further, the HSN Explanatory Notes to Heading 8543 provide that the introductory provisions of Explanatory Note to Heading 8479 concerning machines and mechanical appliances having individual functions apply, mutatis mutandis, to the appliances and apparatus of Heading 8543. Hence, reference is made to HSN Explanatory Notes to Heading 8479.

1.84 USN Explanatory Notes to Heading 8479 provides that 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).

1.85 On a conjoint reading of Explanatory Notes to Heading 8543 and Heading 8479 it is understood that for a product to fall under Heading 8543, all the above 3 conditions are to be met. In the instant case, though conditions (a) and (b) are fulfilled, condition (c) is not satisfied. As per condition (c) (i) the product should not be classified in any particular heading of Chapter 85 since no other heading covers it by reference to its function, description or type. However, as already discussed in detail above, the primary function of the product is distribution of electricity, and such products are specifically covered under Heading 8537. Since condition (i) of (c) is not fulfilled, it is immaterial discuss the other two points of condition (c).

1.86 In view of the above, it is clear that the Racks cannot merit classification under CTH 8543 as it is covered under a particular heading of Chapter 85 i.e., 8537 by reference to its function.

1.87 In this regard, reliance is placed on Xerox India Case (supra) wherein the Department sought to place the machines under Heading 8479 (which is similar to Heading 8534) being the residual entry as opposed to the assessee which claimed the product to be a part of Heading 8471-Automatic Data Processing Machines. The Hon’ble Supreme Court held that the multi-functional machine is to be classified as per its principal function and as such the product cannot merit classification under Heading 8479 which is a residuary Heading.

1.88 Notwithstanding the above, reliance is also placed on GRI 3 (a) which provides that when by application of rule 2(b) or for any other reason, goods are classifiable under two or more headings than heading which provides the most specific description shall be preferred to headings providing a more general description.

1.89 In the instant case, the specific heading for classification of Racks is Heading 8537 which covers products for distribution of electricity. Whereas Heading 8543 is the general or residuary entry which covers products not elsewhere classified in Chapter 85. Hence, by virtue of GRI 3(a) also the specific heading shall prevail over the general or residuary heading and accordingly Racks should be classified under Heading 8537.

1.90 In this regard, reliance is placed on the decision in the case of Commissioner of Central Excise v. Wockhardt Life Sciences Limited [2012 (277) E.L.T. 299 (S.C.)] wherein relying on various other cases of the Hon’ble Supreme Court it has been held that a commodity cannot be classified in a residuary entry if there is a specific entry for that commodity. The relevant extract is reproduced as under:

“A commodity cannot be classified in a residuary entry, in the presence of a specific entry, even if such specific entry requires the product to be understood in the technical sense [see Akbar Badrudin v. Collector of Customs, 1990 (2) SCC 203 = 1990 (47) E.L.T. 161 (S.C.); Commissioner of Customs v. G.C. Jain, 2011 (12) SCC 713 = 2011 (269) E.L.T. 307 (S.C.)].

A residuary entry can be taken refuge of only in the absence of a specific entry; that is to say, the latter will always prevail over the former [see C. C.E. v Jayant Oil Mills, 1989 (3) SCC 343 = 1989 (40) E.L.T. 287 (S.C.); H.P.L. Chemicals v. C.C.E, 2006 (5) SCC 208 = 2006 (197) E.L.T. 324 (S.C.); Western India Plywoods v. Collector of Customs, 2005 (12) SCC 731 = 2005 (188) E.L.T. 365 (S.C.); C.C.E. v. Carrier Aircon, 2006 (5) SCC 596 = 2006 (199) E.L.T. 577 (S.C.)]. “

fEmphasis supplied)

1.91 In view thereof since, the specific heading for Racks in reference to its principal function is  Heading 8537 and accordingly it merits classification thereunder and not under residuary Heading 8543.

Classification of the Racks at six and eight-digit level under heading 8537

1.92 In the backdrop of the above facts, since the Applicant has submitted that the classification at four-digit level is under heading 8537, the tariff classification of the Racks at the six and eight-digit level is discussed below. CTH 8537 covers the following subheadings and tariff items:

8537	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
853710	– For a voltage not exceeding 1,000 V:
85371010	— For use in goods of Chapter 88 or 89 or 93
85371090	— Other
85372000	– For a voltage exceeding 1,000 V

1.93 The output voltage of the Racks is 200 – 240 VAC which is below 1000 Volts. Hence, the Racks merit classification under sub-heading 853710. Further, at eight-digit level, the Racks merit classification under the residual entry which is Tariff Item 8537 10 90 as it is not meant for use in goods of Chapter 88 (Aircrafts, spacecraft, and parts thereof) or Chapter 89 (Ships, boats and floating structure) or Chapter 93 (Arms and Ammunition; parts and accessories thereof).

1.94 Based on the above discussion, it is humbly submitted that the Racks to be imported merit classification under Tariff Item 8537 10 90.

OUESTION 2: APPLICABILITY OF CONCESSIONAL DUTY BENEFIT UNDER S.NO. 490 OF THE NOTIFICATION NO. 50/ 2017

1.95 In view of the classification above, the applicable tariff rate on CTH 8537 10 90 is 15%. The Central Government in terms of Section 25(1) of the Customs Act has issued Notification No. 50/2017 which intends to provide concessional exemption benefit on import of certain specified items covered in the notification including articles of heading 8537. In this background, the Applicant also wishes to seek clarity on eligibility of availing exemption benefit on import of Racks under S. No. 490 of Notification No. 50/2017.

1.96 Notification No. 50/2017 vide its S. No. 490 provides concessional rate of BCD @ 7.5% to all goods falling under CTH 8537 except a few items mentioned therein. For ease of reference, the aforementioned entry under Notification No.  50/2017 has been extracted below:

1.97 Considering Racks are classifiable under CTH 8537 of the Customs Tariff and the fact that it is not excluded from the benefit of concessional BCD under S. No. 490 by virtue of the exclusions mentioned therein, the Applicant submits that the benefit of concessional rate of BCD should be available to Racks at the time of its import. Hence, the effective BCD on import of Racks should be @ 7.5%.

1.98 Therefore, the Applicant humbly submits that the Hon’ble Authority may kindly issue the advance ruling as prayed at an early date.

1.99 PRAYER

In the light of the above, a ruling is sought from the Hon’ble CAAR as follows:

A. The Racks to be imported by the Applicant is correctly classifiable under Tariff Item 8537 10 90 of the First Schedule of the Customs Tariff at the time of import; and

B. The concessional BCD @ 7.5% vide S. No. 490 of Notification No. 50/2017 is available to the Racks to be imported by the Applicant.

C. The Applicant craves leave to alter, amend or modify any of the aforesaid grounds or submissions made herein this application and make such additional submissions without prejudice to the submissions made herein, at the time of hearing of the said application.

D. The Applicant also craves leave to produce and provide any such further additional documents in support of its submissions at the time of hearing and before conclusion of the proceedings.

E. The Applicant further prays for an opportunity of being heard in person. Comments of Custom Port Commissionerate:

2.1 As per the provision of CAAR Regulation, 2021, the complete application of the applicant was provided to the concerned Custom Port, and requested to furnish the requisite comments in the instant matter. The port authority i.e. NS-V and ACC Sahar, Mumbai vide their letter dated 19.11.2025 and 14.11.2025 furnished their comments respectively, which are reproduced as under:

2.2 Comment of port authority i.e. NS-V:

3. As per the application, the applicant is seeking ruling on the following question law;

3.1 Whether the Racks (such as Rack V 2.2) imported by the Applicant merit classification under Customs Tariff Heading (CTH) 8537 10 90 of the First Schedule of the Customs Tariff Act, 1975 ?

3.2 Whether benefit of concessional rate of Basic Customs Duty (BCD) @7.5 under Sr. No. 490 of the Notification No. 50/2017-Customs dated 30.06.2017 (as amended) is available to such Racks imported by the Applicant ?

4. The applicant has submitted the following statement of the facts about the product under consideration;

4.1 The Racks are hub or power distribution systems which will be located outd000r on a specific gateway site. The Racks are housed within an aluminium enclosure. Further, it functions to provide electricity to the Antenna and networking equipment installed at the gateway site.

4.2 The racks has two types of outlets;

4.2.1 With Power supply and over current protection- These outlets are mainly connected to Starlink Antennas. The outlets provide Alternating Current mains supply to Antenna and basic protection from electrical overloads.

4.2.2 With Power Supply and “online double-conversion’ or ‘no breakup’ back up- These outlets are connected to the networking equipment which may be installed in the Racks upon importation into India or networking equipment installed at the gateway site to provide electricity and power backup in case of power outage.

4.3 The different components of the Racks include Power Distribution Unit (PDU) Uninterrupted Power Supply (UPS) System, Temperature and humidity sensor for rack circuit breakers, plugs, connectors for optical fiber, optical fiber cable insulator, controllers, etc. amongst others.

4.4 The principal function of the Racks is to distribute electricity to the Antenna and networking equipment which may be installed in the Racks upon importation into India or at the gateway site.

4.4.1 Power Distribution to Antenna:- The Racks Provide AC mains supply to the Antenna with the help of a Panel board/load centre installed inside the Rack. The panel board serves as the intermediary between the main electrical supply and the antenna, ensuring a direct and efficient power connection.

4.4.1.1 Within the Panel board, there are circuit breakers installed to safeguard the antenna from over current situations during power distribution. The circuit breakers automatically disconnect the power supply in case of an overload or short circuit, thereby protecting the Antenna from over current and potential damage at the time of power distribution.

4.4.2 Power Distribution to Networking Equipment:- Electricity is provided to the networking equipment with the help of PDU and UPS system mounted on the Rack. Two separate PDUs are connected to two separate UPS systems. The PDU distributes AC mains power supply to the networking equipment which is sourced from the respective UPS system.

4.4.2.1 Further, the UPS system is connected to the utility outlet from which it sources direct AC mains supply. As a double conversion UPS system, it first converts incoming AC power to DC and then converts it back to AC before supplying it to PDU. This process ensures stable power supply to the networking equipment thereby protecting it from power fluctuations and interruptions.

4.4.3 Additionally, as an ancillary function, the PDU and UPS system work together to ensure that continuous power is supplied to the networking equipment in cases of power outage as well. When the main AC input fails, the UPS system utilizes the DC power stored in its battery, converting it into AC power. This converted power is then delivered to the PDU, which in turn powers the networking equipment, maintaining uninterrupted operation even during electrical disruptions.

4.5 Thus, as per the submission of the applicant, Racks is an electricity distribution unit having main functions to distribute electricity to the Antenna and networking equipment.

5. As per the submissions of the applicant, the goods under consideration, described as Racks, are aluminum enclosures designed to house various electrical components such as Power Distribution Units (PDU), Uninterrupted Power Supply (UPS) systems, circuit breakers, plugs, connectors, temperature and humidity sensors, controllers, and other auxiliary devices and the principal function of the said Racks is to distribute and control the supply of electricity to the antenna and networking equipment installed at the gateway site.

6. The Heading 8537 of the First Schedule to the Customs Tariff Act. 1975 covers “Boards, panels, consoles, desks, cabinets and other bases, equipped with Iwo 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, but excluding switching apparatus of heading 8517.”

7. On examination of the functional and structural features, it is observed that the subject goods are in the nature of a cabinet (Rack) equipped with multiple apparatus of Heading 8535 or 8536, such as circuit breakers, plugs, connectors, and sockets, which are specifically intended for switching, protection, and connection of electrical circuits. The said Racks perform the essential function of distribution and control of electricity, as they channel the AC mains power through circuit protection devices to antenna and networking systems, ensuring regulated and continuous electrical supply.

8. Although the Racks also incorporates a UPS system, which is a static converter falling under Heading 8504, the UPS serves only an ancillary role in providing stable and backup power to the connected equipment. As per the General Rules for Interpretation (GIR) and the Explanatory Notes to Heading 8537 of the Harmonized System, the inclusion of conversion or regulating devices such as rectifiers, UPS, or sensors does not alter the classification when the principal function remains electric control or distribution.

9. Accordingly, applying Rule 3(b) of the General Interpretative Rules, the essential character of the composite assembly is derived from its power distribution and control function performed by the PDU, circuit breakers, and connectors. Therefore, the merit classification goods appears to be under Heading 8537 as “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.

10. As far as concerned to the Notification benefit of the Sr. No. 490 of the Notification No. 50/2017-Customs dated 30.06.2017, it is observed from the relevant text of the notification said Sr. No. is available to all goods falling under CTH 8537 other than those suitable for use in;

i. motor vehicles falling under heading 8702 or 8704

ii. motor cars falling under heading 8703; or

iii. motor cycles falling under heading 8711

10.1 From the submission of the importer, the said goods is not intended to be used for the above purposes and hence the notification benefit of the said Sr. No. 490 ibid also appears to be applicable.

2.3 Comment of port authority i.e. ACC Sahar:

2. The matter has been examined in detail with reference to the technical description, literature, and relevant provisions of the Customs Tariff Act, 1975 and Notification No. 50/2017-Cus, dated 30.06.2017.

3. It is observed that the goods are electrical cabinets equipped with PDUs, UPS modules, circuit breakers and related apparatus, functioning primarily for only distribution of electricity to antennas and networking equipment. The goods do not perform any telecommunication or signal-processing functions in the imported condition.

4. Accordingly, the goods merit classification under:

i. CTH 8537 10 90 — 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 — for a voltage not exceeding 1,000 volts — Other.

ii. Further, as per Serial No. 490 of Notification No. 50/2017-Cus, dated 30.06.2017, the above goods attract Basic Customs Duty @ 7.5%, provided they are not for use in motor vehicles. Since the goods are meant for fixed gateway installations, the concessional rate is applicable.

iii. This communication is issued for information and record, pending formal issuance of the advance ruling by the Hon’ble CAAR, New Delhi, if applicable.

3. Personal Hearing:

Personal hearing in the matter was conducted through virtual mode on 22.12.2025 wherein the authorized representative of the applicant i.e Sh. Gautam Khattar, Ms. Amisha Bhasin, Ms. Lovey Singhal and Sh. Sahil Jaggi attended the same and reiterated the same which were already submitted with the application of the applicant.

4. Additional Submissions of the Applicant:

The applicant vide additional submissions dated 22.12.2025 has informed that Notification No. 50/2017-Cus, dated 30.06.2017, has been superseded vide Notification No. 45/2025-Cus, dated 24.10.2025. As per Serial No. 281 of Notification No. 45/2025-Cus, dated 24.10.2025, the above goods attract Basic Customs Duty @ 7.5%.

5. Findings, Discussion & Conclusion:

5.1 Having examined the CAAR-1 application, the comments received from the jurisdictional Customs Commissionerate, the record of personal hearing held on 22.12.2025, additional written response of the applicant dated 22.12.2025 and the applicable legal framework, I find the application to be valid in terms of the Customs Act, 1962 and the CAAR Regulations, 2021. I therefore allow the application in terms of Customs Act & CAAR regulations and proceed to determine the classification of the proposed imports on the basis of the information on record.

Product Description

5.2 On going through the application, I find that the product under consideration, as described in the application and supporting technical literature, is Racks (such as Rack V2.2) for captive consumption at its gateway site. The Racks to be imported by the Applicant are a hub or power distribution system which will be located outdoor on a specific gateway site of the Applicant. The Racks are housed within an aluminium enclosure. Further, it functions to provide electricity to the Antenna and networking equipment installed at the gateway site.

The Racks has two types of outlets —

(a) With power supply and over current protection — These outlets are mainly connected to Starlink Antennas. The outlets provide Alternating Current (`AC’) mains supply to Antenna and basic protection from electrical overloads.

(b) With power supply and ‘online double-conversion’ or ‘no breakup’ back up —These outlets are connected to the networking equipment which may be installed in the Racks upon importation into India or networking equipment installed at the gateway site to provide electricity and power backup in case of power outage.

The different components of the Racks include Power Distribution Unit (`PDU’), Uninterrupted Power Supply (`UPS’) system, temperature and humidity sensor for rack, circuit breakers, plugs, connectors for optical fiber, optical fiber cable insulators, controllers, etc. amongst others. Further, Racks are imported as a complete unit.

5.2.1 The principal function of the Racks is to distribute electricity to the Antenna and networking equipment which may be installed in the Racks upon importation into India or at the gateway site. This principal function of the Racks is accomplished in the following manner:

Power Distribution to Antenna

The Racks provide AC mains supply to the Antenna (at the gateway site) with the help of a Panel board/ load centre installed inside the Rack. The panel board serves as the intermediary between the main electrical supply and the antenna, ensuring a direct and efficient power connection. Within the Panel board, there are circuit breakers installed to safeguard the antenna from overcurrent situations during power distribution. These circuit breakers automatically disconnect the power supply in case of an overload or short circuit, thereby protecting the Antenna from over current and potential damage at the time of power distribution.

Power Distribution to Networking Equipment

Electricity is provided to the networking equipment with the help of PDU and UPS system mounted on the Rack. Two separate PDUs are connected to two separate UPS systems. The PDU distributes AC mains power supply to the networking equipment which is sourced from the respective UPS system. Further, the UPS system is connected to the utility outlet from which it sources direct AC mains supply. As a double conversion UPS system, it first converts incoming AC power to DC and then converts it back to AC before supplying it to PDU. This process ensures stable power supply to the networking equipment thereby protecting it from power fluctuations and interruptions.

Additionally, as an ancillary function, the PDU and UPS system work together to ensure that continuous power is supplied to the networking equipment in cases of power outage as well. When the main AC input fails, the UPS system utilizes the DC power stored in its battery (viz. the Eaton Extended Battery Module), converting it into AC power. This converted power is then delivered to the PDU, which in turn powers the networking equipment, maintaining uninterrupted operation even during electrical disruptions.

Issue of classification:

5.3 The question for determination before me is whether the Racks (such as Rack V2.2) merit classification under CTH 8537 10 90 or under Heading 8504 or 8543 or 8517. The applicant claims CTH 8537 10 90 which the Department also accepts.

The competing tariff headings covers the following:-

• Heading 8504 — ‘Electrical Transformers, Static Converters (For Example, Rectifiers) And Inductors’
• Heading 8517-‘Telephone Sets, Including Smartphones and Other Telephones for Cellular Networks or for Other Wireless Networks: Other 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), Other than Transmission or Reception Apparatus of Heading 8443, 8525, 8527 Or 8528’.
• Heading 8543 — ‘Electrical Machines and Apparatus Having Individual Functions, Not Specified or Including Elsewhere in This Chapter’
• Heading 8537 — ‘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’

5.3.1 The Relevant HSN Explanatory Notes to Tariff Heading 8504 is as follows:-“Electrical Transformers, Static Converters (For Example, Rectifiers) And Inductors’

(I) ELECTRICAL TRANSFORMERS

Electrical transformers are apparatus which, without having any moving parts, transform, by means of induction and using a preset or adjustable system, an alternating current into another alternating current of different voltage, impedance, etc. These usually consist of two or more coils of insulated wire wound on laminated iron cores, although in some cases (e.g., radio frequency transformers) there may be no magnetic core, or the core may be of agglomerated iron dust, ferrite, etc. An AC in one coil (the primary circuit) induces an AC usually at different values of current and voltage in the others (the secondary circuit). In certain cases (auto transformers) there is only a single coil, part of the winding of which is common to the primary and secondary circuits. In shell type transformers, there is a shell of laminated iron round the transformer. Certain transformers are designed for particular purposes, e.g., matching transformers for matching the impedance of one circuit with that of another, and instrument transformers (current or voltage transformers, combined instrument transformers) used to step down or step up voltages or currents to the level of the connected equipment, e.g., measuring instruments, electricity meters or protective relays. The heading covers all transformers. They vary from ballasts for the control of the amount of current that flows through discharge lamps or tubes, small types used in wireless sets, instruments, toys, etc., to large types enclosed in oil tanks or equipped with radiators, fans, etc., for cooling purposes. The large types are used in electricity stations, stations for interconnecting mains, distributing stations or substations. “

5.3.2 The Relevant HSN Explanatory Notes to Tariff Heading 8517 is as follows:-

“Telephone Sets, Including Smartphones and Other Telephones for Cellular Networks or for Other Wireless Networks: Other 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), Other than Transmission or Reception Apparatus of Heading 8443, 8525, 8527 Or 8528′.

The term “electrical apparatus for line telephony or line telegraphy” means apparatus for the transmission of speech or other sounds (telephony) or codes which represent characters, graphics or images or other data (telegraphy) between two points by variation of an electric current or optical wave flowing in a line communications medium. The line communications medium is usually a metallic or dielectric circuit (copper, optical fibres, combination cable, etc.), or a combination thereof connecting the transmitting station to the receiving station, whether directly or indirectly. Transmission may be in the form of analogue or digital signals. The heading covers all such electrical apparatus designed for this purpose, including the special apparatus used for carrier current line systems or for digital line systems.

5.3.3 The Relevant HSN Explanatory Notes to Tariff Heading 8537 is as follows:-

“These consist of an assembly of apparatus of the kind referred to in the two preceding headings. (e.g., switches and fuses) 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. 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 functions such as logic, sequencing, timing, counting and arithmetic, to control, through digital or analog input/output modules, various types of machines. The heading does not cover automatic controlling apparatus of heading 90.32

PARTS

Subject to the general provisions regarding the classification of parts (see the General Explanatory Note to Section XVI), parts of the goods of this heading are classified in heading 85.38.

The heading excludes:

(a) Telephone switchboards (heading 85.17).

(b) Simple switch assemblies, such as those consisting of two switches and a connector (heading 85.35 or 85.36)

(c) Cordless infrared devices for the remote control of television receivers, video recorders or other electrical equipment (heading 85.43).

(d) Time switches with clock or watch movement or with synchronous motor (heading 91.07).”

5.3.3 The Relevant HSN Explanatory Notes to Tariff Heading 8543 is as follows:-

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 principal electrical goods covered more specifically by other Chapters are electrical machinery of Chapter 84 and certain instruments and apparatus of Chapter 90. 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. Most of the appliances of this heading consist of an assembly of electrical goods or parts (valves, transformers, capacitors, chokes, resistors, etc.) operating wholly electrically. However, the heading also includes electrical goods incorporating mechanical features provided that such features are subsidiary to the electrical function of the machine or appliance

5.4 At the outset, I note that Rule 1 of the General Rules for Interpretation provides that classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes. Only when such classification cannot be made by Rule 1, shall subsequent rules be invoked. Therefore, the first step is to examine whether the goods are prima facie covered by Heading 8504,8517, 8537 or 8543.

5.4.1 It is evident that Heading 8504 covers ‘Electrical transformers, static converters (for example, rectifiers) and inductors. Since Racks consists of UPS system which is a static converter it becomes relevant to analyse this heading. UPS system inside the Racks performs conversion of electrical energy from AC to DC and then back to AC. Because of conversional capabilities and function of providing power backup, UPS typically qualifies as a static converter under 8504. However, by virtue of Note 3 to Section XVI and HSN Explanatory Notes VII, Racks is a multi­functional or composite machine, and it merits classification basis its principal function i.e., distribution of electricity. As, Racks consist of different parts which simultaneously perform separate functions. These functions are complementary to each other to achieve the principal function of distribution of electricity.

5.4.1.1 For Racks to be classified as a UPS, its principal function should be that of conversion of electrical energy and providing power back up. However, the principal function of Racks is distribution of electricity to antenna and networking equipment and not merely providing power backup or conversion of electrical energy. Providing power back up to the network equipment is only an ancillary or additional function of the Racks and not its primary function. Further, the Racks cannot be classified on the basis of one of its components, rather it is required to be assessed as a whole unit consisting of different components. In the instant matter, UPS system is one of the many components of the Racks which performs the ancillary function as a static converter to provide power back up to the networking equipment. Its ancillary nature is also established from the fact that the UPS only provides backup to the networking equipment and no double conversion or power backup facility is provided by the Racks for antenna. Whereas all the components and parts come together to contribute to the principal function of power distribution which gives the Racks its essential character.

In this background, Racks do not merit classification under CTH 8504 as UPS which provides ancillary support to the principal function of the Rack.

5.4.2 Heading 8517 covers Telephone Sets, Including Smartphones and Other Telephones for Cellular Networks or for Other Wireless Networks: Other Apparatus for the Transmission or Reception of Voice, Images or Other Data, Including Apparatus for Communication in a Wirc’d or Wireless Network (Such as a Local or Wide Area Network), Other than Transmission or Reception Apparatus of Heading 8443, 8525, 8527 Or 8528′. On a mere perusal of Heading 8517, it is understood that products with networking functions, i.e., which are capable of transmission or reception of voice, images or other data are covered under its ambit. This understanding is also supported by the explanatory notes to HSN 8517. The HSN Explanatory Notes to CTH 8517 provides that:

“This heading covers apparatus for the transmission or reception of speech or other sounds, images or other data between two points by variation of an electric current or optical wave flowing in a wired network or by electro-magnetic waves in wireless network. The signal may be analogue or digital. The networks, which may be interconnected, include telephony, telegraphy, radio-telephony, radio-telegraphy, local and wide area networks.

(G) Other communication apparatus includes apparatus which allows for the connection to a wired or wireless communication network or the transmission or reception of speech or other sounds, images or other data within such a network.”

However, in the instant case, no network connection is established by Racks in as imported condition. Thus, at the time of importation, the said Racks cannot perform any networking function. To this extent, classification of subject good is not possible under CTH 8517.

5.4.3 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”

Therefore, I note that for an article to be classified under Tariff Heading 8537, it must satisfy the following conditions:

(a) Equipped with two or more apparatus of heading 8535 or 8536;

(b) Product is meant for electric control or the distribution of electricity; and

(c) Should not be switching apparatus of Heading 8517.

In the present case, I note that impugned goods satisfy these conditions on account of following:

Equipped with two or more apparatus of Heading 8535 or 8536 (Condition a)

CTH 8535 and 8356 covers electrical apparatus for switching or protecting electrical circuits, or for making connections to or in electrical circuits. The difference in Heading 8535 and 8536 is that electrical apparatus for a voltage exceeding 1000 Volts is covered under Heading 8535 and electrical apparatus for a voltage not exceeding 1000 Volts is covered under Heading 8536. CTH 8535 and 8536 both cover electrical apparatuses such as circuit breakers, optical fiber cables, connectors for optical fibers, plug, etc. The Racks are equipped with all these components. Hence, the first condition, i.e., the product should be equipped with two or more apparatus of Heading 8535 or 8536 is satisfied.

Product is meant for electric control or the distribution of electricity.

As already discussed above, the principal function of the Racks is that of a power distribution system which provides power supply to the networking equipment and Antenna installed at the gateway site. Hence, the second condition, i.e., the product is meant for electrical control or distribution of electricity is also satisfied.

Not a switching apparatus of Heading 8517

As already mentioned above, the product under consideration does not perform any networking function nor is it imported with any networking equipment embedded in it. Hence, it is excluded from the ambit Heading 8517. Hence, the third condition that a product should not be a switching apparatus of Heading 8517 is also satisfied.

Since the Racks satisfy all the three conditions envisaged under Heading 8537, it appropriately merits classification under Heading 8537.

5.4.3.1 I have also gone through the HSN Explanatory Note to Heading 8537. On perusal of Explanatory Notes to Heading 8537, the heading covers assembly of apparatus of Heading 8535 and Heading 8536 such as switches, fuses, etc. mounted on the board, panel, etc. The product may also incorporate articles of other Headings such as transformers, voltage regulators etc. The Heading covers small switchboards for lighting installations to complex control panels for radio stations, etc.

In view of the HSN Explanatory Notes, the product under consideration squarely falls within Heading 8537. The Racks are an assembly of electrical apparatuses of Headings 8535 or 8536 including articles of other Headings such as UPS System (static converter). Further, this is not a simple switch board rather a complex power distribution system for providing electricity to the networking equipment and antenna at the gateway site.

5.4.4 Heading 8543 which covers ‘Electrical Machines And Apparatus Having Individual Functions, Not Specified or Including Elsewhere in this Chapter’.

I have also gone through the 1-ISN Explanatory Note to Heading 8543 which provides that the heading covers all electrical appliances and apparatus, not falling in any other heading of Chapter 85,  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. Further, the HSN Explanatory Notes to Heading 8543 provide that the introductory provisions of Explanatory Note to Heading 8479 concerning machines and mechanical appliances having individual functions apply, mutatis mutandis, to the appliances and apparatus of Heading 8543. Hence, reference is made to HSN Explanatory Notes to Heading 8479.

HSN Explanatory Notes to Heading 8479 provides that 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).

On a conjoint reading of Explanatory Notes to Heading 8543 and Heading 8479, for a product to fall under Heading 8543, all the above 3 conditions are to be met. In the instant case, though conditions (a) and (b) are fulfilled, condition (c) is not satisfied.

As per condition (c) (i) the product should not be classified in any particular heading of Chapter 85 since no other heading covers it by reference to its function, description or type. However, as already discussed in detail above, the primary function of the product is distribution of electricity, and such products are specifically covered under Heading 8537. Since condition (i) of (c) is not fulfilled Racks cannot merit classification under CTH 8543 as it is covered under a particular heading of Chapter 85 i.e., 8537 by reference to its function.

5.5 Having examined all the headings, I find that Heading 8537 provides a more specific description of the subject goods. The principle of Rule 3(a) of GRI dictates that where goods are prima facie classifiable under two headings, the heading giving the most specific description shall prevail over a more general one. Heading 8537, which explicitly mentions “Boards, Panels, Consoles, Desks, Cabinets and Other Bases, Equipped with Two Or More Apparatus of Heading 8535 Or 8536, For Electric Control,” is clearly more specific than Headings 8504, 8517 or 8543. Additionally, I note that the essential character of the Racks is to distribute electricity to the Antenna and networking equipment which may be installed in the Racks upon importation into India or at the gateway site. It is therefore more appropriately classified as an independent electrical control apparatus.

5.6 Classification of the Racks at six and eight-digit level under heading 8537

As already discussed above, I find the classification of Racks under heading 8537. CTH 8537 covers the following subheadings and tariff items:

8537	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
853710	– For a voltage not exceeding 1,000 V:
85371010	— For use in goods of Chapter 88 or 89 or 93
85371090	— Other
85372000	– For a voltage exceeding 1,000 V

The applicant has submitted that the output voltage of the Racks is 200 – 240 VAC which is below 1000 Volts. Hence, the Racks merit classification under sub-heading 853710. Further, as the Racks are not meant for use in goods of Chapter 88 (Aircrafts, spacecraft, and parts thereof) or Chapter 89 (Ships, boats and floating structure) or Chapter 93 (Arms and Ammunition; parts and accessories thereof) hence the Racks merit classification under the residual entry which is Tariff Item 8537 10 90 at eight-digit level.

5.6.1 I find that the Commissionerate has also agreed upon the Racks merit classification under heading 8537.

Issue of notification exemption:

6. The applicant had sought a ruling on whether benefit of concessional rate of BCD @ 7.5% under S. No. 490 of the Notification No. 50/2017 is available to the Racks imported by them. The applicant further vide additional submission dated 22.12.2025 has informed that Notification No. 50/2017-Cus, dated 30.06.2017 has been suppressed vide Notification No. 45/2025-Cus, dated 24.10.2025. As per Serial No. 281 of Notification No. 45/2025-Cus, dated 24.10.2025, the above goods attract Basic Customs Duty @ 7.5%.

For ease of reference, the aforementioned entry under Notification No. 45/2025-Cus, dated 24.10.202 has been extracted below:

S. No.	Chapter or Heading or Sub-heading or tariff item	Description of goods	Standard rate	Integrated Goods and Services Tax	Condition No.
(1)	(2)	(3)	(4)	(5)	(5)
281.	8537	All goods other than those suitable for use in — (1) motor vehicles falling under heading 8702 or 8704; (ii) motor cars falling under heading 8703; or (iii) motor cycles falling under heading 8711	7.5%	–	–

The notification exemption is available to all goods falling under heading 8537 other than those suitable for use in motor vehicles, motor cars or motor cycles. As per the submission by the applicant

Racks are not intended for use in motor vehicles.

6.1 Hence, I find that this benefit is available to applicant for import of Racks.

7. In view of the above, I hold that “Racks (such as Rack V.2) are classifiable under heading 8537, subheading 8537 10, more specifically under tariff item 8537 10 90 (“Other”) of the First Schedule to the Customs Tariff Act, 19757. Also, the benefit of Serial No. 281 of Notification No. 45/2025-Cus, dated 24.10.202 is available to Racks.

8. I, rule accordingly.