2022 (1) TMI 1283 - AAR - Customs

Classification of the APU Off Combo Unit proposed to be imported - to be classifiable under Customs Tariff Heading/HSN Code 8803 30 00 as Other parts of aeroplanes or helicopters under the general description Parts of goods of Heading 8801 or 8802 or not? - HELD THAT - In this case it has been indisputably brought out and amply illustrated that the clearly defined function of an APU off combo unit is only as a replacement of a part of aircraft i.e. it s APU. By combining several functions into a single unit the Unit is clearly customized for use only with aircrafts. Therefore it is reasonable to hold that the Unit can only be regarded as a part of aircraft which replaces the on-board APU and contributes to operational efficiency and eco friendliness. The only function of the Unit that is clearly defined is its function as the substitute to the APU i.e. substituting an aircraft part. The GPU has an inbuilt computer system which synchronizes with the aircraft mechanism and which also activates the computer operations in the aircraft. The GPU cannot be used as a normal generating set in view of its inbuilt configuration which facilitates only functions of aircrafts - The HSN General Explanatory Notes to Chapter 88 lay down that Subject to the provisions of the Notes to Section XVII it also covers parts of such equipment. The relevant Section Notes have already been discussed above and the conclusion thereof is that the Unit under consideration based on its design and intention to be used solely as a source of power and preconditioned air to stationary/parked aircrafts merits classification under Chapter 88 of the Customs Tariff. Note 3 to Section XVII states that references in Chapters 86 to 88 to parts or accessories do not apply to parts or accessories which are not suitable for use solely or principally with the articles of those Chapters. A part or accessory which answers to a description in two or more of the headings of those Chapters is to be classified under that heading which corresponds to the principal use of that part or accessory. The Unit can only be termed and considered as a part of aircraft which replaces the on-board APU and is suitable for use solely and principally with aircrafts falling under Chapter 88 and is not hit by the exclusion provision of the notes to Section XVII. Thus APU OFF combo unit merits classification under chapter sub-heading 8803 30 00 of the First Schedule to the Customs Tariff Act 1975.

Summary

Issues Involved:
1. Classification of the APU Off Combo Unit.
2. Applicability of the Mak Controls case precedent.
3. Examination of relevant Customs Tariff Headings.
4. Interpretation of Section and Chapter Notes of the Customs Tariff.

Detailed Analysis:

1. Classification of the APU Off Combo Unit:
The primary issue is the classification of the APU Off Combo Unit proposed for import by the applicant. The applicant describes the unit as a combination of a 400 Hz diesel ground power unit and an air-conditioning system, intended to replace the aircraft’s Auxiliary Power Unit (APU) when the aircraft is on the ground. The applicant seeks classification under Customs Tariff Heading 8803 30 00, arguing that the unit is a part of the aircraft used solely and principally with an aircraft.

2. Applicability of the Mak Controls Case Precedent:
The Commissioner of Customs (Preventive), Vijayawada, referenced the Mak Controls case, where the Tribunal classified a Ground Power Unit (GPU) under Heading 8803 as a part of an aircraft. The Commissioner argued that if the applicant's product were covered under this decision, there would be no need for an advance ruling. The Tribunal had observed that the GPU was designed exclusively for use with aircraft, providing power and synchronizing with aircraft systems, similar to the APU Off Combo Unit in question.

3. Examination of Relevant Customs Tariff Headings:
The Commissioner suggested that the unit might be classified under Heading 8415 (Air Conditioning Machines) or 8502 (Power Generators) based on its functionalities. However, the applicant argued that the unit’s principal function is to replace the APU, providing power and preconditioned air to the aircraft, making it a part of the aircraft under Heading 8803. The ruling considered the unit's design, functionality, and exclusive use with aircraft, concluding that its classification should be under Chapter 88.

4. Interpretation of Section and Chapter Notes of the Customs Tariff:
The ruling relied on Note 3 to Section XVII, which states that parts and accessories suitable for use solely or principally with the articles of Chapters 86 to 88 should be classified under those chapters. The unit’s functionality as a replacement for the APU, providing power and preconditioned air, aligns it with the description of parts of aircraft under Heading 8803. The ruling emphasized that the unit’s design and exclusive use with aircraft justify its classification under Chapter 88, specifically under sub-heading 8803 30 00 as "Other parts of aeroplanes or helicopters."

Conclusion:
The APU Off Combo Unit, being a combination of a 400 Hz power unit and an air-conditioning system designed exclusively for use with aircraft, merits classification under Chapter 88, sub-heading 8803 30 00. The ruling considered the unit’s principal function, design, and exclusive use with aircraft, aligning it with the precedent set by the Mak Controls case and the relevant section and chapter notes of the Customs Tariff.