2019 (2) TMI 66 - AAR - GST

Classification of traded item - Power Bank - Whether the Power Bank , traded by the Applicant, is classifiable under Heading 8504 40 90 as Static Converter -Others ? - Held that - The principal function of the instant product is to store the electricity in the battery of the said product and to supply the same when required. Hence it is pertinent to mention here that the battery in the Power Bank is the main / core part of the device and without the battery the Power Bank would not function in the required manner. The charge management system is an ancillary circuitry for Charging the battery and the voltage boost converter is also an ancillary circuitry to draw the current from the battery at the relevant rating, depends on the load of the device connected. The Power Bank can also be used in the absence of the said voltage booster system, in which Case only the prescribed / pre-determined rate of current only can be drawn - the principal function of Power Bank is only to charge, even though the additional circuitry is embedded in it for drawing required rated current depends on the load. The accumulators are covered under heading 8507 whether or not they include any ancillary components which contribute to their function of storing and supplying electric energy. Further the. accumulators are classified under the heading 85.07 even if they are designed for use with a specific device. Therefore, even though the battery in the said Power Bank is attached to the ancillary circuitry of Voltage Booster System , for effective function of the said battery, the principal function of the said Power Bank remains the same i.e storing and supplying of electric energy and hence the said product merits classification of the heading 85 07. as an accumulator.

Summary

Issues Involved:
1. Classification of "Power Bank" under the correct tariff heading.
2. Determination of whether "Power Bank" is a 'Static Converter' or an 'Accumulator.'

Issue-wise Detailed Analysis:

1. Classification of "Power Bank" under the correct tariff heading:

The Applicant, M/s. Xiaomi Technology India Private Limited, sought an advance ruling to determine whether their product "Power Bank" should be classified under Heading 8504 40 90 as 'Static Converter - Others'. The Applicant argued that the Power Bank consists of a battery and a static converter, which converts electric charge to provide regulated output to devices, thus fitting the description of a static converter.

2. Determination of whether "Power Bank" is a 'Static Converter' or an 'Accumulator':

The Applicant's submission highlighted that the Power Bank performs two main functions: accumulation of electrical energy and conversion of energy from DC to DC to provide regulated output. They argued that the principal function of the Power Bank is to charge devices, which necessitates the inclusion of a converter.

The Applicant referenced the Harmonised Commodity Description and Coding System, which defines a static converter as a device that converts electric energy to adapt it for further use. They also relied on a Technical Research Report from IIT, Varanasi, which classified the Power Bank as a static converter.

The Applicant further compared the Power Bank to an Uninterrupted Power Supply System (UPSS), which is classified under Heading 8504 as a static converter, and cited relevant case law and circulars supporting this classification.

Findings and Discussion:

The Authority for Advance Rulings considered the submissions and determined that the principal function of the Power Bank is to store electricity and supply it when required, making it an accumulator. The ancillary circuitries, such as the charge management system and voltage booster system, enhance the function of the battery but do not change the principal function of the device.

The Authority distinguished the Power Bank from a UPSS, noting that the principal function of a UPSS is to convert DC power into AC power for uninterrupted supply, whereas the Power Bank's primary function is to store and supply electric energy.

The Authority referred to the explanatory notes to the Harmonised Commodity Description and Coding System, which state that accumulators are classified under Heading 8507, even if they include ancillary components for storing and supplying energy. Additionally, Notification No. 24/2018-Central Tax (Rate) dated 31.12.2018, effective from 01.01.2019, classifies "Power Banks" under Heading 8507 as lithium-ion accumulators.

Ruling:

The "Power Bank" traded by the Applicant is classifiable under Heading 8507 as an Accumulator and not as a Static Converter.