2021 (8) TMI 978 - AAR - Customs

Classification of goods - components for the assembly of iPERL flowmeter - HELD THAT - The impugned product is intended for use in water supply. However, iPERL is not merely used to measure the volume of the liquid consumed. The device measures the rate of flow of liquid, based on which eventually volume of the liquid consumed can be calculated. The application of General Interpretation Rules (1-4) should always be in sequential order. As per Rule 1, classification shall be determined according to the terms of the heading and any relative section or chapter notes. The applicant had informed vide email dated 05.08.2021 that they may import excess components over and above required for assembly of iPERL . For classification of such parts and accessories relevant Chapter and Section notes are required to be referred. General Explanatory Note 1 (f) to Chapter 90 excludes parts of general use, as defined in Note 2 to Section XV, of base metal (Section XV) or similar goods of plastics (Chapter 39). The Senses iPERL smart meter merit classification under heading 90.26 and more specifically, under subheading 90261010 of the first schedule to the Customs Tariff Act, 1975.

Issues Involved:

1. Classification of components for assembly of iPERL flowmeter.
2. Determination of appropriate tariff heading for iPERL flowmeter.
3. Consideration of US Customs cross ruling on iPERL classification.
4. Classification of excess components imported for assembly.

Issue-wise Detailed Analysis:

1. Classification of components for assembly of iPERL flowmeter:

M/s Flextronics Technology India Private Limited sought an advance ruling for the classification of components required for the assembly of the "Sensus iPERL smart meter." The iPERL flowmeter measures the rate of flow of water using Faraday’s law of electromagnetic induction and the Hall effect, and it includes features like backflow detection, empty pipe detection, and leakage alerts. The applicant clarified that all components for the assembly of a complete flowmeter would be imported together for phase 1, with additional parts sourced domestically from phase 2 onwards. The process involved in phase 1 is only of assembly, with no further processing of imported components.

2. Determination of appropriate tariff heading for iPERL flowmeter:

The ruling considered two potential headings for classification: 90.26 and 90.28. Heading 90.26 covers instruments or apparatus for measuring or checking the flow, level, pressure, or other variables of liquids or gases, including flowmeters. The iPERL flowmeter fits this description as it measures the flow of liquid using a magnetic field and includes recording and signaling devices with an electrical output. The HSN Explanatory Notes for heading 90.26 support this classification, as they specifically mention flowmeters that operate using magnetic fields.

3. Consideration of US Customs cross ruling on iPERL classification:

The applicant referenced a US Customs cross ruling that classified iPERL under heading 90.28, which covers gas, liquid, or electricity supply or production meters. However, the ruling found that the iPERL flowmeter does not meet the properties of meters under heading 90.28, which are designed to measure the total amount of fluid delivered over a period using mechanical devices and counting mechanisms. The iPERL flowmeter measures the rate of flow of water and is not merely a supply meter. Therefore, the classification under heading 90.28 was deemed inappropriate.

4. Classification of excess components imported for assembly:

The applicant indicated that excess components might be imported to fulfill minimum order quantities and handle defects or damages. The ruling referred to the General Explanatory Notes to Chapter 90, which state that parts and accessories suitable for use solely or principally with a particular kind of machine, instrument, or apparatus are to be classified with those machines, instruments, etc. Therefore, parts and accessories identifiable as suitable for use with the iPERL flowmeter under heading 90.26 will remain classified under the same heading.

Conclusion:

Based on the detailed analysis, the "Sensus iPERL smart meter" merits classification under heading 90.26 and more specifically, under subheading 90261010 of the first schedule to the Customs Tariff Act, 1975.

← Previous Next →