2024 (12) TMI 414 - AAR - Customs

Benefit of Custom Duty Exemption under the N/N. 9/2024-Cus., dated 30-1-2024 - ASSY-CASE-FRONT can be named in lieu of FRONT COVER or not? - HELD THAT - It is rightly being provided by the Commissionerate that the Front Cover of Mobile refers to the external protective panel that covers the front face of the mobile device. It primarily focuses on the aesthetic and protective aspects of the front-facing surface, which usually includes the display screen, front-facing camera, and sometimes sensors and speaker grilles. The front cover is often a separate piece that can be removed or replaced independently of the rest of the casing. While, Assy Case Front of Mobile refers to the fully assembled front portion of the mobile device s casing or enclosure. This encompasses not only the external front cover but also all components that are integrated into or attached to the front face of the device, such as the display screen, touch panel, sensors, buttons, and other internal elements. It includes both the structural and functional aspects of the front part of the device As such the goods imported as Inputs and/or parts for manufacture of new Final product comes under manufacturing activity and its duty free import is subject to fulfilment of IGCR Rules and conditions specified therein. However as per the condition of the Notification as given in Table above, the benefit of Notification No. 9/2024, dated 30-1-2024 under Sl. No. 6E is permissible only when the final product emerged out of the Inputs and/or parts, falls under the HS Code 39 or 73.

Summary

Issues Involved:

1. Whether "ASSY-CASE-FRONT" can be named in lieu of "FRONT COVER" for customs duty exemption.
2. Whether HS Code 8517 79 90 can be used instead of Chapters 39 or 73 for customs duty exemption.
3. Whether the process undertaken for manufacturing "ASSY-CASE-FRONT" amounts to manufacture under customs rules.

Issue-wise Detailed Analysis:

1. Naming of "ASSY-CASE-FRONT" in lieu of "FRONT COVER":

The applicant sought clarification on whether the product "ASSY-CASE-FRONT" could be considered equivalent to "FRONT COVER" as listed under Serial No. 6D(ii) of Notification No. 9/2024-Customs for customs duty exemption purposes. The ruling clarified that the product "ASSY-CASE-FRONT" is distinct from the "FRONT COVER" as specified in the notification. The "Front Cover" refers to the external protective panel of a mobile device, focusing on aesthetic and protective aspects. In contrast, "Assy-Case-Front" includes the fully assembled front portion of the device, encompassing both structural and functional components. The ruling concluded that since the product description "ASSY-CASE-FRONT" is not mentioned in the notification, the duty exemption benefit under Serial No. 6E is inadmissible.

2. Use of HS Code 8517 79 90 instead of Chapters 39 or 73:

The applicant questioned whether they could use HS Code 8517 79 90 for the final product, instead of the specified Chapters 39 or 73, to avail customs duty exemption. The ruling stated that the notification specifically mentions Chapters 39 or 73 for the final product under Serial No. 6D. Since the applicant's product "Assy-Case-Front" would be classified under HS Code 8517 79 90, it does not qualify for the exemption, which is limited to products under Chapters 39 or 73.

3. Manufacturing Process of "ASSY-CASE-FRONT":

The applicant sought clarification on whether the process undertaken for manufacturing "ASSY-CASE-FRONT" on goods imported under the notification amounts to manufacture. The ruling noted that the Customs Authority for Advance Rulings (CAAR) is not mandated to provide rulings on whether a process amounts to manufacture. The authority can only issue rulings on matters specified under Section 28-H of the Customs Act, 1962. Therefore, no ruling was provided on this question.

Conclusion:

The authority concluded that the applicant cannot avail customs duty exemption for "ASSY-CASE-FRONT" under the specified notification as it does not match the product description "FRONT COVER" nor falls under the specified HS Codes (Chapters 39 or 73). Additionally, CAAR does not have the mandate to rule on whether the manufacturing process qualifies as manufacture under customs rules.