Cathode, Anode & Separator Films Are Parts of Lithium-Ion Electric Accumulators: CAAR Allows BCD Exemption [Read Notification]
The CAAR relied upon Note 2(b) to Section XVI, which lays down that if a Part is Not Covered by any other specific Tariff Heading, it must be Classified under Heading of Machine with which it is Solely or Principally for use
The Customs Authority for Advance Rulings (CAAR), New Delhi, has delivered a crucial ruling regarding the Customs Classification and eligibility for concessional Basic Customs Duty (BCD) for key raw materials imported by M/s. ATL Battery Technology (India) Private Limited for manufacturing Lithium-ion cells.
The applicant, M/s. ATL Battery Technology (India) Private Limited, is a manufacturer of Lithium-ion cells. In order to verify the exact Customs Tariff Headings (CTH) and eligibility for a concessional rate of Basic Customs Duty (BCD) for four imported goods: Cathode Coated Foil, Anode Coated Foil, Separator, and LC Breaker, they filed for an Advance Ruling. Lithium-ion cells, the finished product, are covered under CTH 8507 6000.
The Applicant sought categorization under CTH 8507 for the Cathode Coated Foil and Separator as parts of electric accumulators. They argued, however, that the Anode Coated Foil, which is mostly composed of graphite, should be categorized as graphite used for electrical purposes under CTH 8545 19 00. The LC Breaker was suggested. under CTH 8536 30 00. They claimed that under Sr. No. 523A of Notification No. 50/2017-Cus, every item qualified for the concessional BCD.
The Department, represented by the Pr. Commissioner of Customs, Air Cargo Complex (Import), generally concurred with the applicant except for the Anode Coated Foil. The Department stated that since the Anode is clearly an electrode and an integral part of a Lithium-ion Cell, it should likewise be categorized under CTH 8507 90 90 as a part of an accumulator, rejecting the CTH 8545 proposal.
In his decision, Shailesh Kumar, the Customs Authority for Advance Rulings, New Delhi, classified the Anode Coated Foil under tariff item 8507 90 90, agreeing with the Department's stance. This was based on the finding that the Anode is a highly developed, specialised component performing a vital electrochemical function in the Lithium-ion cell, therefore qualifying as a "part" of the electric accumulator (CTH 8507).
The CAAR confirmed the classification for the other three items as proposed by both the applicant and the Department: Cathode Coated Foil under tariff item 8507 90 90, Separator (microporous film) under tariff item 8507 90 10, and the LC Breaker (circuit protection device) under tariff item 8536 30 00. The LC Breaker was independently categorized as an electrical protection mechanism, not a passive component of the accumulator itself.
The CAAR determined that under Sr. No. 523A of Notification No. 50/2017-Cus, all four imported goods: Cathode Coated Foil, Anode Coated Foil, Separator, and LC Breaker are qualified to benefit from the reduced rate of Basic Customs Duty. The concession is subject to the necessary condition of end-use compliance, requiring verification that the components are utilized in the manufacture of Lithium-ion cells.
As a result, this order provides the applicant with the security they requested on both the categorisation and the duty benefits for these essential inputs.
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