GOVERNMENT OF PAKISTAN
MODEL CUSTOMS COLLECTORATE OF APPRAISEMENT (EAST) CUSTOM HOUSE, KARACHI
C.No. / (31) MCC/KAPE/Classification/2013/379 Dated: 15th, Jan.2015.
PUBLIC NOTICE NO.03 OF 2015
SUB: CLASSIFICATION OF GOODS DECLARED AS PRINTED CIRCUIT BOARDS AND CD MECHANISM.
The Additional Collector of Custom, Model Custom Collectorate of Appraisement (West) Karachi vide letter bearing C. No SI/PDC/-164/2012-VII dated 18.11.2013 has referred a case to the PCT committee with details as appearing below:
2. M/S Automate Industries (Private) Limited has been importing consignments said to contain components/sub-components for audio systems for different models of vehicle, being assembled by the local licensed assembler while availing concession of Custom duty, in excess of 5% under serial 83(i) (EEPAS Scheme) of the SRO 565(I)/2006, dated 5.06.2006 against survey certificates issued from time to time, based on recommendation and determination of Input Output Radio Certificate (IORC) along with annual quantitative requirement of the importing company by the Engineering Development Board, which is a pre-requirement of the said regime. The EDB has recommended printed circuit board (PCB) and CD mechanism classifiable under PCT headings 8534.0000 and 8522.9000 respectively, among other items, to be the items qualifying for exemption under the aforesaid serial of the SRO ibid. However under physical examination of import under the said serial No of the SRO, it has been noticed that M/s. Automate Industries (Private) Limited are importing both of the items almost complete (approx. 80% of the complete unit ) i.e. Printed Circuit Board (PCB) and CD mechanism which gives them the essential character of the main apparatus and are, thus classifiable under PCT headings of their main machine i.e. Radio/Cassette Player 8527.2110 and 8527.2910 respectively or as semi knock down condition kit (SKD) on the following grounds:
(i) The PCB being imported is complete in all manners fitted with all components and all is almost ready for use;
(ii) The two major assemblies i.e. PCB mounted with all components and CD mechanism duly mounted with all electrical and mechanical components cannot be considered as raw materials, sub-components or components subject to Custom duty 5% covered under sub-serial (i) of serial No. 83 of SRO 565(I) 2006 as (complete knock down kit) Or to consider it as semi-knocked down kit (SKD) which is mentioned at serial No 83 of the SRO 565(I) 2006.
The matter was referred to FBR for clarification, however, FBR vide letter C.No. 2 (15)/survey-II/2001/141840-R dated 23.10.2013 has directed that reference may be made to Classification Centre, Custom House, Karachi for determination of classification of imported goods.
(3) The Classification Committee helped its meeting on 18.11.2014, scrutinized the details of the case, examined the sample placed before the Committee and perused the relevant sections of the Explanatory Notes and the Concessionary Notification.
(4) The Consultant representing the Importer argued that Printed Circuits Boards are classifiable under heading 85.34. Notes 5 to chapter 85 mentions that PCBs with mechanical and electrical components are not regarded as printed circuit board within the meaning of heading 85.84 but parts which are classifiable under heading 8529.9090in accordance to Notes 2 to section XVI to the Pakistan Custom Tariff. Similarly, CD mechanism being a part of Car Audio System is also classifiable under heading 8529.9090. None of these components (PCB, CD Mechanism) alone develop the essential character of car an audio system. Rather these components are required for the manufacture /assembly of car audio system. In view of the above the consultant requested to classify the impugned goods under PCT heading 8529.9090 (PCB) and 8519.9090 (CD Mechanism). He further opined that it is required to determine classification of each component/sub component separately even if the essential character of all the components taken together may be car audio system of heading 8527.2110 or 8527.2910.
5. The Classification Committee considered the case in light of samples presented. The sample as presented considered of the CD Mechanism and Printed Circuit Board. The components missing were Nose piece (front panel), casing and brackets. The Committee members are of the opinion that the samples as presented clearly make the item fall in the bracket of complete radio/cassette player as the essential character of items is that of radio/cassette player.
(a) The PCT heading being claimed by the importer for CD Mechanism i.e. 85.22 covers “Parts and accessories suitable for use solely or principally with the apparatus of headings 85.19 to 85.21”. Both these headings pertain to “Sound recording or reproducing apparatus” and “Video Recording or reproducing apparatus, whether or not incorporating a video tuner” respectively. PCT heading 85.34 pertains to “Printed Circuits”. In the instant case, the CD Mechanism and Printed Circuit Board imported together have the essential character of main machine/apparatus i.e. Radio/Cassette Player, thus attracting classification under PCT heading 85.27 which covers “Reception apparatus for radio-broadcasting, whether or not combined, in the same-housing, with sound recording or reproducing apparatus or a clock”. The appropriate sub-heading under main heading 85.27 is 8527.2110. Perusal of the Goods Declaration and Examination report retrieved subsequently which were not presented with the Collectorate’s letter revealed that the quantity of CD Mechanism and fully mounted Printed Circuit Boards was equal in number, thus constituting a set having essential character of radio/cassette player. Sub-heading 8527.211 covers; “Radio broadcast receivers not capable of operating without an external source of power, of a kind used in motor vehicles combined with sound recording or reproducing apparatus for vehicles of chapter 87.”
(b) Perusal of Note 2 to Section XVI reveals that the Note focuses upon parts of machine and their classification, or other parts of machines of suitable for use solely or principally with a particular kind of machine or with a number of machines of the same heading. Since the impugned items are not parts, as presented together as a set i.e. CD Mechanism and PCB, hence the Note 2 to Section XVI becomes irrelevant.
(c) The Explanatory Notes to chapter 85, 34 in last para mentions that “Circuits on which mechanical elements or electrical components have been mounted or connected are not regarded as printed circuit within the meaning of this heading. They generally fall to be classified in accordance with Note to Section XVI or Note 2 of chapter 90, as the case may be” In the matter under consideration, the printed circuit board is mounted with all electrical components including capacitors, resistors, integrated circuits etc., and accompanied with CD Mechanism constituting a set, hence disqualifying the items from the purview of Printed Circuits (85.34). Both CD Mechanism and Printed Circuit Board when taken together have the essential character of car audio system.
6. In light of the above facts, impugned goods i.e. CD Mechanism and Printed Circuit Boards are appropriately classifiable under PCT heading 8527.2110 for the given above and in terms of Rule 2(a) of General Rules for Interpretation.
Signed by
(Zeba Bashir Ahmad)
Additional Collector I
Classification Committee