GOVERNMENT OF PAKISTAN
COLLECTORATE OF CUSTOMS APPRAISEMENT (EAST)
CUSTOM HOUSE, KARACHI
C-183/KAPE/PCT/2021 Dated: 31.12.2022
PUBLIC NOTICE NO. 18/2022
SUB: DETERMINATION OF CLASSIFICATION OF ‘STEAM FIRED ABSORPTION CHILLER’
The Collector of Customs Appraisement Port Muhammad Bin Qasim has forward a reference vide letter No.Group-VI-601-2021-PQ dated 12.09.2022 for classification of ‘steam fired absorption chiller, Model XZ0.01-233 D (33/34) H2 (661RT)’ under specific PCT Code 8418.6990 or as partial shipment and a part of Plant under PCT 8477.8000, being part of 3000 TPD Bottle and Film Grande PET Scan Line Plant.
2. Brief facts as reported by the referring Collectorate are that importer M/s. Ismail Resin (Private) Limited, Karachi (NTN 8074404) imported ‘steam fired absorption chiller, Model XZ0.01-233 D (33/34) H2 (661RT)’ vide Goods Declaration No. KPPI-HC-84421-17-06-2022 as partial shipment of 300 TPD Bottle and Film Grade PET Scan Line Plant for release thereof under PCT heading 8477.8000, which covers ‘machinery for working rubber or plastics or for the manufacture of products from these materials, not specified or included elsewhere in this Chapter. However, referring Collectorate was of the view imported goods (absorption chiller), being refrigerating equipment, is appropriately classifiable under PCT heading 8418.6990, which is meant for ‘refrigerating or freezing equipment’s’ and that similar goods imported by the same importer as 3rd partial shipment for the same plant vide GD No.KAPW-HC-106274-13-01-2022 was assessed and cleared under PCT heading 8418.6990 by the Collectorate of Customs, Appraisement-West Karachi. According, the referring Collectorate assessed the impugned good under PCT heading 8418.6990, considering the machine as having individual function of refrigeration. On the other hand, the importer was of the view that “being integral part of plant for manufacturing of resins” in terms of Customs General Order 12 of 2002 dated 15.06.2002, the under reference goods are classifiable under PCT heading 8477.8000.
3. The meeting was held on 13.08.2022, 30.09.2022, 22.10.2022, 12.11.2022 and 03.12.2022 which were attended by the representative of Collectorate of Customs, Port Muhamamd Bin Qasim and the members of the Classification Committee whereas the representatives of the importer attend meeting dated 12.11.2022 and 03.12.2022 and the issue was discussed in detail. The representative of the importer explained the working of the Chiller and contended that all the imported impugned goods would function in conjunction with other machineries to manufacturer end products (resin), hence should be treated as integral part of ‘Plant for manufacturing of resins’ and classified under heading 8477.8000 in view of Section Note 4 & 5 of Section XVI and in line with the Para I(xi)(i) of the Customs General Orders 12 of 2002 dated 15.06.2002 (Classification of machinery).
4. On the other hand, the representative of Collectorate of Port Muhammad Bin Qasim asserted the imported ‘steam fired absorption chiller’ has separately defined function of production of chilling of water as its end product which can be used for multiple purposes and is not restricted to be used specifically for the manufacturing of “Resin” as its end product. Therefore, the imported boiler having individual function is specifically classifiable under PCT heading 8418.6990. The representative of Collectorate of Port Muhammad Bin Qasim further contended that the issue of classification in a similar case has already been settled vide Public No. 4/1989 wherein the classification committee had ruled in case of ’10 Mega Watt Complete Power Plant based on Steam’ which consisted of water treatment section (water softener), boiler, steam turbine and generator, and ruled to classify each component in their respective PCT heading in the light of WCO classification opinion. The Committee also observed that in another similar matter, a Public Notice No.4 of 2006 was issued with respect to classification of ‘Complete Continuous Sugar Dissolving System and Syrup Room Designed for Beverage Filing Line’. The imported system consisted of plate heat exchangers, cooling tower, chiller, hot water tank, mixing tank etc. The Classification Committee ruled to classify all these machines separately and independently under their respective PCT headings.
5. As regard, Para 1(xi)(i) of the Customs General Order, 12 of 2012, the representative of the Collectorate further added that the same deals with the classification of those machines only which, for the convenience of packing/handling/transportation etc, are imported in disassembled/undissembled from in partial shipments and that CGO does not deal with classification of any plant which may comprise a number of machines of varying description and functions, hence the importer’s claim to cite the aforesaid provisions of CGO becomes irrelevant.
6. The Classification Committee has gone through the arguments and documents put forth by the two sides and also considered the relevant provisions of law dealing with the HS classification. Classification of any imported goods under Pakistan Custom Tariff is determined under the Genera Rules for the Interpretation (GIR) of First Schedule to the Customs Act, 1969. As per GIR 1, the classification shall be determined according to the terms of the headings and components intended to contribute together to a clearly defined function. This leads to the conclusion that the said rule is in respect of machine having different separate components which when combined together by various ways like piping, cables etc. become capable to perform some clearly defined function. Since the impugned good i.e. ‘steam fired absorption chiller’ is an independent machine performing a specific function and imported as complete independent unit, and answers to a description under heading 8418, the same cannot be classified elsewhere.
10. The committee has also considered the provisions of Para I(xi)(i) of the Customs General Order 12 of 2002 dated 15.06.2002 (Classification of machinery) which is reproduced below.
“It is an established practice that all components of machinery when imported in disassembled form either collectively or separately are classified in the heading pertaining to that machinery subject to exclusions provided in the Chapter XVI of Harmonized System. It is felt that in case of partial shipments that discretion remained dormant due to presence of standing concessions to Individual headings subject to entitlement of industry. In this backdrop, and in view of withdrawal of concessionary notifications pertaining to plant and machinery, it has now become imperative to draw attention of the concerned field formations to the following provisions:-
(a) In terms of Rule 2(a) of General Rules for interpretation, complete or finished articles presented unassembled or disassembled are to be classified in the same headings as the assembled articles. When the goods are so presented, it is usually for reasons such as requirements or convenience of packing, handling or transport. This rule also applies to incomplete or unfinished articles presented unassembled or disassembled provided they retain the essential character of the finished article. However unassembled components of an article which are in excess of the number required for that article when complete are to be classified separately.
(b) It is not unusual in case of project imports to import plant and machinery in unassembled/disassembled form by way of partial shipments from different sources. It is not only incorrect but undesirable to classify individual shipments separately with disregard to intent and purpose of whole machinery. It is therefore advisable that the components of machinery whether presented together or separately, be classified under one heading appropriate to the machinery unless specifically excluded under Chapter Notes.”
11. The Classification Committee observed that the heading as well as contents of this specific clearly deal with the classification of machinery imported in disassembled form. Such disassembled machines may be imported in the form of components in partial shipments and when all these components are assembled together at destination site, they assume the shape of a machinery having some specific function. As per sub para (i) (b), such partial shipments brought in partially are to be classified under the one heading appropriate to that assembled machinery. Similarly, sub para (i)(a) and (ii)(b) also speak of some specific machines not for the whole plant. Further description, scope and types of such machines is available in respective Explanatory Notes to that heading which clearly excludes those machinery which is specified and included elsewhere in the chapter. Since chillers are specifically included in HS 8418, the same cannot be classified under any other heading like 84.77. If importer’s stance to classify machines having specific headings duly determined in accordance with GIR under any other heading for any reason is accepted, the whole structure of classification determination will come down crumbling. Furthermore, the First Schedule to the Customs Act, 1969, being an Act of the Legislature cannot be ignored and brushed aside on any pretext, including any confusion of understanding on account of the said CGO. Needless to mention that during the meeting, the representative of Port Qasim Collectorate confirmed that the subject chiller is imported in complete assembled form and this position has not been rebutted by the importer’s representative. The Committee also observed that vide Public Notice No.4/1989 and Public Notice No.4 of 2006, it was ruled to classify all machines separately and independently under their respective PCT headings. Therefore, the importer’s claim for invoking para I(ix) of CGO 12 of 2002 is unfounded and irrelevant.
12. Foregoing in view, Committee is of the view that the imported ‘steam fired absorption chiller, Model XZ0.01-233 D (33/43) H2 (661RT)’ is classifiable under PCT heading 8418.6990, under GIR 1.
13. The above classification determination is specific to the product whose detail/specifications have been given above. Further, the ruling is based on the documents and information provided by the Collectorate/importer and shall be treated as annulled if it is found at any subsequent stage that the same was obtained by providing incorrect, false, misleading or incomplete information.
14. This Public Notice is issued in terms of Chapter-II (Classification) of CGO 12/2002 dated 15.06.2002.
(Signed by)
(Mushtaq Ali Shahani)
Additional Collector of Customs/
Chairman Classification Committee
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