In Re: M/s. Xiaomi Technology India Private Limited
GST
2019 (2) TMI 66 – AUTHORITY FOR ADVANCE RULINGS, KARNATAKA – 2019 (21) G. S. T. L. 333 (A. A. R. – GST)
AUTHORITY FOR ADVANCE RULINGS, KARNATAKA – AAR
Dated:- 22-1-2019
AAR KAR ADRG 01/2019
GST
SRI. HARISH DHARNIA, AND DR. RAVI PRASAD M.P. MEMBER
Represented by: Sri Shivarejan K, Charted Accountant
ORDER UNDER SUB-SECTION (4) OF SECTION 98 OF CENTRAL GOODS AND SERVICE TAX ACT, 2017 AND UNDER SUB-SECTION (4) OF SECTION 98 OF KARNATAKA GOODS AND SERVICES Tax ACT, 2017
1. M/s. Xiaomi Technology India Private Limited, Orchid – Block E, Embassy Tech Village/ Devarabisanahahalli, Marathaili Outer Ring Road, Bangalore – 560 103 having GSTIN number 29AARCS5667D1ZQ, have filed an application for Advance Ruling under Section 97 of CGST Act,2017,KGST Act, 2017 & IGST Act, 2017 read with Rule 104 of CGST Rules 2017 & KGST Rules 2017, in form GST ARA-01 discharging the fee of Rs. 5,000-00 each under the CGST Act and t
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attery charger i.e. adaptor, to store the electrical energy. The second component is the circuitry which is equipped with an Integrated Chipset, consists of a charge management system and a voltage boost converter. The Charge Management System detects the type of charger being used to charge the Mi Power Bank and adjusts the charging current accordingly. The Voltage Booster Converter is a DC-to-DC power converter that steps up voltage from its input supply to its output i.e. load. It is a class of switched-mode power supply (SMPS) containing at least two semiconductors (a diode and a transistor) and at least one emery' storage element i.e. a Capacitor, inductor or the two in combination. Filters made Capacitors (sometimes combination with inductors) are added to the output and input to reduce voltage ripples. The said converter detects the device being charged by the Mi Power Bank and adjusts the current to ensure the optimum level of current & voltage output, as per the load demand. T
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5.2018, before this authority and submitted that they have been classifying their product 'Power Bank' right from the pre-GST regime under the entry 8504 40 90 as 'Static Coverters – Others' with respect to imports as well as domestic procurement; the most relevant chapter for determining the HSN of Power Bank under Customs Tariff Act 1975 shall be chapter 85 and the tariff entries relevant to the classification in the instant ease are '8504 40 90' in respect of static converters that are taxable at 18% of GST and '8507 60 00' in respect of electrical accumulators that are taxable at 28% of GST.
7. The Applicant further submitted that the terms used in the tariff are technical or scientific in nature and it sis a well settled principle of interpretation that where a word is used in tariff entry in a technical or scientific sense, then it must be construed according to its technical or scientific meaning. The applicant, based on the explanatory notes to the Harmonised Commodity Descrip
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4 to the Section XVI of Customs Tariff Act 1975, the Power Bank has 2 or more components (i.e. static converters and batteries), has a clear defined function of charging a device and accordingly Power Bank is classifiable under tariff entry 8504 40 90 as 'Static Converter – Others'. The applicant, in support of their argument, submitted copy of Technical Research Report, issued by the Indian Institute of Technology (Banaras Hindu University), Varanasi wherein it is reported that Tower Bank can be considered as static converter and not only a charge accumulator”.
7.2 The applicant, without prejudice to the above argument, put forth another argument, submitting that the Power Bank essentially performs dual function i.e. accumulation of energy & conversion of energy from DC to DC providing regulated output current; the principal function of the Power Bank is to ensure the charging of device; mere lithium-ion battery would not suffice to charge a device unless the battery is supported by
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f Luminous Electronics Pvt. Ltd., [2001 (129) ELT 605] = 2001 (3) TMI 131 – CEGAT, NEW DELHI wherein it is held that the UPSS is classifiable as Static Converter under tariff heading 8504. They also refer to the Circular No. 104/2003-Cus. Dated 9-12-2003, issued by the then CBEC„ New Delhi wherein the UPSS was classified under tariff heading 8504 of Customs Tariff Act 1975 as well as The C,Ex., Tariff Act 1985. The Static Converter (UPSS) also is classified under 8504 in the GST regime and the explanatory notes to the Harmonised Commodity Description and Coding System to heading 85.04 supports the said Classification of the UPSS.
7.4 In View of the above, the applicant prays to clarify the classification of the Power Bank under tariff heading 8504, in the light of their analysis / arguments supra, technical report of IIT, Varanasi and judicial precedence on UPSS.
FINDINGS & DISCUSSION:
8. We have considered the submissions made by the Applicant in their application for advance
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are employed which contribute to the function of the battery in the Power Bank. The ancillary circuitries are (i) Charge Management System, which is used to detect the type of charger being connected to charge the battery in Power Bank and to adjust the current accordingly and (ii) Voltage Booster System, which is used to detect the device Connected to the Power Bank and to obtain output as per the load demand. Both the circuits are essentially enhancing the function of the main part i.e. Battery. Therefore the principal function of the said product is to store the electricity and supply the same i.e to charge the devices, connected to it.
8.3 Therefore it is clear from above that the principal function of the instant product is to store the electricity in the battery of the said product and to supply the same when required. Hence it is pertinent to mention here that the battery in the Power Bank is the main / core part of the device and without the battery the Power Bank would not fu
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of the above, the principal function of Power Bank is only to charge, even though the additional circuitry is embedded in it for drawing required rated current depends on the load.
8.5 The reasons for categorizing UPSS as a Static Converter falling under Chapter Heading 8504 have been discussed in detail in the cited case of M/s. Luminous Electronics Pvt. Ltd,. Vs CCE, New Delhi. 2001 (3) TMI 131 – CEGAT, NEW DELHI. The Applicant concludes with the argument that as the functions and components of UPSS are similar to that of Power Bank under examination, the Power Bank also merits classification under Chapter Head 8504 similar to that of UPSS. We proceed to examine the functions and components of UPSS vis-a-vis a Power Bank.
The principal function of a UPSS is to act as an uninterrupted source of electric power. The electric stored in the battery of the UPSS is converted into A-C. power, by the inverter in it, and supplied. However it is not essential to have a battery in the UPSS an
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tem to heading 85.07 states the following:
Electric accumulators remain classified here even if presented without their electrolyte.
Accumulators containing one or more cells and the circuitry to interconnect the cells amongst themselves, often referred to as “battery packs”, are covered by this headings whether or not. they include any ancillary components which contribute to the accumulator's function of storing and supplying energy, or protect it from damage, such as electrical connectors, temperature control devices, and protective housings. They are classified in this heading even if they are designed for use with a specific device.
It is clearly evident from the above explanatory note that accumulators are covered under heading 8507 whether or not they include any ancillary components which contribute to their function of storing and supplying electric energy. Further the. accumulators are classified under the heading 85.07 even if they are designed for use with a specific d
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