Appellate Authority of Advance Ruling upheld decision of AAR – ‘Power Banks’ are Accumulators falling under Chapter Heading 8507 and are not static convertors!

Facts of the case:

Applicant is engaged in trading of electrical and electronic goods including power banks. They submitted that power banks while charging compatible devices perform mainly two activities (i) accumulation of electrical energy and (ii) converting energy from DC-to-DC to provide regulated output based on load demand. They filed an application with AAR on the matter of classification of ‘Power Banks’ under chapter heading 8504 40 90 ‘Static Converter – Others’. AAR ruled against applicant stating that power banks are accumulators and not static convertors because

• principal function of those are to store electric energy and supply when required; and
• a s.no. has been inserted under chapter 8507 of description “Lithium-ion accumulators (other than battery) including lithium-ion power bank” which also clarified the classification.

Aggrieved by ruling applicant filed appeal with appellate authority of advance ruling arguing that the functions and components of power banks are similar to that of UPSS hence those merit classifications under Chapter Head 8504 similar to that of UPSS (static convertor).

AAAR’s Ruling:

The AAAR upheld order passed by AAR and stated that:

• Primary difference between static sonvertor and accumulator is the fact of storage (accumulation) of electrical energy. Merely, the fact that a power bank can also convert energy from DC-to-DC does not make it a static convertor. Therefore, it is an accumulator falling under chapter 8507.
• Ruling further clarified that power banks / accumulators had GST rate of 28% and w.e.f. 31.12.2018 vide notification no .24/2018-Central Tax (Rate) entry no. 376AAA the rate was revised to 18%.

 Source: [2019] 108 taxmann.com 259 (AAAR-KARNATAKA)

Xiaomi Technology India (P.) Ltd., In re [2019] 102 taxmann.com 28 (AAR – Karnataka)