--- title: "Customs ruling quietly zeroes duty on the guts of Sanmina's AI storage racks" description: "A Mumbai customs ruling puts the imported parts for five Sanmina-SCI India storage-server models at nil Basic Customs Duty. In the week it surfaced, the drives inside those racks stood sold out years ahead." publisher: "The Inference" section: "Hardware" published: 2026-10-09T19:06:27.918Z modified: 2026-10-09T19:06:27.918Z canonical: https://theinference.org/article/customs-ruling-quietly-zeroes-duty-on-the-guts-of-sanmina-s-ai-storage-racks language: en keywords: "Sanmina, Customs, AI Hardware, Supply Chain, Hard Drives, India" --- # Customs ruling quietly zeroes duty on the guts of Sanmina's AI storage racks > A Mumbai customs ruling puts the imported parts for five Sanmina-SCI India storage-server models at nil Basic Customs Duty. In the week it surfaced, the drives inside those racks stood sold out years ahead. ## A Chennai plant asked two questions in April Sanmina-SCI India builds storage servers at SIPCOT Oragadam, outside Chennai [1]. The joint venture of Reliance Strategic Business Ventures and [Sanmina](https://theinference.org/markets/companies/sanmina)'s Singapore arm holds a customer order for servers it has yet to build [1]. On April 21, 2026, it [asked Mumbai's customs advance-rulings authority two questions](https://taxguru.in/custom-duty/imported-inputs-storage-servers-eligible-conditional-customs-duty-exemption-caar-mumbai.html): how five of its models should be classified, and whether their imported parts enter duty-free [1]. The ruling is public through the tax trade press [1]; no financial outlet appears to have noticed. ## Nil duty on the parts, whichever way the box is classified All five models land in tariff heading 8471 [1]. The two Crestone JBODs, 4U racks holding up to 102 3.5-inch drives on dual 1600-watt supplies, are storage units under 8471 70 90 [1]. La Jolla, Coronado and Mlk Mavericks carry server modules with their own processors, [AMD](https://theinference.org/markets/companies/amd) EPYC chips in two of them, and are processing units under 8471 50 00 [1]. The split decided nothing about the money. Parts actually used to build all five enter at nil Basic Customs Duty under Serial No. 39 of Notification 24/2005, provided the plant follows the IGCR end-use rules [1]. Copper parts and solar glass stay excluded [1]. ## The drives are the scarce part Finished 8471 machines already cross India's border duty-free under the same notification [1]. The end-use route extends that to components for whoever assembles locally [1]. Importers of the same boards, chips and power supplies without an advance ruling and IGCR registration stay on the ordinary First Schedule rate: the carve-out runs through the assembler, not the import channel [1]. Timing is why it matters. [Seagate](https://theinference.org/markets/companies/seagate) [shipped 218 exabytes in its June quarter](https://finance.yahoo.com/markets/stocks/articles/seagate-sustain-strong-revenue-growth-150700755.html), 34% more than a year earlier, roughly 90% of it to data centers, and most of its nearline output is already allocated into calendar 2028 [2][3]. [Western Digital](https://theinference.org/markets/companies/western-digital)'s finance chief framed the market in one line: "My revenue is not gated by the demand. My revenue is gated by the amount I can supply" [2]. ## The ramp is already in the stock [Sanmina](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000897723)'s [June quarter brought in $3.46 billion, up 69.7% year over year](https://www.ad-hoc-news.de/boerse/news/corporate-news/sanmina-stock-reports-69-7-percent-revenue-growth-after-q3-beat/70237123), on EPS of $3.31 against a $2.77 consensus [5]. A year earlier the same quarter earned $1.53, and management now guides fiscal 2026 to $14.0 to $14.3 billion of revenue [6]. *Chart: **Sanmina's revenue sat near $2B for two years, then jumped 59% and 102%** Sanmina quarterly revenue from late 2023 through the June 2026 quarter, showing a flat stretch near $2B then a jump to $3.19B, $4.01B and $3.46B* *Quarterly revenue, USD billions, from Sanmina's SEC filings; fiscal quarters mapped to calendar quarter labels. Retrieved October 9, 2026. [7]* The shares have [gained 46.2% this year, against Jabil at 31.4% and Celestica at 25.7%](https://uk.finance.yahoo.com/news/celestica-rises-25-7-ytd-151700542.html) [8]. The ruling surfaced this week, after those gains were booked [1]. *Chart: **Sanmina has outrun Jabil, Celestica and its own industry this year** Year-to-date share price gains for Sanmina, the EMS industry, Jabil and Celestica* *Year-to-date share-price gains through October 8, 2026, percent; industry is the Zacks Electronics Manufacturing Services peer set. [8]* ## The ruling has edges, and names no number The order does not classify the individual inputs, whose position "remains subject to assessment" at the border [1]. Any configuration change, dropping the CPU-carrying server module for instance, voids it under Section 28J(3) [1]. No rupee figure appears anywhere in it, so the size of the duty saved is not on the record [1]. ## The skeptics sit above the plant Toshiba's roughly $380 million expansion adds about 75 exabytes against an industry shortage near 300, and [Bernstein kept Buy ratings on Seagate at $1,350 and Western Digital at $770](https://www.kucoin.com/news/flash/bernstein-report-tdk-head-acquisition-fears-overblown-seagate-and-western-digital-remain-buy) anyway [2][4]. On Sanmina itself, the Street's average target of $198.33 sits 13.4% below the last close [5]. ## What to watch Chennai's bills of entry and its IGCR-3 filings will show whether the duty route gets used, and [the fiscal fourth-quarter print tests the raised year](https://www.ad-hoc-news.de/boerse/news/nebenwerte/sanmina-stock-slips-after-strong-q3-2026-beat-and-higher-full-year-guidance/70018839) [6]. The drives are rationed into 2028; Mumbai just made the rack around them cheaper to build. ## Takeaway A CAAR Mumbai ruling grants nil Basic Customs Duty on the imported parts for five Sanmina-SCI India storage-server models, conditional on IGCR end-use rules, just as hard-drive supply is rationed into 2028 and Sanmina's storage-driven revenue jump has already been priced in. ## Sources 1. [TaxGuru, "Imported Inputs for Storage Servers Eligible for Conditional Customs Duty Exemption: CAAR Mumbai", 9 October 2026](https://taxguru.in/custom-duty/imported-inputs-storage-servers-eligible-conditional-customs-duty-exemption-caar-mumbai.html) 2. [WebProNews, "AI Data Deluge Revives Hard Drives as Seagate, Western Digital Sell Out Years Ahead", 8 October 2026](https://www.webpronews.com/ai-data-deluge-revives-hard-drives-as-seagate-western-digital-sell-out-years-ahead/) 3. [Zacks Equity Research via Yahoo Finance, "Can Seagate Sustain Its Strong Revenue Growth in Fiscal 2027?", 10 September 2026](https://finance.yahoo.com/markets/stocks/articles/seagate-sustain-strong-revenue-growth-150700755.html) 4. [KuCoin/MarsBit, "Bernstein Report: Fears Over TDK Head Acquisition Are Exaggerated; Seagate and Western Digital Remain Buys", 9 October 2026](https://www.kucoin.com/news/flash/bernstein-report-tdk-head-acquisition-fears-overblown-seagate-and-western-digital-remain-buy) 5. [ad-hoc-news, "Sanmina stock reports 69.7 percent revenue growth after Q3 beat", 6 October 2026](https://www.ad-hoc-news.de/boerse/news/corporate-news/sanmina-stock-reports-69-7-percent-revenue-growth-after-q3-beat/70237123) 6. [ad-hoc-news, "Sanmina stock slips after strong Q3 2026 beat and higher full-year guidance", 29 August 2026](https://www.ad-hoc-news.de/boerse/news/nebenwerte/sanmina-stock-slips-after-strong-q3-2026-beat-and-higher-full-year-guidance/70018839) 7. [Sanmina, quarterly figures from its SEC filings, retrieved 9 October 2026](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000897723) 8. [Zacks via Yahoo Finance UK, "Celestica Rises 25.7% YTD: Buy, Sell or Hold the Stock?", 8 October 2026](https://uk.finance.yahoo.com/news/celestica-rises-25-7-ytd-151700542.html) --- Customs ruling quietly zeroes duty on the guts of Sanmina's AI storage racks — The Inference. Canonical: https://theinference.org/article/customs-ruling-quietly-zeroes-duty-on-the-guts-of-sanmina-s-ai-storage-racks