CLASSIFICATION OF THERMAL PRINTER RIBBON - CUSTOMS AUTHORITY FOR ADVANCE RULING

In M/S HID INDIA PRIVATE LIMITED VERSUS PRINCIPAL COMMISSIONER OF CUSTOMS AIRPORT AND AIR CARGO COMPLEX, BENGALURU - 2023 (7) TMI 1065 - AUTHORITY FOR ADVANCE RULINGS CUSTOMS, MUMBAI, the applicant is engaged in the import, sales and distribution of various HID brand products, primarily access control cards, readers and printers.  The applicant proposed to import the products commonly known as ‘Thermal Printer Ribbon’ (‘TPR’ for short) designed for use with thermal ID card printers.  There has been no authoritative determination on classification of the said product by the Proper Officers of the Customs.  Therefore the applicant filed an application for getting ruling from the Authority for Advance Ruling on the following questions-

• Whether TPR proposed to be imported by the applicant is classifiable under Tariff Plan 8443 99 59 of the First Schedule to the Customs Tariff Act, 1975?
• If the answer to the above question is in the negative, then what would be the correct classification of ‘Thermal Power Ribbons’ under First Schedule to the Customs Tariff Act, 1975?
• What would be the rate of duty applicable on the import of ‘Thermal Printer Ribbons’?

The applicant submitted the following before the Authority for Advance Ruling-

• TPR consists of the components - supply and take up spools, thermal transfer ink ribbon, geared and non geared flanges, a RFID tag and a cleaning roller.
• The product does not consist of ink cartridge and/or ink nozzle spray but it is in a form of a ribbon.
• The purpose of TPR is to serve as a medium for printing graphic images and text on an ID plastic card by use of heat.
• In the thermal printing process, pigmented dye and/or resin is never transferred to the card by reason of impact but due to the heat on the printer head.
• TPR is a part of Thermal Printing Machinery and therefore falls for classification under the heading 8443 - Printing machinery used for printing by means of plates, cylinders and other printing components of Heading 8442; other printers, copying machines and facsimile machines, whether combined or not combined; parts and accessories thereof.
• Without TPR the thermal printers cannot function. 
• Since TPR is a part of accessory to Thermal Transfer Printers i.e., DTC and HDP thermal printers which are covered under CTH 8443 32, the classification would be governed by section 2 Note of section 16.
• The TPR shall not be governed by Section Note 1(q) of Section XVI which state that typewriter or similar ribbons, inked or otherwise, prepared for giving impressions will not fall for classification under section XVI. 
• The TPR shall accordingly fall under any one of the entries of sub-heading under three dash, i.e, ‘Parts and accessories of goods of sub-headings 8443 31, 8443 32.
• As entries 8443 99 10 to 8443 99 40 relates to a copying machines, the product  TPR does not fall under any of the said entry.
• In absence of ink cartridge or ink nozzle spray, the product under no circumstance falls under 8443 99 51 to 8443 99 53 and accordingly shall fall under the Entry 8443 99 59 i.e., ‘Other’.
• TPR cannot be classified under Chapter Heading 9612 as this ribbon is different from typewriter/computer printer ribbons because of the difference in the physical characteristics and printing process.
• As per the Explanatory Notes for CTH 9612, in order for a ribbon to fall under the said category, it must be linked to give impressions.  The term ‘impression’ means the indentation or depression made by the pressure of one object on or into another.
• In the present case the pigmented dye and/or resin is never transferred to the card by means of impact but due to the heat on the printer head.
• In the advance ruling No. HQ H262583, dated 27.12.2006 issued by the US Customs and Broker Protection the identical product was held to be classified under sub-heading 8443 99 of HTSUS.
• In the Advance Ruling No. 98.439 dated 20.12.2018 given by the Brazilian Customs (pertaining to a similar printer ribbon for dye sublimation printer) it was ruled that TPR would be classifiable under sub heading NCM 8443.99.49.
• Even though the Advance ruling cited above is not binding on the Indian Customs, the same will certainly have persuasive value. 
• Since TPR cannot be classified as typewriter ribbons or similar ribbons under CTH 9612 the product in the present case would fall under 8443.99.59. 

The applicant also relied on the following judgments-

• M/S HONEYWELL AUTOMATION INDIA LTD. VERSUS COMMISSIONER OF CUSTOMS, ACC, MUMBAI - 2017 (10) TMI 409 - CESTAT MUMBAI - it was held that the Thermal printer is a printing device capable of being connected to an Automatic Data Processing Machine or a network to print output and thus would be covered under CTH 8443 32 90.
• COMMISSIONER OF CENTRAL EXCISE, DELHI VERSUS INSULATION ELECTRICAL (P) LTD. - 2008 (3) TMI 22 - SUPREME COURT it was held that part is one without which the particular machinery cannot be operational or could not suitably discharge the functions for which it has been designed to justify their claim to the classification. 

The Authority for Advance Ruling has gone through the records of the case, oral and written submissions made by the applicant, which include various CTHs descriptions, sections and chapter notes as well as HSN Explanatory Notes. 

The Authority for Advance Ruling observed that the applicant proposed to import the products commonly known as ‘TPR’ which is specifically designed for use with thermal ID card printers.  The similar products in the past have been classified under the Heading CTH 8443 as well as under CTH 9612.  This indicates that there can be two contending classifications for the same product under First Schedule of the Customs Tariff Act.  The Authority for Advance Ruling analyzed the components of TPR and also Section Note 2 of Section XVI.  The Authority for Advance Ruling also analyzed the judgments relied on by the petitioner.

The Authority for Advance Ruling considered that before reaching any definitive conclusion it is essential to examine other possible classification i.e. 9612 - typewriter or similar ribbons inked or otherwise prepared for giving impressions, whether or not on spools or in cartridges, ink-pads, whether inked or not inked, with or without boxes.  The Authority for Advance Ruling observed that as per the Explanatory Notes for CTH 9612, in order for a ribbon to fall under the said category, it must be inked to give impressions.  In the present case the pigmented dye and/or resins is never transferred to the card by means of impact but due to the heat on the printer head.  Therefore the Authority for Advance Ruling accepted the contentions of the applicant that the TPR will not fall under CTH 9612. 

The Authority for Advance Ruling ruled that the TPR is correctly classifiable under the CTH 8443 99 59 of the First Schedule of Customs Tariff Act, 1975.  The rate of duty applicable to TPR falling under the CTH 8443 99 59 is BCD - Nil and IGST is at 18%.