2008 (1) TMI 283 - AAR - Customs

Customs Authority Upholds Duty Rates for DVDs and HDDs, Emphasizes Data Identity Disclosure

The ruling authority upheld the classifications and duty rates for recorded DVDs and HDDs as determined by the Commissioner of Customs. It was decided ... Goods exported from India for recovery of data and re-imported after recovery of the data - recovered data is stored in a new medium i.e. digital video discs (DVDs) or hard disc drive (HDD) are classifiable under 85234080 & 84717020 respectively – since it is established that damaged data on DVDs & HDD is re-imported, such imported DVDs & HDD are allowed for exemption from basic custom duty & additional duties of customs under notification 94/96 Issues Involved:1. Classification and rates of import duties for re-imported data in different media.2. Assessable value for goods exported for data recovery and re-imported.3. Applicability of specific Customs Notifications on the duty rates.Issue-wise Detailed Analysis:1. Classification and Rates of Import Duties for Re-imported Data in Different Media:The applicant, engaged in IT infrastructure and software services, sought clarification on the classification and rates of import duties for data recovered and re-imported on different media. The Commissioner of Customs classified recorded DVDs under 8523 40 80 and recorded HDDs under 8471 70 20. These classifications were accepted by the ruling authority. The imports of DVDs and HDDs containing damaged data, exported for recovery, are exempt from basic customs duty and additional duties under Notification No. 94/96-Cus, provided re-importation of the same damaged data is established.2. Assessable Value for Goods Exported for Data Recovery and Re-imported:The applicant argued that the recovered data, being proprietary and non-commercial, should not add to the assessable value. The Commissioner contended that the data has commercial value and should be included in the assessable value. The ruling authority decided that the assessable value for re-imported HDDs and DVDs would be determined as per column 3 of sr.no.2 of Notification No. 94/96-Cus. This includes the fair cost of repairs, materials used, insurance, and freight charges, both ways. The ruling emphasized that the identity of the data, not the medium, determines the imported goods' identity.3. Applicability of Specific Customs Notifications on the Duty Rates:The applicant claimed exemptions under Notification Nos. 24/2005-Cus and 94/96-Cus for imports. The Commissioner agreed that imports of recorded DVDs and HDDs are fully exempt from basic customs duty under Notification No. 24/2005-Cus and additional duty under Notification No. 6/2006-CE. However, the Commissioner argued that the imports of new media containing recovered data should be treated as fresh imports, attracting additional duty. The ruling authority disagreed, stating that the recovered data should be treated as the same goods re-imported after repair, eligible for duty exemption under Notification No. 94/96-Cus.Conclusion:The ruling authority concluded that the classifications and duty rates for recorded DVDs and HDDs are as outlined by the Commissioner. The additional duty of customs on HDDs containing recovered data will be charged as per Notification No. 94/96-Cus, provided the conditions are met. The identity of the data, not the medium, is crucial for determining the goods' identity for duty exemption purposes. The ruling emphasized that the applicant must disclose the nature of the data to Customs to establish the identity of the exported and imported data.