Desktop computer classification under heading 8471 applies to bundled CPU, monitor, keyboard and mouse supplied as one package.

Supplies of a desktop package comprising CPU, monitor, keyboard and mouse were treated as a single supply of an automatic data processing machine under heading 8471, rather than separate supplies or a composite supply with the CPU as principal supply. The classification was based on Chapter Note 5 to Chapter 84, Section Note 4 to Section XVI, and the integrated commercial presentation of the package, including a single product description, single price and unified shipment. Because the bundled desktop had the essential character of a desktop computer, it fell within the tariff entry linked to the concessional GST rate, attracting 9% CGST and 9% SGST when supplied together with the CPU.

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Issues: Whether the supply of desktops consisting of CPU, monitor, keyboard and mouse or any combination of input and output units is a single supply of a desktop computer classifiable under heading 8471, or a composite supply with CPU as the principal supply; and consequently, the applicable rate of GST.

Analysis: The product was examined in light of the tariff scheme under heading 8471 and the relevant notes to Chapter 84 and Section XVI of the Customs Tariff Act, 1975. The expression "automatic data processing machine" under Chapter Note 5 to Chapter 84 permits systems consisting of variable numbers of separate units, and separately presented units meeting the prescribed conditions are classifiable under heading 8471. Keyboards and mouse satisfy those conditions. Monitors, though covered separately under heading 8528 when supplied on their own, were found in the present supply to be part of a bundled desktop computer identified by a single product description, a single price and integrated shipment. Section Note 4 to Section XVI also supports classification of a combination of components intended to contribute together to a clearly defined function under the heading appropriate to that function. On these facts, the CPU with the connected peripheral units was held to have the essential character of a desktop computer and not to be treated as separate supplies for classification purposes. Heading 8471 was also the tariff entry specified in Sl. No. 360 of Notification No. 01/2017-C.T. (Rate) dated 28.06.2017.

Conclusion: The supply is a single supply classifiable under heading 8471 and is taxable at 9% CGST and 9% SGST when all the units are supplied together with the CPU.

Ratio Decidendi: Where components are supplied together as an integrated desktop computer with a single commercial identity and essential character, the whole is classified under heading 8471 for GST rate purposes.

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