2022 (10) TMI 527 - AAR - Customs

Sharp LCD Monitors: Customs Classification & Duty Exemption Denied

The Sharp Professional LCD Monitors were correctly classified under sub-heading 8528 52 00 of the Customs Tariff Act. However, they were deemed ineligible ... Classification of Sharp Professional LCD monitors (of specified models and size), intended to be imported - classifiable under sub-heading 8528 52 00 or 8528 59 00 of the First Schedule to the Customs Tariff Act? - applicability of Serial Number 17 of Notification No. 24/2005-Customs, dated 1-3-2005, as amended on import - import is exempt from levy of the whole of duty of Customs leviable thereon under the First Schedule of the Customs Tariff Act or not? HELD THAT:- The applicant has submitted a copy of rulings dated 9-3-2017 issued by the US Customs and Border Protection regarding classification of Sharp Professional LCD Monitors which support landscape and portrait viewing modes, including SD card slot, D-sub input, DVI-D input/output, HDMI input and USB port, and also contain 10W speakers for audio playback, do not contain television tuner or any television reception capability, and are capable to directly connecting to and are designed for use with an ADP machine of Heading 8471. The US authorities have held the LCD monitors with aforesaid features, bearing specific model numbers (which are different from those covered by this ruling) under Heading 8528.52. On complete reading of the guidance provided by Chapter Note 6, it is evident that the goods in question, which are monitors, not incorporating television reception apparatus, and are capable of directly connecting to and designed for use with an automatic data processing machine of Heading 8471 do not merit classification under Heading 8471. Further, in terms of Note 6(E) of Chapter 84, such goods merit classification under the heading appropriate to their respective functions, which in the present case is display of images and videos - the appropriate heading for monitors, not incorporating television reception apparatus is 8528. Further, at the sub-heading level, non-cathode ray monitors are classifiable under other monitors, and those that are capable of directly connecting to and designed for use with an automatic data processing machine of Heading 84.71 are classifiable under sub-heading 8528 52 00. Thus, all the 10 model of LCD Monitors or Touchscreen CD Monitors, viz. PN-HW861, PN-HW751, PN-HW651, PN-HW551, PN-HW501, N-HW431, PN-R903A, PN-86HC1, PN-75HC1, PN-70HC1E do not answer to the description of automatic data processing machine of heading 84.71. Further, there is nothing on record to contest the submission of the applicant that these monitors are capable of directly connecting to and designed for use with an automatic data processing machine of Heading 84.71. Therefore, these monitors are correctly classifiable under Heading 8528; and being non-cathode ray monitor under sub-heading 8528 52 00. Applicability of exemption vide Serial Number 17 of Notification No. 24/2005-Customs, dated 1-3-2005, as amended on the proposed import of goods in question - HELD THAT:- While it is undeniable that these monitors can be used with ADP machines, presence of a built-in USB media player or display of AV sourced images or writing board function, enable these monitors to be used even without ADP machine for display of media content. Following the settled principle of law that provisions of notification benefits must be interpreted restrictively, it is concluded that the benefit of exemption vide Serial Number 17 of Notification No. 24/2005-Cus., dated 1-3-2005 is not admissible to the said monitors which are capable of being used without ADP machines. The said 10 models of Sharp monitors are correctly classifiable under Heading 8528 and more specifically sub-heading 8528 52 00. However, in view of the features available in the monitors that allow for the same to be used readily with ADP machine, the benefit of notification No. 24/2005-Cus., as amended is not available to the said goods. Issues Involved:1. Classification of Sharp Professional LCD monitors under the appropriate sub-heading of the Customs Tariff Act.2. Applicability of Serial Number 17 of Notification No. 24/2005-Customs, dated 1-3-2005, as amended, for exemption from customs duty on the import of the said monitors.Detailed Analysis:1. Classification of Sharp Professional LCD Monitors:The applicant, M/s. Sharp Business Systems (India) Pvt. Ltd., sought an advance ruling on the classification of Sharp Professional LCD monitors under sub-heading 8528 52 00 or 8528 59 00 of the Customs Tariff Act. The monitors in question are designed for use with Automatic Data Processing (ADP) machines and do not contain television reception capabilities.The ruling considered various references, including a US Customs and Border Protection ruling and a previous ruling by the Customs Authority for Advance Rulings, Mumbai, which classified similar devices under sub-heading 8528 62. However, the present case involved monitors, not projectors, which are designed for use with ADP machines.The relevant Chapter Notes of Chapter 84 were examined, particularly Note 6, which outlines the conditions for classifying units as part of an automatic data processing system. The monitors did not meet the criteria to be classified under Heading 8471 as automatic data processing machines. Instead, they were found to be appropriately classified under Heading 8528, which covers monitors not incorporating television reception apparatus.Conclusion:The ten models of Sharp Professional LCD Monitors (PN-HW861, PN-HW751, PN-HW651, PN-HW551, PN-HW501, PN-HW431, PN-R903A, PN-86HC1, PN-75HC1, PN-70HC1E) are correctly classifiable under sub-heading 8528 52 00.2. Applicability of Serial Number 17 of Notification No. 24/2005-Customs:The applicant also sought a ruling on whether the import of the said monitors would be exempt from customs duty under Serial Number 17 of Notification No. 24/2005-Customs. This notification provides exemption for goods 'solely or principally used in an automatic data processing system of Heading 8471.'During the hearing, it was clarified that the monitors are mainly used with ADP machines but also have features such as built-in USB media players, which allow them to function independently of ADP machines. This dual functionality means that the monitors cannot be considered as being 'principally' used with ADP machines, as required by the notification for exemption.Conclusion:The benefit of exemption under Serial Number 17 of Notification No. 24/2005-Cus., dated 1-3-2005, is not available to the said monitors due to their capability to function without ADP machines.Final Ruling:The ten models of Sharp Professional LCD Monitors are classified under sub-heading 8528 52 00. However, they are not eligible for customs duty exemption under Serial Number 17 of Notification No. 24/2005-Cus., dated 1-3-2005.