2025 (2) TMI 1303 - AT - Customs

Imported interactive flat panels with inbuilt CPU and storage classified as data processing units (CTI 8471), not monitors; appeal dismissed

The dominant issue was classification of imported interactive flat panels under CTI 8471 4190 (automatic data processing machines) or CTI 8528 5900 ... Classification of imported goods - Interactive Flat Panel - classifiable under Customs Tariff Item (CTI) 8471 4190 as claimed by the respondents; or, is it classifiable under Customs Tariff Heading (CTI) 8528 5900 as claimed by the Revenue - HELD THAT:- In terms of the General Rules for Interpretation for arriving at the correct classification of Interactive Flat Panels, besides examination of the ‘terms of the headings’ as above at paragraphs 9.3 to 9.6, it is also required to be tested for fulfilment of relative Section or Chapter Notes or otherwise. The relevant section notes and chapter notes are Note 3 to Section XVI and Note 5A to Chapter 84. Since, the Interactive Flat Panels are self-contained automatic processing units by itself, even if it is used as display monitors, it cannot be said that such goods should be classified under sub-heading 8528 as the principal function of the impugned goods remain as data processing machines - the impugned goods are appropriately classifiable under CTI 8471 4190. In the identical set of the facts in the case of Cloudwalker Streaming Technologies Private Limited [2022 (1) TMI 1078 - CESTAT MUMBAI], this Tribunal had examined the issue of correct classification of ‘Interactive intelligence panel’ and the BCD exemption available to such goods, and have held that these are classifiable under Heading 8471. In the case of Ingram Micro India Private Limited [2022 (2) TMI 308 - CESTAT NEW DELHI], the Co-ordinate Bench of the Tribunal have examined the issue regarding classification of “interactive display system”, and have held that the imported Interactive Flat Panels having an in-built CPU, internal storage, operating software etc., satisfy the conditions of Chapter Note 5(A) to Chapter 84 and thus are correctly classified under 8471 9000 and not under 8528 5200. The impugned order dated 31.01.2023 in classification of the BENQ Interactive Flat Panels under CTI 8471 4190; and by setting aside the orders of original authority wherein he had revised the classification under CTI 8528 5900, does not require interference. The impugned order dated 31.01.2023 passed by the learned Commissioner of Customs (Appeals) is upheld - Appeal of Revenue dismissed. 1. ISSUES PRESENTED AND CONSIDERED (i) Whether 'Interactive Flat Panel' imports are correctly classifiable as 'Automatic data processing machines' under CTI 8471 4190, or as 'Other monitors' under CTI 8528 5900, applying the General Rules for Interpretation and the relevant Section/Chapter Notes. (ii) Whether the appellate order confirming classification under CTI 8471 4190 and setting aside the reclassification under CTI 8528 5900 is legally sustainable. (iii) Whether a direction under Rule 41 of the CESTAT (Procedure) Rules, 1982 can be issued for provisional assessment of future imports during pendency of the appeal, in absence of any final order of the Tribunal. 2. ISSUE-WISE DETAILED ANALYSIS Issue (iii): Maintainability of Rule 41 request for directions for provisional assessment during pendency Legal framework: The Tribunal examined Rule 41 of the CESTAT (Procedure) Rules, 1982, as invoked for seeking directions regarding provisional assessment of future bills of entry under the classification accepted by the appellate authority. Interpretation and reasoning: The Court held that Rule 41 enables issuance of orders/directions to give effect to the Tribunal's order(s) or in relation to its orders. As no final order had been passed by the Tribunal at the time of hearing, the prerequisite for invoking Rule 41 was not met. Conclusion: The application seeking directions for provisional assessment of future imports was dismissed as not entertainable in absence of any final Tribunal order. Issues (i) & (ii) (grouped): Correct tariff classification of 'Interactive Flat Panels' and sustainability of the appellate order Legal framework: The Tribunal applied the scheme of classification under the Customs Tariff Act read with the General Rules for Interpretation, particularly the principle that classification is determined by the terms of headings and relevant Section/Chapter Notes (GIR 1), and considered Note 3 to Section XVI (principal function of composite/multifunction machines) and Chapter Note 5(A) to Chapter 84 (definition/essential capabilities of 'automatic data processing machine'). Interpretation and reasoning: The competing headings were CTH/CTI 8471 (automatic data processing machines and units) and CTH/CTI 8528 (monitors and projectors, not incorporating television reception apparatus). The Tribunal reasoned that heading 8528 covers 'monitors and projectors' and is intended for monitors lacking the features of an ADP machine, whereas heading 8471 covers ADP machines and their units. On the facts found, the imported 'Interactive Flat Panels' were not 'mere monitors'; they contained processors, operating system, RAM and internal storage, along with input/output connectivity, indicating they function as self-contained data processing units. The Tribunal tested the goods against Chapter Note 5(A) to Chapter 84 and held that the imported panels fulfilled all four requirements: (i) internal storage enabling storage of programmes/data necessary for execution; (ii) capability of being freely programmed in accordance with user requirements; (iii) capability to perform computations specified by the user; and (iv) execution of processing programmes by logical decision during the processing run without human intervention. Applying Note 3 to Section XVI, even if the goods could be used for display, their principal function remained that of data processing, and they could not be classified as monitors under heading 8528 on that basis. The Tribunal also distinguished the cited 'electronic white board' decision relied on by Revenue on the ground that such product was PC-based input equipment requiring connection, whereas the goods here were self-contained and incorporated ADP functionality in themselves. Conclusion: The Tribunal conclusively held that the imported 'Interactive Flat Panels' are appropriately classifiable under CTI 8471 4190 and not under CTI 8528 5900. Consequently, the appellate order confirming classification under CTI 8471 4190 and setting aside the reclassification by the original authority was found legally sustainable and required no interference; the Revenue's appeal was dismissed.