2025 (1) TMI 1716 - AAR - Customs

Kitted mixed-reality device accessories: whether they are ADPM parts under CTH 8473 (CTI 84733099), classification upheld

The dominant issue was whether kitted accessories for a mixed-reality device were classifiable as parts/accessories of an automatic data processing ... Classification of the kitted accessories of Apple Vision Pro namely Dual Loop Band, Solo Knit Band and Light Seal - classifiable under CTI 84733099 of the First Schedule of the Customs Tariff Act, 1975 or otherwise - HELD THAT:- The term freely programmable' is not explicitly defined under the Customs Tariff but the reliance is placed on the decision of Ingram Micro India Private Limited Vs. Principal Commissioner of Customs (Import), New Delhi [2022 (2) TMI 308 - CESTAT NEW DELHI] wherein the Hon’ble CESTAT while deciding the classification of Interactive Display System as an automatic data processing machine under CTH 8471, observed that for complying with the requirement for the goods being 'freely programmable', the goods should be capable of downloading and installing new programmes in accordance with their needs and usage. The Apple Vision Pro is equipped with the necessary hardware, including sufficient RAM and storage, to support the storage and execution of its operating system and software programs, enabling effective data processing. The software loaded onto the device is freely programmable, allowing users to customize the functionality according to their specific requirements. The device is capable of performing the arithmetical computations as specified by the user, and its processing program enables it to modify its execution dynamically based on logical decisions during the processing run without human intervention. In light of these capabilities, the Apple Vision Pro meets all the criteria outlined in Note 6(A) of Chapter 84, thereby qualifying it as a device covered by the definition of automatic data processing machine (ADPM). The Apple Vision Pro can perform a wide range of tasks and functions across various domains, seamlessly integrating multiple technologies into one platform - this device is capable of performing multiple functions, including automatic data processing. The Apple Vision Pro are capable of performing plethora of functions. It can be seen from the technical features of the subject goods that it is used predominantly as an automatic data processing (ADP) machine. In fact, communication and gaming are only auxiliary functions of the goods but same cannot construed to be its principal function - the Apple Vision Pro having specific function of automatic data processing, falls within the ambit of Chapter Heading 8471 as per Chapter Note 6(A) to Chapter 84 and Explanatory Notes. The kitted accessories of Apple Vision Pro namely Dual Loop Band, Solo Knit Band, and Light Seal are classifiable under CTH 8473 (Parts and accessories (other than cover, carrying cases and the like) suitable for use solely or principally with machines of headings 8470 to 8472), more specifically under CTI 84733099 (Parts and accessories (other than cover, carrying cases and the like) suitable for use solely or principally with machines of headings 8470 to 8472- Parts and accessories of the machines of heading 8471 - Other - Other) of the First Schedule of the Custom Tariff Act, 1975. 1. ISSUES PRESENTED AND CONSIDERED (i) Whether the Apple Vision Pro is classifiable as an automatic data processing machine under heading 8471, considering Chapter Note 6(A) to Chapter 84 and the exclusion for machines performing a specific function other than data processing. (ii) Whether the Dual Loop Band, Solo Knit Band and Light Seal, imported separately, are classifiable as 'accessories' suitable for use solely or principally with a machine of heading 8471 under heading 8473, and specifically under the residuary tariff item 84733099, or whether they require classification under alternative headings suggested by the department (e.g., as VR headset parts under heading 8529 or by constituent material). 2. ISSUE-WISE DETAILED ANALYSIS Issue (i): Classification of Apple Vision Pro as an ADP machine under heading 8471 Legal framework: The Court applied Rule 1 of the General Rules for Interpretation and examined Chapter Note 6(A) to Chapter 84 prescribing four cumulative conditions for 'automatic data-processing machines', and Chapter Note 6(E) requiring classification by specific function if the machine's principal function is other than data processing. Interpretation and reasoning: The Court evaluated the device's technical features and concluded it satisfies all four requirements of Note 6(A): (a) storage and execution of programs and necessary data (supported by internal storage, processor, operating system); (b) 'freely programmable' capability through installation and running of applications based on user needs; (c) ability to perform arithmetical computations integral to its operation; and (d) execution of processing programs with logical decisions and real-time modification without human intervention based on sensor inputs. The Court further examined whether the device's principal function is something other than data processing (including communication and gaming). It held that communication and gaming are auxiliary features comparable to those found on computers, and that automatic data processing remains the predominant function, so Chapter Note 6(E) does not displace classification under 8471. Conclusions: The Apple Vision Pro was held to fall within heading 8471 as an automatic data-processing machine, not elsewhere specified or included, because its principal function is automatic data processing while other functions are auxiliary. Issue (ii): Classification of Dual Loop Band, Solo Knit Band and Light Seal as accessories under heading 8473, specifically 84733099 Legal framework: The Court applied heading text of 8473 covering 'parts and accessories... suitable for use solely or principally with machines of headings 8470 to 8472', read with Rule 1 of the General Rules for Interpretation and the explanatory understanding that accessories are devices designed to perform a particular service relative to the main function of the machine or increase its range of operations. The Court also applied judicially-recognized meanings of 'parts' (essential components without which the whole cannot function) and 'accessories' (supplementary items adding convenience/effectiveness without being essential). Interpretation and reasoning: On the product descriptions, the Court found the three items are not 'parts' because the device's core processing and display functions do not depend on them. They were treated as 'accessories' because they enhance usability and effectiveness: the bands secure and improve fit/comfort during use, and the light seal prevents light leakage to improve visual clarity and immersion. The Court further found they are specifically designed for the device and suitable for use solely or principally with it, rejecting the departmental position that they are equally compatible with other VR headsets. Since the device was held classifiable under 8471 (not 8528), the Court rejected classification of the accessories under 8529 (parts for apparatus of headings 8524 to 8528). The Court also rejected classification by constituent material, noting no applicable heading was identified that would better capture their functional nature as accessories for a heading 8471 machine. Conclusions: The Dual Loop Band, Solo Knit Band and Light Seal, when imported separately, were conclusively held classifiable under heading 8473 as accessories suitable for use solely or principally with machines of heading 8471, and, in absence of a more specific eight-digit entry, under the residuary tariff item 84733099.