2026 (1) TMI 903 - AAR - Customs

Portable mobile, tablet, wearable and vehicle devices classified as ADP machines under CTH 8471; held in 8471.30.90

Dominant issue-whether the portable mobile, tablet, wearable and vehicle-mounted devices are classifiable as automatic data processing machines (ADP ... Classification under Heading 8471 - portable computers (mobile, tablet, wearable and vehicle-mounted computers) - automatic data processing machines (ADP machines) - principal function / Section Note 3 to Section XVI - General Rules of Interpretation (GRI) - Rule 1 - Customs Authority for Advance Rulings (CAAR) - Whether the Portable Computers in question i.e., Mobile Computers, Tablet Computers, Wearable Computers and Vehicle-Mounted Computers in the present application are classifiable under Tariff Item 84713090 of the First Schedule to the Customs Tariff Act, 1975? - HELD THAT:- It is settled principle of law that the classification of any good under Customs Tariff Act, 1975 is governed by the General Rules for the Interpretation of the Import Tariff. Further, Rule 1 of GRI stipulates that 'classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes.' It is only when the headings and notes do not require otherwise that one may proceed to the subsequent rules. Therefore, the starting point is an analysis of the terms of the competing headings, 8471 and 8517, read with the relevant chapter/Section notes. For the purpose of determining the correct classification of the impugned goods, it is imperative to examine Tariff Headings 8471 and 8517 in the proper context and statutory framework. The impugned goods operate on operating systems (Windows, Android) that allow for the storage and execution of diverse applications. Thus, they meet one of the basic criteria of an ADP machine. They can be programmed with custom or off-the-shelf software for specific enterprise tasks. Thus these products meet second criteria also. They process data input from barcodes, perform computations (e.g., inventory calculations, price updates), and execute these tasks based on pre-programmed logical sequences with minimal human intervention post-initiation. Thus they meet third and fourth criteria of classification as ADP machine. Therefore, the subject goods squarely fall within the statutory definition of an ADP machine. So far as further subheading level classification is concerned, find that sub-heading 8471 30 specifically covers 'Portable digital automatic data processing machines, weighing not more than 10 kg, consisting of at least a central processing unit, a keyboard and a display.' The subject goods, being portable, containing a CPU, a display, and an input unit (which includes a touchscreen functioning as a keyboard), satisfy this description. As the goods are composite machines incorporating functions of an ADP machine and a communication apparatus, the question is which is the principal function of these machines. Chapter Note 6(D) of chapter 84 provides a list of apparatus (e.g., printers, communication apparatus) that are excluded from Heading 8471 when presented separately. This note is relevant for classifying units of an ADP system, not the complete ADP machine itself. Since, the subject goods are complete ADP machines, Note 6(D) does not operate to exclude them from Heading 8471. Additionally, Note 6(E) states that “Machines incorporating or working in conjunction with an automatic data processing machine and performing a specific function other than data processing are to be classified in the headings appropriate to their respective functions ...”. This note applies when the machine's principal function is other than data processing. As noted above, the principal function of the subject goods is data processing. Therefore, to my mind they are not excluded by Note 6(E). The CAAR, Mumbai, in a series of rulings, maintained a consistent view on the classification of such specialized, rugged portable computers. The rulings in Brightpoint India Pvt. Ltd., Rashi Peripherals Pvt. Ltd., and Mustek Technologies Pvt. Ltd. [2025 (12) TMI 1677 - CUSTOMS AUTHORITY FOR ADVANCE RULINGS, MUMBAI], among others cited by the applicant, have analyzed devices with near-identical features and have conclusively held them to be classifiable under CTH 8471 30 90. I took these decision as persuasive value. The jurisdictional Commissionerate's has placed reliance on 'permanent communication modules' and 'international classification practices' in support of its view but I do not find force in argument on account of reason that the permanence of a module does not equate to the primacy of its function. A high-end laptop has 'permanent' Wi-Fi and Bluetooth modules, but its principal function remains data processing. The same logic applies here. Regarding international practices, while they can be persuasive, the binding authority in India is the Customs Tariff, the GRIs, the Chapter Notes, and the clarifications issued by the CBIC. The CBIC Circular No. 20/2013 represents a conscious policy decision on the classification of such goods, which aligns with the WCO's view on tablet computers. Other international rulings referenced by the Commissionerate, without specific details, cannot supersede this clear and directly applicable guidance. Therefore, I am not inclined to accept the above argument. Thus, the impugned goods namely, the various models of Mobile Computers, Tablet Computers, Wearable Computers, and Vehicle-Mounted Computers, as detailed in the application, merit classification as Automatic Data Processing Machines. Consequently, the impugned goods are correctly classifiable under Tariff Item 8471 30 90 of the First Schedule to the Customs Tariff Act, 1975. Thus, the goods merit classification under CTI 84713090. Issues: Whether the portable computers (mobile, tablet, wearable and vehicle-mounted computers) described in the application are classifiable under Tariff Item 84713090 of the First Schedule to the Customs Tariff Act, 1975.Analysis: Classification is determined by applying Rule 1 of the General Rules for Interpretation together with relevant Section and Chapter Notes. Chapter Note 6(A) to Chapter 84 defines an automatic data processing (ADP) machine by specific capabilities (storage and execution of programs, programmability, arithmetical computation, and autonomous program execution); sub-heading 8471.30 covers portable ADP machines containing a CPU, a keyboard (including touch-screen) and a display. Note 6(D) and 6(E) exclude certain apparatus when presented separately or when the principal function is other than data processing; Note 3 to Section XVI directs classification by the principal function where composite machines perform more than one function. The devices at issue run general operating systems (e.g., Android/Windows), are programmable with off-the-shelf or custom applications, perform high-volume barcode capture and related data processing, and execute programmed logical sequences with minimal human intervention. Many models lack cellular connectivity and identical base models are offered with and without SIM capability, indicating that cellular communication is optional. The devices are marketed, designed and constructed primarily for enterprise data capture and processing (rugged housing, built-in professional barcode scan engines, enterprise security), not principally for telephony or voice/data transmission. CBIC Circular No. 20/2013 (classification of tablet computers) and persuasive AAR precedents support treating devices whose principal function is computing as ADP machines even if they possess supplementary communication features. Applying the principal-function test and Chapter Note 6(A), the products meet the statutory criteria for ADP machines and fall within portable ADP machines of sub-heading 8471.30; they are not excluded under Notes 6(D) or 6(E) and therefore are not classifiable under Heading 8517.Conclusion: The portable computers are classifiable under Tariff Item 84713090 of the Customs Tariff Act, 1975; decision is in favour of the assessee.