TaxTMI 
TaxTMI 
TaxTMI 
2017 (8) TMI 143
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.... the goods were computerized colour grading system and classifiable under CTH 85438960 as "Colour Correctors. In adjudication proceedings, original authority vide an order dt. 04.01.2006 rejected the request of the importer to treat the items as automatic digital processing machines and instead held that the imported goods are colour correctors specifically designed for a particular primary function and which find a specific entry at CTH 85438960 chargeable to duty under appropriate merit rate of duty. In appeal, the Commissioner (Appeals) vide impugned order dt. 16.6.2006, while holding that the colour correctors imported would be classifiable under CTH 847170 irrespective of equipment with which they have been imported, however upheld the order of original authority in respect of the classification of Discreet Lustre Master Station under, CTH 85438960. Aggrieved, appellants are before this forum. 2. On 21.07.2017, when the matter came up for hearing on behalf of appellant, Ld. Advocate T.Sundaranathan made oral submissions which can be summarized as under : (i) Computerized colour grading system is not a film machine nor is there any place to put the film inside. They put the f....
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....red during the relevant period. The contesting tariff entries are as under : Tariff item Description of goods Unit Rate of duty Standard Preferential Areas 8471 Automatic data processing machines and units thereof; magnetic or optical readers, machines for transcribing data on to data media in coded form and machines for processing such data, not elsewhere specified or included 8471 30 - Portable automatic data processing machines, weighing not more than 10 kgs., consisting of at least a central processing unit, a keyboard and a display; 8471 30 10 --- Personal computer u Free - 8471 30 90 --- Other u Free - Tariff item Description of goods Unit Rate of duty Standard Preferential Areas 8543 Electrical machines and apparatus having individual functions, not specified or included elsewhere in this chapter .... ..... ..... .... ... --- Edit control unit: 8543 89 51 ---- Computerised editing system controlling more than three video editing machines u 15%- - 8543 89 52 ---- Other video control....
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....t is able to accept or deliver data in a form (codes or signals) which can be used by the system. (C) Separately presented units of an automatic data processing machine are to be classified in heading 8471. (D) Printers, keyboards, X-Y co-ordinate input devices and disk storage units which satisfy the conditions of paragraphs (B) (b) and (B) (c) above, are in all cases to be classified as units of heading 8471. (E) Machines performing a specific function other than data processing and incorporating or working in conjuction with an automatic data processing machine are to be classified in the headings appropriate to their respective functions or, failing that, in residual headings." [emphasis added] From these Chapter Notes, it can be interpreted that in case specific function of the item is other than data processing, however, item incorporates or works in conjunction with automatic data processing machine, such a machine is to be classified in the headings appropriated to the respective functions. This interpretation is further reinforced by Note 7, in Chapter 84 which clarifies that "A machine which is used for more than one purpose, is, for the purpose of classification, ....
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....literature produced shows that the system's unique and extreme powerful 32 bit / software engine offers superior performance and image quality which is ideal for grading digital interrelates and film scan at any retroaction, including 2K and 4K. The main features at a glance is that the Real time primary color grading of 10 and 16 bit 2K scans, extensive selective color correction tools etc., What is understood from the above is that the item under import is a colour grading system, discreet luster master station (color corrector), consisting of: IBM servers, Colour monitor, DVS Centaurs audio08, storage devices Generic control panel device and others. The item under import is a unit, which is used for grading digital intermediates, in this case a digital film (Digital Cinema). Also the catalogue clearly states that the items under import are "Designed to meet the highly specialized needs of directors of photography and colorists, Lustre provides with concepts, intuitive tools and the unique ability to fully participate in colour grading and look design as part of the digital intermediates process". (Emphasis added) The features of the system includes apart from others, pri....
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....n designed. Lower appellate authority in particular has in page 12 of the impugned order found that: "The goods were clearly shown to have been designed to meet the highly specialized needs of Directors of photography and colorists, that it include features such as primary and selective color correction, grading, tracking, effects, animation, playback, video capabilities such as pan and scan, conforming and editing etc. It was also brought out how some of the equipments such as IBM Intellistations and some of the cards such as the Centaurus, SD stations, NVIDIA QUADRO graphics accelerator cards and generic control panel etc were all specialized equipment tailor made for editing, composing and other highly specialized uses in the field of video film color correction and manipulation. These averments have been strongly backed by a large number of catalogues / brochures of these proprietary products, which have all apparently been brought together by the manufacturers M/s. Autodesk under the umbrella of the 'Discreet lustre master station'. The specialized and specific nature of the goods under import was shown to be the reason why the goods could not be classified merely as ....