TaxTMI 
TaxTMI 
2022 (2) TMI 308
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....ect of Bill of Entry No. 6337994 dated 03.01.2020 has been upheld and the appeal has been dismissed. 3. The issue in both the appeals is regarding classification of the goods namely (i) (ViewBoard) ViewSonic IFP6550-2/65" Interactive Display System; and (ii) (ViewBoard)-ViewSonic-IFP7550-2/75" Interactive Display System. The appellant claims that the classification would be under Customs Tariff Item [CTI] 8471 41 90, though, earlier at the time of self-assessment, the appellant had claimed it to be under CTI 8471 90 00. The Department claims that it should be under CTI 8528 52 00. The Deputy Commissioner rejected the self-assessment done by the appellant under CTI 8471 90 00 and ordered for re-assessment of the goods under CTI 8528 52 00. The case set up by the appellant at the time of assessment was that the goods were Automatic Data Processing Machines [ADPM ] and not Monitors and, therefore, classifiable under CTI 8471 90 00 and not under CTI 8528 52 00. At the appellate stage, the appellant contended, on a re-consideration of the matter, that the goods were more specifically and correctly classifiable under CTI 8471 41 90. 4. In order to appreciate the issue involved in t....
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....ng machines : u Free - 8471 41 - Comprising in the same housing at least a central processing unit and an input and output unit, whether or not combined : 8471 41 10 --- Micro computer u Free - 8471 41 20 --- Large or main frame computer u Free - 8471 41 90 --- Other u Free - 8471 49 00 -- Presented in the form of systems u Free - 8471 50 00 - Processing units other than those of sub-headings 8471 41 or 8471 49, whether or not containing in the same housing one or two of the following types of unit: storage units, input units, output units u Free - 8471 60 - Input or output units, whether or not containing storage units in the same housing : 8471 60 10 --- Combined input or output units --- Printer : u Free - 8471 60 24 ---- Graphic printer ....
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.... 10% - 8528 49 00 u 10% - 8528 52 00 u 10% - (emphasis supplied) 6. The discussion and the conclusion arrived at by the Deputy Commissioner and the Commissioner (Appeals) are identical in both the appeals. Reference would, therefore, be made to the orders passed by the Deputy Commissioner and the Commissioner (Appeals) contained in Customs Appeal No. 50709 of 2021. While analysing CTI 8471 90 00, (claimed by the appellant at the stage of assessment) the Deputy Commissioner observed as follows: "5.2 From the perusal of the technical specification of the product, it appears that the said product contains that automatic data processing machine (i.e. processor), storage devices (i.e. hard disk, RAM), input devices (i.e. Touch screen) and output devices (i.e. Display) all embedded in one unit. Thus it appears that goods may be classified under tariff item 8471 50 00. Going further, the technical specifications of the product also reveal that this product has connectivity ports such as HDMI port, VGA ports etc. which clearly indicate that this product can act as standalone display monitor and can be used in conjunction with any other ADP machine....
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....e of heading 8471 and thus the products appears classifiable under 85285200." (emphasis supplied) 8. Thereafter, the Deputy Commissioner proceeded to determine the classification of the goods and the relevant paragraphs are reproduced below: "5.4 Now the primary question arises whether goods are to be classified as ADP machine meriting classification under 8471 or Display monitors under 8528. In the instant case, the product description as per the catalogue for the impugned goods submitted by the importer indicates that goods are being used for business and educational purposes. ********* 5.6 Further, it is also evident that large screens are convenient to be used for display purpose in comparison to using the same as automatic data processing machines for analysis since as the screen size increases, the display becomes more prominent. From the perusal of above description, it is clear that as the size of the goods increases, the display becomes more prominent which can cater to the large number of audiences. Thus the goods are primarily used for Display purposes and are intended for use with ADP machines of heading 8471. Further the technical speci....
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....lassification. Going by the description on catalogue, website descriptions and general awareness of such technological devices, I am of the considered view that buyers intending to purchase Computer will not select the impugned goods as it is not known in market as such. In trade parlance and common parlance, computer is known and used in different manner. The Assessing Authority has correctly made note of Large size of display on the instant case- 65" and 75"- and thus has inferred that same are meant for display purpose to large gathering. Thus, as per Note5(E) of Chapter Note 84, the impugned goods merit classification as per their specific use. Further, perusal of bill of entry cleared at Mumbai Customs reveals that there is no speaking order in the said clearance and so the basis on which, the officers have accepted the said classification is not clear. Whereas, in the instant case, a Speaking Order has been passed giving due reasoning for changing for changing the classification. 5.5 As far as principle use of the impugned goods is concerned, the Assessing Authority has discussed the same in impugned A.O. Further, it is widely known that the technological ad....
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....ods do not perform any function other than data processing. The large size display is only a feature/specification of the goods and this cannot be construed to be its function, much less its principal function, as held by the Commissioner (Appeals); (iv) The goods have also been classified under CTH 8471 in the US Customs Cross Ruling and WCO Classification Ruling; (v) The goods would not merit classification under CTH 8528 since this Heading covers monitors which are capable of receiving and displaying the signals when attached to any of the devices like ADPM, video camera or recorder and these monitors do not have capability of functioning independently or through two-way communication. They are also not capable of processing any data on their own, nor are they capable of storing any data; (vi) The goods, on the other hand, have an in-built CPU, 2GB RAM for executing program, 16 GB storage capacity and are also loaded with Android 7.0 operating software. Thus, the goods can perform a plethora of functions beyond being used as a traditional whiteboard in the classrooms. The goods are not merely used for display of the information or presentation bu....
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....erature would indicate that the primary function of the goods is display and not automatic data processing. In support of this contention reliance has been placed on the decisions of the Supreme Court in Atul Glass Industries Ltd. vs. Collector of Central Excise [1986 (25) E.L.T. 473 (S.C.)] and Real Optical Co. vs. Appellate Collector of Customs [2001 (129) E.L.T. 7 (S.C.)]; (iii) It is no doubt true that the goods imported by the appellant have enabled ADPM but what is required to be seen is whether presence of such ADPM and its auxiliary function of data processing can outweigh the display function, which is the primary function of the goods. In support of this contention reliance has been placed on the decision of the Supreme Court in Xerox India Ltd. vs. Commissioner of Customs, Mumbai [2010 (260) E.L.T. 161 (S.C.)] as also the decision of the Bangalore Tribunal in Logic India Trading Co. vs. Commissioner of Customs, Cochin [2016 (337) E.L.T. 65 (Tri. - Bang.)], the appeal against which was dismissed by the Supreme Court on 30.09.2016 and the judgment is reported in Commissioner vs. Logic India Trading Co. [2016 (342) E.L.T. A34 (S.C.)]; (iv) Reliance upon HS....
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....lso be accessed by connecting the product to a dongle via USB port or by the use of a LAN cable. The product can also be connected to laptops, and input can be given either from the product to the laptop or vice versa. New programs can be downloaded and installed according to the requirements of the user. The user can record lectures and share lectures/notes/presentations via e-mail or QR codes. As the product is cloud enabled, a user can also upload the notes on a pre-set cloud storage. 14. These facts have also been noted by the Deputy Commissioner in the assessment order for addressing the issue as to whether the goods should be classified as ADPM for classification under CTH 8471 or as display monitors for classification under CTH 8528. What, however, prevailed with the Deputy Commissioner to hold that the goods would merit classification under CTH 8528 is that large screens (since the goods are of 65 inches and 75 inches) are convenient for display purpose in comparison to using the same as ADPM since the display become more apparent as the screen size increases. This observation led the Deputy Commissioner to hold that the goods are primarily used for display purposes and ....
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....o goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles of rule 3. 3. When by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: (a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the mate....
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....) executing, without human intervention, a processing program which requires them to modify their execution, by logical decision during the processing run. ******** (E) 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 or, failing that, in residual headings." HSN Explanatory Notes 84.71 (1) Automatic Data Processing Machines and Units thereof ******** (A) Automatic Data Processing Machines The automatic data processing machines of this heading must be capable of fulfilling simultaneously the conditions laid down in Note 5 (A) to this Chapter. That is to say, they must be capable of: (1) Storing the processing program or programs and at least the data immediately necessary for the execution of the program; (2) Being freely programmed in accordance with the requirements of the user; (3) Performing arithmetical computations specified by the user, and (4) Executing, without human intervention, a processi....
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....gnals which can be processed by the machine. (3) An output unit which converts the signals provided by the machine into an intelligible form (printed text, graphs, displays, etc.) or into coded data for further use (processing. control, etc.). Two of these units (input and output units, for example) may be combined in one single unit. A complete automatic data processing system is classified in this heading, even though one or more units may be classified elsewhere when presented separately (see Part (B) Separately presented units, below). These systems may include remote input or output units in the form of data terminals. Such systems may also include units, apart from the input or output units, designed to increase the capacity of the system for instance, by expanding one or more of the functions of the central unit (see Part (B) below). Such units are inserted between the input or output units (start and end of the system), although adapting and converting units (channel adaptors and signal converters) may occasionally be connected before the input unit or after the output unit. Automatic data processing machines and systems are put ....
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....ccording to the aforesaid Chapter Note 5(A), ADPM would be a machine which is capable of storing a processing program; is freely programmable; performs arithmetical computations; and can execute a processing program by logical decision during the processing without human intervention. 18. The impugned goods are IFP having an in-built CPU (ARM Cortex A.73 dual-core 1.2GHz Processor), a 2GB RAM and Android 7.0 Operating software. In addition, they also have an internal storage capacity of 16GB. Thus, goods are machines which are capable of storing data or programmes for the execution of programmes and satisfy condition no. (i) of Chapter Note 5(A) to Chapter 84. 19. The goods come with a pre-installed operating system, namely, Android 7.0. The said Android version is a customized operating system for these IFP. Further, the goods also have an OPS slot. With the use of the OPS Slot, additional hardware can be connected to the goods and the OPS Slot can also be used for installing other operating software such as Windows, etc. on the goods. Thus, the goods are machines on which the user is able to load and execute a program. In other words, the goods are capable of executing any ....
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....M by taking recourse to trade parlance, namely, that buyers intending to purchase a computer will not select the goods because of the large size display and, therefore, the goods should be specified according to the use. The Commissioner (Appeals) also committed an error in holding that even if the goods are capable of being used as ADPM considering their features, they would still merit classification under CTH 8528 in view of the provisions of GRI (3)(c). There was no occasion for the Commissioner (Appeals) to apply the provisions of GRI (3) (c) as the relative Chapter Notes left no manner of doubt that the goods would merit classification under ADPM. 26. In terms of CTI contained in Chapter 85 and the HSN Explanatory Notes to CTH 8528, it is more than apparent that CTH 8528 would cover monitors which are capable of receiving and displaying the signals when attached to any of the devices like ADPM, video camera or recorder. Such monitors do not have the capability of functioning independently or through two way communication. They are also not capable of processing any data on their own, nor are they capable of storing any data. 27. It also needs to be noted that the Mumbai....
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....gue that these do contain a central processing unit and does operate on software that requires an input device which, though not be different from that for computers and other automatic data processing machines, functions on its own. Therefore, the goods in question cannot be said to be merely projectors or monitor and, thereby, renders recourse to heading 8528 of the First Schedule to the Customs Tariff Act, 1975 to be inconsistent with the General Rules for Interpretation of the Import Tariff. In accordance with the judicial decisions on discharge of the onus devolving on the assessing authority, and without going into the conformity of the description adopted in the bill of entry, it can safely be held that the revised classification does not bear the authority of law. Furthermore, as it is not controverted that the said exemption notification is available to all goods classified under heading 8471 of the First Schedule to the Customs Tariff Act, 1974, we are, without examining the appropriateness of the tariff item, enabled to hold that the duty liability discharged by the appellant suffices for the purpose of levy. Accordingly, the impugned order is set aside and appeal is all....
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....cie, classifiable under two or more headings, classification shall be effected according to sub-rules (a), (b) and (c) of Rule 3 and in that order. The sub-rules are quoted :- "(a) The heading which provides the most specific description shall be preferred to heading providing a more general description. However when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable. (c) When goods cannot be classified by reference to (a) or (b), they shall be classified under the heading which occurs last in the numerical order among those which equally merit consideration." (emphasis su....