TaxTMI 
TaxTMI 
2022 (8) TMI 1393
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.... 39 9 TC 83 Without SIM 39 10 TC 26 With SIM 40 11 TC 57 With SIM 40 12 TC 77 With SIM 40 13 TC 15 With SIM 40 Both the applications contain similar devices, except for the additional feature of SIM card slots in devices mentioned under application No. 40 2. The applicant is a distributor of IT & mobility solutions in India and is engaged in the distribution of different types of electronic parts and products utilised for items such as cameras. CPUs, gaming graphic cards, monitors, motherboards, printers etc. The applicant intends to import the above-mentioned handheld mobile computers. These devices are powered by Qualcomm Snapdragon processor and possess the Android 10 operating system. They are equipped with front and rear cameras, battery and gorilla glass. They support GPS, Bluetooth and wireless radio. They also incorporate micro USB 2.0. Out of 13 devices specified in Table 1, 5 devices of application No. 40 are SIM cards enabled. As per the applicant, these devices are used for scanning barcodes and processing data in order to increase the efficiency of functions such as inventory management etc. The p....
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....) Specialized applications are developed to run on mobile computers, which are not/cannot run on android based mobile phones; (m) The physical keyboard is akin to what is found on a conventional computer; (n) Extra keys are provided for scanning and for performing other data processing functions. 2.1 The applicant has submitted that the handheld mobile computers proposed to be imported by them are classifiable under Heading 84.71 as Automatic Data Processing (ADP) machines, for the following reasons : (a) These devices satisfy the criteria set out in Heading 84.71 to be classified as ADP machines; (b) The principal function performed by these devices is that of processing data, and thus, they merit classification as ADP. (c) The proposed imports are commercially known as "mobile computers/touch computers" and not as phones. 2.2 As per the applicant, to qualify as an ADP machine, goods have to satisfy all the conditions mentioned in Note 6(A) to Chapter 84 and should not be covered by Note 6(D....
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....of functioning other than as an ADP machine, the function of the ADP machine is the principal function and therefore, shall be treated as an ADP machine in terms of Note 3 to Section XVI. The proposed imports are marketed to businesses for ease of logistics and not as a substitute for a communication device. That, the handheld mobile computers are used to transmit other data, apart from the inventory-related data, is only an incidental function and the classification is to be based as if the principal function were the sole purpose. Commercially too, the products are known as "mobile computers" and not as "phones". As per the trade parlance, the proposed imports are known in the market as "mobile computers/touch computers" and not as smartphones or telephones. In view of the above, the applicant submitted that the handheld mobile computer models are classifiable under sub-heading 8471 30 90. 2.4 The applicant has contended that the product is an automatic data processing machine that cannot be classified under the Heading 8517. The proposed imports are not primarily meant for communication purposes. Communication ability like that of a traditional telephone/mobile telephone....
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....13 or 8517 14. Thus, these products cannot be classified under the residuary Entry of 8517 62 90 or 8517 69 90. 2.6 In support of their contention, the applicant submitted Circular No. 20/2013, dated 14-5-2013 wherein it was held that "the difference between a "smartphone" and a "tablet computer", is not based on whether the product has a voice calling function or not, but on the principal features that a producer has intended for the device when designing and developing it. Accordingly, the tablet computers are more appropriately classifiable in Heading 8471, sub-heading 8471 30, by application of General Rules for Interpretation (GRI) of Import Tariff, 1 [Note 3 to Section XVI and Note 5(A) to Chapter 84] and 6". The Circular also reaffirms the ruling of the World Customs Organisation, regarding tablet computers. As per the applicant, handheld mobile computers are similar to tablet computers based on the following characteristics : (a) Both devices are marketed with a focus on their data processing function; (b) Both devices are available for sale with SIM slots or without SIM slots. (c)  ....
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....swanathan explained that the difference between the two applications is that one application contains a mobile computer/touch computer with SIM card slots and the other one contains similar products without SIM card slots. Sh. Vishwanathan requested an amendment in application No. 40 to include another product, namely, TCI5 (with SIM) which is otherwise similar to the product listed in the application. Samples of all products (except PS 20) were produced for inspection and their working was explained. The working of Zebra PS 20 was shown on the manufacturer's website. Sh. Vishwanathan has submitted a compilation of all products involved in the application along with their essential features in a tabular format. It is explained that these products are essentially ADP machines and even those with SIM cards are not actually intended for use as a calling/receiving device, i.e., a mobile phone. It was categorically asked whether a user can download or delete applications of his choice freely on these devices and the answer to that is in affirmation. 5. I have considered all the materials placed before me in respect of the subject devices. I have also gone through the submissions....
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....ions of the devices under consideration meet the criteria as laid down in the relevant chapter note reproduced above. The impugned devices, as seen in Para 2.2, appear to be able to satisfy the requirements of an ADP machine. Note 6(C) to Chapter 84 specifies the conditions for a unit to be classified as being part of an automatic data processing system. However, from the working and features of the impugned devices, it appears that these are not units of ADP machines, but ADP machines themselves. Note 6(D) to Chapter 84 lists certain separately presented products that are to be excluded from Heading 8471, even if they can be classified as part of an ADP system. Note 6(E) to Chapter 84 mentions that a machine 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. As the impugned devices, as described by the applicant, appear to be akin to ADP machines performing capturing of data and its further processing, the Notes 6(D) and 6(E) do not appear to have application in this....
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....computer", is not based on whether the product has a voice calling function or not, but on the principal features that a producer has intended for the device when designing and developing it". Thus, as per the said circular, tablet computers are classifiable under Heading 8471 and not under Heading 8517 despite the fact that the product is having cellular connection functionality, considering its principal function as automatic data processing. Similarly, in this case, the principal function of the impugned devices is barcode scanning and data processing for monitoring deliveries, tracking assets and managing inventory. Therefore, these devices appear to merit classification under Heading 8471 and not under Heading 8517. 5.2 In regards to the classification opinion of the 68th session of the Harmonized System Committee, it is observed that the committee has classified RFID/barcode readers with a mobile operating system capable of scanning and cellular connectivity under sub-heading 8517 13. This sub-heading covers smartphones. Note 5 to Chapter 85 states that "For the purposes of Heading 85.17, the term "smartphones" means telephones for cellular networks, equip....