TaxTMI 
TaxTMI 
2022 (10) TMI 1179
X X X X Extracts X X X X
X X X X Extracts X X X X
....manufacturing, marketing and sale of Automated Identification and Data Capture (AIDC) products such as barcode scanners, barcode printers, mobile computers, POS printers and other information technology products utilised for primarily business and enterprise computing and IT solutions. The applicant intends to import the above-mentioned handheld mobile computers. These devices have Hard Keys (Volume up/down key, left/right scan, power, reset), Soft Keys (Three touch keys: Back, Home, Menu), are powered by Qualcomm or Mediatek Octa-core processor and possess the Android (7/8/9/10/11 or 12) operating system. They are equipped with front and rear cameras, battery and gorilla glass. They support GPS, Bluetooth and wi-fi system. They have multi touch capacitive screen, motion sensor equipped and have micro-SD card extension capability. As per the applicant, these devices are computers used for scanning barcode and processing data in order to increase efficiency of functions in supply chain management such as inventory management, asset tracking, stock taking etc. The product carries a processing ability of a laptop and the functionality of a scanner in a single wireless device. They ess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s of Heading 84.71 of are extracted in the table below : TABLE-2 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, weighting not more than 10 kg., consisting of at least a central processing unit, a keyboard and a display : 8471 3010 --- --- Personal computer 8471 3090 --- --- Other - Other automatic data processing machines To qualify as an ADP Machine, the goods have to satisfy all the conditions mentioned in Note 5(A) to Chapter 84 and should not be covered by Notes 5(D) and 5(E). Note 5A is extracted below : 5(A) For the purposes of heading 84.71, the expression "automatic data processing machines" means machines capable of : (i) Storing the processing program or programs and at least the data immediately necessary for the execution of the program; (ii) Being freely programmed in accordance with the requirements of the user; (iii) Performing arithmetical computat....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... state that a complete automatic data processing unit must comprise of at least the following three units, namely, Central processing Unit, Input Unit and an Output Unit. The Handheld Enterprise mobile computers proposed to be imported contain all three of the above units, i.e., input units in the form of a scanner, a central processing unit (inbuilt) in the form of processor and an output unit (the screen). Therefore, all the requirements to be an ADP machine is satisfied in the instant case. Thus, in terms of Rule 1 of the GIR, the mobile computer models in question are correctly classifiable under Heading 84.71 only. More specifically the products ought to be classified under Customs Tariff Item 8471 30 90 since they qualify the description given under sub-head 8471 30 i.e., they are portable automatic data processing machines, weighing not more than 10 kg, consisting of at least a central processing unit, a keyboard and a display and are not personal computers. Further, the products have specific professional grade barcode scanners in built into the device which feature emphasise how the scanning and processing function for the device is the primary function. This is what sets ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dheld mobile computers in question. 2.6 Applicant further submitted that Chapter Note 5(E) states that : (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. It is contended that aforesaid Note also will not apply in case of the handheld mobile computers proposed to be imported as they are ADP Machines themselves and not machines incorporating or working in conjunction with an ADP Machine. Therefore, in view of the above, it is submitted that the handheld mobile computers proposed to be imported are classifiable under Heading 84.71 and more specifically, classifiable under Customs Tariff Item 8471 30 90. 2.7 The applicant submits that the product being an AUTOMATIC DATA PROCESSING MACHINE cannot be classified under the Heading 85.17 of the Customs Tariff. The Heading 8517 covers "Telephone sets, including telephones for cellular networks or for other wireless networks; other apparatus for transmission or reception of voice, images or other dat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....wave flowing in a wired network or by electro-magnetic waves in a wireless network." Further, the HSN Explanatory notes for Heading 8517 on Page XVI-8517-3 covers "Other Apparatus for Transmission or Reception of Voice, Images or other data, including apparatus for communication in a wired or wireless network (such as a Local or Wide Area Network)", wherein various types of devices that are covered under this entry are provided. In respect of sub-headings 8517 62 90 and 8517 69 90, the applicant states that these are residuary entries and will only apply if products are not classified elsewhere. As explained above in detail, the imported handheld mobile computers are classifiable under Heading 8471, and if not under 8471, then alternatively under sub-heading 8517 13 or 8517 14. Thus, these products cannot be classified under the residuary entry of 8517 62 90 or 8517 69 90. 2.8 The applicant contends that the proposed imports are not classifiable under Heading 85.17 for the reasons that the proposed imports are not primarily meant for communication purposes. Communication abilities like that of a traditional telephone/mobile telephone is only an ancillary function that these ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nectivity. Thus, the principal and ancillary functions in proposed imports and smartphones, are diametrically opposite. (b) The way the proposed imports are built, it is evident that it is meant for rugged use and is not sleek like smartphones in similar price range. The proposed imports also don't have most of the features there in smartphones of similar price range. (c) Furthermore, smartphones of the same price range as the impugned product, are marketed as luxury items for the personal use whereas the impugned products are purely used industrially. Their designs are not sleek or sophisticated like that of smartphones and are rather designed to be used in arduous environment and are made to withstand hardy environment. (d) As per the trade parlance, the products in question are known in the market as ADP Machines and not as smartphones or telephones. (e) Conventionally also, the products considered as smartphones are different from the proposed imports. In view of the above, the handheld mobile computer models proposed to be imported are not smartphones as defined under Note 5 to C....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to take place, have forwarded the comments with regards to the application for advance ruling. The question No. 1 of the application has been replied to in affirmative. It has been opined that the principal function performed by the proposed imports is that of processing data akin to that of an ADP Machine. Scanning and processing of scanned data is the primary function of the said goods. As per submitted details Handheld Enterprise Mobile Computer satisfy the Conditions laid in Para 5(A) of Chapter note of HSN 84. As per submitted technical specifications, some of the models of Handheld Enterprise Mobile Computer have calling function like mobile phone but the goods have main function of Scanning and processing of scanned data. Hence as per Rule 3(b) of the GI Rules, the said goods are classifiable under CTI 8471 30 90. 4. Personal hearing was held on 21-9-2022 at 1300 hrs. Shri D. Senthil Nathan represented the applicant. Sh. Senthilnathan explained that the difference in CTH 8471 30 90 and CTH 8517 13 00, produced two CAAR rulings in respect of similar products. Shri Y. Shreenivas Murthy, Assistant Commissioner, representative of Chennai Air Cargo represented the Chennai ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the headings and legal notes do not otherwise require, GRIs 2 through 6 may be applied in order. In order to merit classification under Heading 8471, it is clear, that these devices need to satisfy the requirements of Note 6(A) to Chapter 84, the said Chapter note is reproduced below :- For the purposes of heading 8471, the expression "automatic data processing machines" means machine capable of : (i) storing the processing programme or programmes and at least the data immediately necessary for the execution of the programme; (ii) being freely programmed in accordance with the requirements of the user; (iii) performing arithmetical computations specified by the user; and (iv) executing, without human intervention, a processing programme which requires them to modify their execution, by logical decision during the processing run. Therefore, there is a need to examine whether the features and specifications 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ies, tracking assets, and managing inventory. They also have communication capabilities. However, for the products under consideration, automatic data processing appears to be the main function, while other functionalities of said machines are not different from auxiliary functions that could be seen on any computer, such as desktop or laptop computers. In Circular No. 20/2013-Cus., dated 14-5-2013, clarification has been provided by the Board regarding the classification of "tablet computers" under Heading 8471 stating that, "... The mobile phone calling function could be provided by the products only as a supplementary function because it could not be activated without running an operating system of the devices.... These devices are not intended to be a substitute for a mobile phone to make voice calls, but, according to its main technical features is designed as a substitute for laptops. The difference between a "smartphone" and "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". Thus, as per the said circular, tablet computers are ....