AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (6) TMI 1253
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....hem meriting classification under Sub-heading 85044090 of the First Schedule to the Customs Tariff Act, 1975, under Category 1- Machines which itself qualifies as an ADP machines, Category 2- Machines which can indirectly be considered as ADP machine (i.e Machines where ADP machines are an integral part of such machine, without which such machines cannot function); Category 3-Telecommunication apparatus other than static convertors for cellular mobile phones, and Category 4-Other machines, are eligible to take benefit of zero rate of Basic Customs Duty under serial number 4 of Notification No. 25/2005-Cus. dated 01.03.2005? 3.1 The applicant has stated inter-alia that, they propose to import various variants of 'Uninterrupted Power Supply' (subject goods, in short) such as single phase UPS, three phase UPS, industrial and transformer based UPS; it is understood that the said UPS intended to be imported is a combination of both electrical and electronics systems designed to provide a total continuity of AC power even in the absence of mains power; UPS draws AC power from the commercial line and processes it to a required condition and at the same time charges the battery wh....
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.... applications even in our daily routines; Internet of Things (loT) has further added to the data in real-time, particularly in customer service & security applications; all these generates data in Terabytes which needs to be processed with high speed, accuracy and needs to be stored for E-Commerce; High-end Servers and ADP machines are deployed for 24x7 operation with stringent compliances for uptime; servers are undisputedly a computer or device on a network that manages network resources; for example, a file server is a computer and storage device dedicated to storing files; any user on the network can store files on the server; a print server is a computer that manages one or more printers, and a network server is a computer that manages network traffic; a database server is a computer system that processes database queries; therefore, it can be concluded that Large Scale & Hyperscale Data Centers (Servers) qualifies as an ADP Machines as all the essential characteristics of an ADP machine have been fulfilled and the same are classifiable under Sub-heading 84715000 as ADP Machines which is undisputed. Category 2- Machines which can indirectly be considered as ADP machines (i.e.....
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....plicable only to those goods under Chapter heading 850440 which are solely and principally to be used only for ADP machines which merit classification under CTH 8471, is uncalled for and defeats the purpose of a beneficial notification; that the exemption notification is applicable for all ADP machines irrespective of the classification of the same under heading 8471 or any other heading of the Customs Tariff; thus, even if the HS classification of the machines like MRI & CT Scan machines is not 8471, given the integral use of ADP for the functioning of such machines, MRI & CT Scan machines are also considered as ADP machines and hence eligible for aforesaid exemption. Category 3- Telecommunication apparatus other than static converter for cellular mobile phones, namely instruments used in Air Traffic Control towers: Globally at any busy airport, an ATC tower has to accurately manage the intervals between landing and take-offs of perpetual flights using the common airstrip or runway; at times these intervals are even less than a minute at airports during peak hours; similarly, ATC also monitors and recommends flying altitudes to all incoming aircrafts on its radar to ensure safety....
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....r solely and principally to be used with ADP machines, the phraseology used in the exemption notification would have been different as, for example, ''goods actually used" or "goods used" or "solely and principally to be used" or similar language as used in Notification No. 24/2005, since both being issued on the same date; however, this is not the case in the exemption notification and therefore an interpretation limiting the scope of serial number 4 only to those static converters which are actually used with ADP machines is incorrect; there is a fine distinction between 'intended for use' and 'actual use'; this distinction has to be kept in mind in view of the fact that it is settled law that the classification of a particular good cannot depend upon the actual use to which it is put to, by the end-user; the goods intended or meant to be used for a particular purpose, may be actually used for a completely different purpose by some end-users; that the importer cannot be made to suffer on the basis of what the end-user does with the product, distinction between 'Actual Use' and 'Intended to be Used' can be substantiated by reliance on the ju....
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....lely and principally" for ADP machines and therefore UPS can be used with other machines as well including the specified machines; subject goods clearly fulfil both criteria of the exemption notification; therefore, the exemption Notification itself provides for the products in respect of which the exemption would not be available and the goods intended to be imported does not fall under such exclusion; hence, they are eligible for the benefit of the exemption Notification. 4. Furthermore, the applicant has submitted that the subject goods will not only provide power backup feature but also be used for protection of Automatic Data processing machines disturbances such as voltage surges, voltage sags/swells, voltage spikes/transients etc. It is further submitted that, at this juncture, it is also necessary to refer to the catalogue which substantiates that that the subject goods have multiple uses; depending upon the nature of industry that they will be put to use, the subject goods can be used in data centers, healthcare sector, infrastructure, telecommunications, industrial applications etc. 5. Comments in the matter have been received from the concerned Commissionerate of Custo....
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.... without ADP machine, these MRI machines cannot function on a stand-alone basis; thus, ADP machine is an integral part of any MRI machine; however, at the time of import, the applicant will not be able to give 'end-use certificate' as they are not aware as to who would their customers be and according to them submission of 'end-use certificate* at the time of import is not mandatory; referring to comments of the concerned Commissionerate, AR stated that they differ as to possession of end use certificate by the importer when the goods are being imported under the notification in question and further, according to them, submission of end -use certificate is not mandatory; it is not mandatory to prove that ADP Machine referred to in the notification in question should be the ADP Machine as per Note 6 under Chapter 84 of the CTH 1975. The AR also mentioned that the phrase for use in means intending to be used and there is no doubt about the UPS which they intend to import can be used for ADP Machine. The AR also reiterated that submission with regard to various case laws as referred in their compliance and stated that the onus is on the department to prove that goods in qu....
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....able under heading 8471, the special purpose data processing machine incorporated or acting in conjunction with a machine is classified on merits by virtue of Note 5E to Chapter 84. Further, special purpose data processing machine do not cease to be data processing machine merely because by virtue of special rules of classification embodied for such machines in Note 5E to Chapter 84, they are classified under headings other than 8471; -exemption notification nowhere mandates that the subject goods under heading 850440 shall be solely and principally be used for ADP machines which merit classification under heading 8471 or telecommunication apparatus; such narrow interpretation that serial number 4 of exemption notification is applicable only to those goods under heading 850440 which are solely and principally to be used only for ADP machines which merit classification under CTH 8471 is uncalled for and defeats the purpose of a beneficial notification; -exemption notification is applicable for all ADP machines irrespective of the classification of the same under heading 8471 or any other heading; thus, even if classification of the machines like MRI & CT scan machines is not 847....
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....assification of a particular good cannot depend upon the actual use to which it is put to, by the end user; the goods intended or meant to be used for a particular purpose, may be actually used for a completely different purpose by some end-users; the importer cannot be made to suffer on the basis of what the end-user does with the product; more importantly, when the exemption notification does not specify production of any end use certificate, the same cannot be insisted upon by Customs at the time of clearance. In the additional submissions, the applicant has also reiterated case laws in supports of their arguments and further stated that, even if it is assumed that the term, 'for use in automatic data processing machine' used in the exemption notification contemplates end use, since no mechanism provided in the notification, the same cannot be insisted upon by Customs; the exemption notification does not mandate any proof of end use criteria being met and the same cannot be read into the exemption notification; exemption notification should be construed strictly only at the threshold for determining eligibility; once assessee falls within the eligibility clause of the e....
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.... which either ultimately qualify as Telecommunication apparatus or ADP machine or where ADP machine is an integral part of the whole machine/system; such interpretation which has been done by introduction of new words and phrases in the notification is against the settled law that a notification has to be construed by the etymology used in the notification; the applicant appears to be of the view that the intention behind issue of notification and words used in the notification are linked and an interpretation limiting the scope of serial number 4 of the notification, only to those static converters which are actually used with ADP machine is incorrect and the benefit of serial number 4 of the notification should not be denied by taking recourse to a narrow interpretation. However, I do not see any ambiguity/confusion arising out of the language used in the notification allowing exemption from duties to static converters for automatic data processing machine and units thereof, and telecommunication apparatus other than static converters for cellular mobile phones. Addition of words such as 'inbuilt', 'built-in' etc. to interpret a notification is neither warranted n....
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....als, or other analogue or digitally processed audio or video signals; machines performing a specific function other than data processing, or incorporating or working in conjunction with an automatic data processing machine, and not otherwise specified under Attachment A or B, are not covered by this agreement. Taking cognizance of the said provisions under the Information Technology Agreement, appears to be the way to interpret the notification within the words and phrases used in the notification. I note that the ITA has unambiguously laid down that machine performing a specific function other than data processing, or incorporating or working in conjunction with an automatic data processing machine, and not otherwise specified under Attachment A or B, are not covered by this agreement. Thus, the manner in which applicant has interpreted the notification is not in accordance with law for the time being in force. 10.3 I also note that, the applicant has submitted a copy of catalogue of 'Uninterrupted Power Supply' along with the application for advance ruling. This catalogue pertains to M/s. Socomec Innovative Power Solutions. It is further observed that in Writ Appeal No. ....