TaxTMI 
TaxTMI 
2023 (8) TMI 362
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....7 1,42,765/- 3 9456919 / 26.04.2017 66,798/- 4 9456942 / 26.04.2017 1,42,765/- 2.2 Upon examination, the goods were found to be personal computers with accessories like mouse, power adapter and gaming console, and as per the website of the supplier, it was ascertained that the goods were specially designed for gaming purposes. As their principal function was gaming, the goods were re-classified under CTH 9504 5000 by the Revenue. 2.3 During the course of adjudication, the appellant had submitted that the imported goods are not "Electronic Games (Console)", but a personal computer, which is a multi-tasking device including computing capability, internet surfing, multimedia playing and editing, word processing, etc.; personal computer is a general purpose computer whose size, capabilities and original sale price make it useful for individuals and are intended to be operated by an end user with no intervening computer operator whereas an "Electronic Game (Console)" such as PS4, XBOX, etc., one can play games only. It was also put forth that the term "video game console" is used to distinguish a console machine primarily designed for consumers to use for play....
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....desktop segment"; it is powered by latest 7th Generation Intel(r) CoreTM i7 processor and the latest nVidia(r) GeForce(r) GTX 1080 graphics - giving it the punch required to run the latest AAA gaming titles at their highest graphics settings. The G20 features ASUS Aura lighting effects, an ESS SABRE HiFi audio headphone DAC and amplifier, and ROG-exclusive gaming software including Aegis III. An advanced heat management design ensures cooling for stable performance during marathon gaming sessions. On top of that, it runs silently at just 22dB at idle. 3.3 The lower appellate authority, considering the above information and details, has concluded that the impugned goods are high-end computers which are specially designed for playing games, observing that although the product satisfied the condition of the Notes for CTH 8471 and do multi-tasking, but as mentioned in the HSN Explanatory Note 2 to Chapter 9504, "video games and machines whose objective, characteristic and principal function are such that they are intended for entertainment purposes (game-playing) remain classified in this heading, whether or not they fulfil the conditions of Note 5(A) to Chapter 84 regarding automat....
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....of which a patently wrong conclusion was arrived at by him. (iv) Subheading Note 1 to Chapter 95 reads as follows: - "1.-Subheading 9504.50 covers: (a) Video game consoles from which the image is reproduced on a television receiver, a monitor or other external screen or surface; or (b) Video game machines having a self-contained video screen, whether or not portable. This subheading does not cover video game consoles or machines operated by coins, banknotes, bank cards, tokens or by any other means of payment (subheading 9504.30)". (v) The above Subheading Note clearly shows that there itself, video game consoles and video game machines are treated as two different categories of products. While Subheading Note 1(b) requires video game machines to have a self-contained video screen, whether or not portable alone, to be covered under 9504, in respect of video game consoles, Note 1(a) provides that an image can be reproduced on a television receiver, a monitor or other external screen or surface. As far as the present import is concerned, there are no inbuilt monitor or screen and these are only desktops with CPU, RAM, Graphic Card....
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....lay video games. The two most popular consoles are Sony's PlayStation and Microsoft's Xbox. Nintendo's Wii is also a contender that simulates physical participation in activities such as bowling and playing tennis (See Wii). Game software is available on CDs or DVDs, although earlier game machines used cartridges containing only read only memory (ROM) chips. Video game consoles require a TV or monitor for display" (xii) www.techopedia.com defines video game console as mentioned below: "A video game console is a specialized computer system designed for interactive video game play and display. A video game console functions like a PC and is built with the same essential components, including a central processing unit (CPU), graphics processing unit (GPU) and random access memory (RAM). To offset costs, most video game console manufacturers use older CPU versions." (xiii) electronics.howstuffworks.com defines video game console as mentioned below: "At its core, a video game console is a highly specialized computer. In fact, most systems are based on the same central processing units (CPUs) used in many desktop computers. To keep the cost of....
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....e benefit of proper classification. (xviii) In view of the above, the impugned goods merit classification only under 8471 3090. 4.2 The Ld. Advocate has further submitted that same model of computers, including updated model of computers of the same category, have been cleared by various Custom Houses / Air Cargo Complex on the basis of classification under 8471 3010 / 8471 3090 in the subsequent periods and the imported systems have same / similar features to the systems under dispute in this appeal. He has enclosed copies of the relevant Bills-of-Entry and product specification sheets to support his contention that the impugned goods are classifiable under Heading 8471 of the Customs Tariff Act. 4.3.1 He has also contended that as per industry norm and commercial parlance, "video game consoles" have limited application and fall under a different category of goods. In this connection, he referred to an extract from 'ChatGPT' powered by Open Artificial Intelligence, which reads as under: - "Video game consoles are called consoles because they are designed to be used with a television, and are typically placed in a central location in a room. They are typical....
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....reate a more refined and succinct control scheme that can be learned by the player more easily. Different games in the same genre tend to use similar control schemes, allowing players to easily adapt to new games." ... .... While a PC is multi-functional and will be purchased to perform tasks other than gaming, a dedicated gaming console must have games available for it to be successful. A good library of games will give a consumer reason to purchase the console and in turn create opportunities for more games to be created for it. Console developers will lower their profit margins on devices to encourage sales of the games as more profit can be obtained from software royalties than the sale of the consoles themselves. Games are frequently used to market a console and can do so either by exclusivity to a specific console or by using existing popular intellectual properties (IPs) that already have a strong following. Pac-Man for the Atari 2600 was already a well known arcade game and was expected to help the sales of 2600 devices due to its popularity despite it being heavily criticized. ... ... In comparison to PC and mobile games, consol....
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.... processor and the nVidia(r) GeForce(r) GTX 1080 graphics, including lighting effects, headphone DAC, amplifier, gaming software Aegis-III and an advanced heat management design / cooling system, typically running on a Windows 10 platform, basically relying on the HSN Explanatory Note (2) to Heading 95.04, which reads as follows: "95.04 - Video game consoles and machines, articles for funfair, table or parlour games, including pintables, billiards, special tab les for casino games and automatic bowling alley equipment (+). 504.20 - Articles and accessories for billiards of all kinds 9504.30 - Other games, operated by coins, banknotes, bank cards, tokens or by any other means of payment, other than automatic bowling alley equipment. 9504.40 - Playing cards 9504.50 - Video game consoles and machines, other than those of subheading 9504.30 9504.90 - Other This heading includes: (1) ... ... (2) Video game consoles and machines as defined in Subheading Note 1 to this Chapter. Video game consoles and machines whose objective characteristics and principal function are such that they are intended for entertainment p....
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....orming arithmetical computations specified by the user; and (4) Executing, without human intervention, a processing programme which requires them to modify their execution, by logical decision during the processing run; Thus, machines which operate only on fixed programs, i.e., programs which cannot be modified by the user, are excluded even though the user may be able to choose between a number of such fixed programs." (Emphasis supplied) 12. The impugned products are automatic data processing machines, but the objective and characteristics indicate that they are intended for entertainment purposes (game-playing). According to the importer's website and also the product literature, it is seen that the impugned goods are designed for the purpose of playing games and reportedly, even has gaming software Aegis III pertaining to the ROG series. 13. The Ld. Advocate in his submissions has accepted that the imported goods have features for gaming, but has argued that a 'video game console' is an entirely different product and it cannot be compared to a Computer System Desktop as the latter is capable of carrying out multiple tasks including computing capabilit....
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.... as compared to gaming personal computers. 15.1 An automatic data processing machine or personal computer is said to be capable, in terms of Chapter Note 5(A) to Chapter 84, of storing the processing programmes and is also freely programmable in accordance with the requirements of the user and capable of computing and executing without human intervention. Whereas video game consoles are simply plug and play devices, which are more user friendly, and meant purely for gaming or entertainment purposes and are not capable of computing, internet surfing, word processing, etc. Any Computer System which has got additional features for playing games, continues to be a Computer System and can also be used for general purposes other than as an entertainment device. 15.2 The impugned goods are freely programmable whereas video game consoles only operate on fixed programmes. As the impugned goods answer to the requirements of the HSN Explanatory Notes to Heading 84.71 as well as Chapter Note 5 (A) to Chapter 84, they are more appropriately classifiable under CTH 8471 as automatic data processing machines. Though the imported goods, declared as computer desktop systems, are known in the m....
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....d be data processing machine too" appears to be misconstrued, in the light of the explicit definition provided under Subheading Note 1 to Chapter 95. Therefore, the reliance on the HSN Explanatory Note (2) to Heading 95.04 by the lower appellate authority is misplaced. 17.1 The lower appellate authority has resorted to Rule 3 of the General Rules for the Interpretation of Import Tariff, concluding that Rule 3(c) is applicable in respect of the present appeal and classified the goods under the heading which occurred last in the numerical order among those which equally merit consideration. 17.2 Rule 3 for the classification of goods as per the General Rules for the Interpretation of Import tariff is extracted below: - "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 ....