TaxTMI 
TaxTMI 
2024 (7) TMI 1716
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.... of directly connecting to and designed for use with Automatic Data Processing Machine (hereafter referred to as ADP) of heading 8471 and claimed benefit of concessional rate of duty under Customs Notification No.24/2005 at SI.No.17. The appellant vide their letter dt. 27.09.2018 explained the nature of the goods and specifically stated that the product being solely used with ADP machine, the LED Monitor tiles are classifiable under 85285200 and eligible for benefit of the notification. They stated that these items are used to create big screen for viewing cinema. The shed officers after examination of the goods gave the report that as per the description on the package these are Cinema LED Signage Board (Colour display unit). There is only one Power In and Power Out ports available on the unit and no other ports. The goods did not have any port such as RS-232C interface, DIN, D-SUB, VGA, DVI, HDMI etc., for connectivity with ADP machine. Again, according to department, though the importer vide letter dated 04.10.2018 stated that they classified the goods under CTH 85285200 as these goods were used with "GDC Server" which is an ADP machine, the importer did not explain how GDC serv....
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....to be connected with an Automatic Data Processing ("ADP") machine for functioning and do not consist of reception apparatus as of television and cannot work on stand-alone basis. b. In the present case, the subject goods will function in conjunction with GDC server and SBB which is classified as a data processing machine. Product brochures in this regard were submitted. c. Since the subject goods can only be used with an ADP machine, these were rightly classified by appellant under CTI 8528 52 00. THE SUBJECT GOODS ARE CLASSIFIABLE UNDER CTI 8528 52 00 6.1 At the outset, it is submitted by the Ld. Counsel that it is not in dispute that the subject goods are Monitors classifiable under Heading 8528 of the Customs Tariff. The only dispute to be decided in the present appeal is whether the subject goods are capable of directly connecting to an ADP machine and whether these are designed for use with an ADP machine. If the subject goods are capable of the above, then, it is submitted that the classification adopted by the Appellant will be the appropriate classification viz. 85285200. 6.2 In this regard, the Ld. Counsel referred to the HSN Explanatory Notes to....
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....o form a huge screen which is visible to the audience. The owner of the cinema hall thereafter loads the respective movies on the storage which is available in the GDC servers and programs the GDC servers to play the movie. However, due to licensing restrictions, the Appellant could not produce the GDC servers before this Hon'ble Tribunal. 6.8 It is also pertinent to note that the Impugned Order has sought to deny the classification of the subject goods under CTI 8528 52 00 on the basis that the Appellant has not proved that the GDC servers are ADP machine. It is settled position of law that the burden to reclassify is on the Revenue. Though the Department dismissed the Appellant's claim of classification, they have not brought on record any evidence to prove that the GDC servers are not ADP machines. 6.9 The Impugned Order has also failed to consider that the subject goods have the following features amongst others such as displaying signals of the graphic adaptors in colour which are integrated in the processor of the ADP machine (such as SBB/ GDC server). These do not incorporate a channel sector or video tuner. They are fitted with connectors which enable connecti....
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....ist of Light Emitting Diodes (LEDs) which are connected to each other on a board. It is submitted that LEDs are classifiable under Heading 8541, and more specifically under CTI 8541 40 20. On perusal of the tariff for the relevant period, it is seen that the tariff rate for LEDs was free. Therefore, it is submitted that the subject goods merit classification under CTI 8541 40 20 as LEDs and no duty is payable. Hence, the Appellant is eligible for refund of duty. 6.14 In light of the above submissions, the Appellant submits that it had rightly classified the subject goods and hence, the reclassification of the subject goods under CTI 8528 59 00 ought to be set aside. THE SBB AND GDC SERVERS ARE ADP MACHINES CLASSIFIABLE UNDER HEADING 8471, AND THE SUBJECT GOODS CAN BE DIRECTLY CONNECTED WITH THESE AND ARE DESIGNED FOR USE WITH THESE MACHINES. THEREFORE, THE SUBJECT GOODS ARE CLASSIFIABLE UNDER CTI 8528 52 00. 7.1 Without prejudice to the foregoing submissions, the Appellant submits that the SBB/ GDC servers with which the subject goods are connected are themselves classifiable as ADP machines of Heading 8471. Therefore, on this ground the subject goods merit classification ....
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....dvertisement must be played during intermissions and schedule the time during which such advertisement will play. Even in the event the movies do not come with any particular slot for intermission, the user can choose the time at which such advertisement must be played. Thus, the user is able to program the server in a manner to suit their commercial needs. (pgs. 145 to 55 of Compilation) The users can also choose to update to higher versions of the software which is inbuilt. This is similar to any laptop or a computing device on which an operating system, such as Microsoft Windows is installed. 5A(iii) Performing arithmetical computations specified by the User SBB has an in-built Quad Core 1Ghz CPU (pg. 268 of Compilation) which performs arithmetical computations through the Arithmetical Logical Unit ('ALU') present in the CPU, in order to implement the various functions of the SBB. The GDC Server has a CPU which enables GDC Server to perform arithmetical computations specified by the User through the ALU present in the CPU in order to implement the various functions of the GDC Server. More specifically, the XSP-1000 contains the ALU with 96KHz proc....
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....the GDC server consists of the XSP-1000 audio processor and the SX-4000 Standalone Integrated Media Box. As demonstrated hereinabove, the features present in the GDC servers satisfy the requirements to be classified as an ADP machine. 7.7 It is submitted by the learned counsel that the subject goods which are capable of directly connecting to and designed for use with ADP machine are rightly classifiable under CTI 85285200. SUBJECT GOODS ARE ELIGIBLE FOR BENEFIT UNDER SL. NO. 17 OF NOTIFICATION NO. 24/2005-CUS. DATED 01.03.2005. 8.1 SI. No. 17 of the Exemption Notification grants exemption from payment of BCD to goods which are classifiable under sub-heading CTSH 8528 42, 8528 52 and 8528 62. Further, as per column 3 of the Notification, the benefit is granted to all goods falling under the aforementioned sub- headings 'of a kind solely or principally used in an automatic data processing system of heading 8471'. 8.2 Therefore, in order to be eligible for the benefit under the exemption notification, any goods must satisfy the following conditions: a. These must be classifiable under CTSH 8528 42 or 8528 52 or 8528 62; b. These goods must be of ....
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....d, the nature and use of the goods. The Ld. AR appearing for the department was also present. These Monitor Tiles were first connected to the SBB to display picture on them. Subsequently, these were connected to Laptop by which also the picture was displayed on the LED Monitor Tiles. Having seen and understood the nature and function of the imported goods, let us proceed to examine the issue of classification on the basis of the provisions and relevant tariff headings. 11. The appellant has classified the imported goods, viz. LED Monitor Tiles under CTH 85285200 as monitors capable of directly connecting to an ADP machine falling under CTH 8471. The department has classified the goods under CTH 85285900 as these are not capable of being connected to ADP of heading 8471. At this outset we have to say that there is no dispute that the goods are Monitors falling under 8528. 11.1 It would be beneficial to have a look at the relevant Chapter Headings, HSN Explanatory Notes, Notification etc. which are noticed below : 11.1.1 Tariff Item Description of Goods Unit Rate of duty Standard Preferential rate (1) (2) (3) (4) (5) 8528 Monitors and p....
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....ircuit and built-in speakers (generally, 2 watts or less in total); (vii) They usually have control buttons situated in the front panel; (viii) They usually cannot be operated by a remote control; (ix) They may incorporate tilt, swivel and height adjusting mechanisms, glare-free surfaces, flicker-free display, and other ergonomic design characteristics to facilitate prolonged periods of viewing at close proximity to the monitor;" (x) They may utilize wireless communication protocol to display data from an automatic data processing machine of heading 84.71. "(B) MONITORS OTHER THAN THOSE CAPABLE OF DIRECTLY CONNECTING TO AND DESICNED EOR USE WITH AN AUTOMATIC DATA PROCESSING MACHINE OF HEADING .. This group includes monitors which are capable of receiving signals when connected directly to the video camera or recorder by means of composite video, s-video or co-axial cables, so that all the radio-frequency circuits are eliminated. They are typically used by television companies or for closed-circuit television (airports. railway stations, factories, hospitals, etc. They can, moreover, have separate inputs for red (R), green (G) an....
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....ing. The choice of ADP machine would depend on the customer and his requirements. The customer may use Samsung Set Box (SSB) or may opt for any other ADP machine. The appellant while importing the Samsung SBB has classified it as ADP and falling under 8471 and the same has been accepted by department. 11.4 The Bench, having had an opportunity to see and perceive the nature of the imported goods viz. 'LED Monitor Tiles' and also the function of it after being connected to the Samsung SBB has to assertively say that the report of the shed officers is not complete. So also, the image of the back side of the LED Monitor Tiles included in para 4 of the findings in OIO is not inclusive of all ports on the back side. 'Picture abhi baaki hai' (There's more to see by the shed officers). There are ports for connecting SBB/ADP machine which are placed in the slight groove part of the square pattern on the back side. This may not be much visible while taking a picture of the backside. 11.5 After visual examination, we are convinced that the LED Monitor Tiles do have necessary port for being connected to ADP machine. The subject goods cannot function without being conn....
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....nder CTI 8528 62 00 and the decisions of the Tribunal rendered for the period prior to 01.07.2017 will continue to apply to projectors imported w.e.f. 01.01.2007. 28. It is also seen that for the period prior to 01.01.2017, all good falling under CTSH 8528 41, 8528 51 or 8528 61 were unconditionally exempt from payment of BCD under Serial No. 17 of the exemption notification. Post 01.01.2017, Serial. No. 17 of the notification exempts all goods falling under CTSH 8528 42, 8528 52 or 8528 62 if they are of a kind solely or principally used in an automatic data processing machine of heading 8471. The goods imported by the appellant satisfy the description of the goods in the exemption notification for both the periods and are, therefore, eligible for exemption." 11.9 The appellant has put forward an alternate argument that the subject goods consists of LED and therefore would merit classification under CTI 85414020. The competing classifications before the authorities below were CTI 85285200 and CTI 85285090. At the appellate stage the appellant or the department cannot resort to an alternate classification. The Tribunal in the case of Pepsico Holdings Pvt. Ltd. Vs CCE Pu....
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.... Thereafter the Appellant cleared the goods by payment of duty under Protest and requested for issuance of a Speaking Order. 2.3 The Appellant justified their classification of the imported LED Monitor under CTH 85285200 on the following grounds :- i. The subject goods have to be connected with an Automatic Data Processing (ADP) machine for functioning and do not consist of * reception apparatus of television and cannot work on standalone basis. ii. In the present case, the subject goods will function in conjunction with GDC Cinema Processor or Samsung SBB which is reportedly classifiable as a data processing machine and iii. The subject goods were classified under CTH 85285200 as they can be used only with an ADP machine. 2.4 Rejecting the submissions made by the Appellant, the Adjudicating Authority issued a speaking order vide Order-in-Original No. 65923/2018 dated 03.11.2018, the gist of which is reproduced below :- i. On perusal of photographs of the imported goods, it appeared that the video monitors were not fitted with connectors, characteristic of Data Processing machine. The examination report revealed that the imported goods do n....
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....e containing the goods, the description was mentioned as "Cinema LED Signage Board (Colour Display Unit)". The article LED Tile is cased in an aluminium housing with dimensions of approximately 40*40*7 cm including the following components :- - light emitting diodes (LED) mounted on a Printed Circuit Board with a pixel density of 72*72 and a brightness of 2000 cd/m2 - Connectors for power supply - Brackets and holes for mounting several tiles together. It appears that the article presented is for use in a modular LED video wall. It does not include a video processor. It appears that the LED Tiles, whether or not connected to other tiles, cannot display video images directly originating from a video source. It can only display signals originating from a dedicated video processor ('digitiser') which processes the signals and divides them over the total number of tiles in the LED video walls. The tiles, when connected to the video processor have the capability to display images in a large number of colours. It is also not in dispute that each tile is capable of displaying images and are able to be connected to each other through LVDS cable. When u....
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....of heading 8471, I am inclined to take a view that impugned goods are not suitable for use " 7. I find that the classification of LED tile is to be determined in terms of General Rules of Interpretation to Import Tariff, relative Section and Chapter Notes especially Chapter Note 5(A) to Chapter 84 of Customs Tariff Act, 1975. Given its objective characteristics, such as the presence of the mounting brackets, the connectors and capacity to display images in a large number of colours, the LED tile is intended to be connected to other tiles and a dedicated external video processor in a LED video wall. The original video signal is processed and transferred by the video processor to the LED video wall. The Video processor divides the complete video signal over the total number of tiles. When one time is missing or broken, the video signal is not completely displayed by the video wall. Each individual tile is therefore considered an essential part for the operation of the LED video wall as a whole. It further appears that LED Tile whether or not connected to other tiles appears to function only in combination with the video processor. All these aspects needs to be examined in detail i....
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....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. (B) Automatic Data Processing (ADP) machines may be in the form of systems consisting of variable number of separate units. (C) Subject to Paragraphs (d) and (C), a unit is regarded as being part of an ADP system if it meets all of the following conditions :- i. it is of a kind solely or principally used in an ADP system; ii. it is connectable to the central processing Unit either directly or through one or more units ; and iii. it is able to accept or deliver data in a form ( codes or signals) which can be used by the system. Separately presented units of an ADP machine are to classified in heading 8471. However, Keyboards, X-Y co-ordinate input devices and disk storage units which sati....
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.... may hence not be correct unless a positive act of approval by the proper officer after examining the product is shown by the appellant. Otherwise, they are only self-assessed BE's which can be examined by the department when any adverse fact comes to its notice or the need arises. Further in the procedure of self-assessment, it is the appellant who has declared the classification of the imported goods under CTH 8528 5200 and has held that the goods are to be used in conjunction with an ADP machine i.e. GDC Cinema processor. It is the appellant who has at first to demonstrate the same when questioned about the classification before shifting the burden to the department. Secondly, they have also to satisfactorily show that the GDC Cinema processor is indeed an ADP machine that satisfies Chapter note 5(a) of Chapter 84 of the Customs Tariff 1985. 12. The appellant has demonstrated live what is purported to be the impugned product along with its operating system. The purpose was to broadly explain the details of the LED Monitor Tiles, while making their submissions. The facts recorded during the examination of the goods as . mentioned in the order in Original dated 3.11.2018 wh....
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...., that does not include a video processor appears to be classifiable as a Monitor part. This is because the tile cannot display video. . 15. Constant and rapid changes in the IT field keep changing the design and use of goods. Later day changes cannot help in the classification of the impugned goods. Later imports have to be assessed on their own merit, if there is a change in the nature, design, use etc., of the goods. It is for this reason that it is essential for the displayed goods to have been shown to be the very same goods as were imported and in use at that relevant time and not their later version. Every import / assessment is an independent cause of action. This principle ensures that tax liabilities are determined fairly and accurately for each import, taking into account the specific features of the imported goods. Goods imported in 2018 cannot be understood for classification in conjunction with machines that were brought into use much later. Signage boards being declared as computer monitors and then over time being changed as cinematic display screens in conjunction with different goods is not permissible, much less when the new facts have not been tested by the O....
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....lant states that the GDC Cinema Processor is an ADP machine falling under CTH 8471 and that it is the department that has not discharged its burden to prove it otherwise. This does not appear to be correct. The impugned order has examined the technical specifications of the imported goods and analysed them in the context of its use with a GDC Cinema Processor in detail, with respect to specifications and parameters provided in the HSN explanatory notes. The analysis concluded that the impugned goods were not suitable for use with ADP machines of heading 8471. In fact the GDC Cinema Processor i.e. XSP-1000 Cinema Server claimed by the appellant to be an ADP machine was found in the impugned order not to contain any technical specifications to show that it was freely programmable in accordance to the requirements of the user, nor was it capable of arithmetic computation nor did it have its own storage option for execution of the processing programme. The monitors themselves also were not having characteristics associated with data processing system and did not have any capability for directly being connected with an ADP machine of CTH 8471, as discussed at Para 4 of the impugned orde....
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....eld that the goods are to be used in conjunction with an ADP machine i.e., a GDC sever. The facts are within the knowledge of the appellant as to what prompted them to make the classification and self- assess the goods. When the department expresses a doubt or raises a question on the classification or duty exemption claim sought, the initial burden is on the appellant who has to demonstrate the reasons for his decision. If he does so the burden shifts to the department, otherwise it would lead to an impossible situation where EXIM trade would be able to make classification choices which suit them best and ask the department to prove the contrary. Secondly, having made an assertion they have also to prima facie show that the GDC Cinema Processor are indeed ADP machines that satisfy Chapter Note 5(A) of Chapter 84 of the Customs Tariff 1985, as the technical specifications and capabilities of the impugned goods are in the special knowledge of the appellant/assessee. The legal principle involved is one who asserts must prove. This burden shifts from time to time having regard to the evidence adduced by the parties to the dispute and the inferences that could be drawn from fact or law....
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....r Tiles are not classifiable under CTH 85285200 and require to reconsider the issue of classification and eligibility of exemption for which the matter requires to be remanded to Adjudicating Authority as held by Member (Technical). (Pronounced in court on 22.3.2024 INTERIM ORDER PER R. MURALIDHAR: In the present case, there is a Difference of Opinion between the Hon'ble Members and the same has been referred to me as the 3rd Member reference Bench by framing the following questions to be resolved :- (a) Whether the 'LED Monitor Tiles' imported by the Appellant merits classification under CTH 85285200 of Customs Tariff Act, 1975, and whether impugned goods are eligible for exemption under Notification No. 24/2005-Customs dated 01.03.2005, as held by Member (Judicial). Or (b) Whether the LED Monitor Tiles are not classifiable under CTH 85285200 and require to re-consider the issue of classification and eligibility of exemption for which the matter requires to be remanded to Adjudicating Authority as held by Member (Technical). 2. The matter was posted for Virtual Hearing on 6th June 2024. The Learned Senior Counsel, Mr. V. Lakshmikumar....
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....Processing Machine. In order to be classified as ADP, four conditions have been specified under Chapter Note 5 (A) of Chapter 84. If these conditions are fulfilled, then the machine would be termed as ADP. Taking me through the Table under Para 7.2 of the Interim Order, he submits that it gets clarified as to how the GDC Server fully meets the four conditions specified under Chapter Note 5(A) of the Chapter 84. It is submitted that GDC Server contains internal storage capacity of 32 TB. This GDC Server also consists of SX-4000 and XSP-1000 software. The GDC Server with the help of the software can perform multiple functions like creating the playlist, setting times for interval between the scenes, setting time for local advertisements, scheduling of the main movie and advertisements etc. All these are pre-programmed in the GDC when the movie is screened in the LED Monitor Tiles in the big screen. Thus, he submits that essentially, the Appellant has proved that the LED Monitor Tiles are being used alongwith/solely with the Automatic Data Processing System i.e. GDC server. Under the Notification No. 24/2005-Cus dated 1/03/2005, the exemption is granted for goods falling under CTH Hea....
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....Tiles would have only input and output electrical wires so as to be connected with each other, only the last tile will have the necessary port which can be connected with the GDC (ADP). This fact has been ignored. 6. The Learned Counsel submits that a practical demonstration of functionality of LED Tiles has been presented before the Division Bench wherein even the Learned Authorized Representative of Revenue attending this Hearing was also present. In that demonstration, it was shown that the LED has the required ports to be connected to the ADP. Since GDC is a very large unit which is basically used in the cinema theatres, the same could not be brought for demonstration purpose at the Tribunal's premises. Therefore, they had brought STB/SBB (Set Top Box) which is like a miniature GDC, capable of being used to screen the video images along with audio (movies) in the imported LED Monitors. He takes a stand that the imported LED Monitors have proper ports and practical demonstration has been given before the Tribunal towards their functionality by getting them connected with STB (Set Top Box) ports. Hence, his submission is to the effect that it is clearly proved that the imp....
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....r (Technical) to remand the matter to the Adjudicating Authority. 10. On another query raised to the Learned AR as to what kind of documentary evidence, Revenue had towards their claim that "Sony LMT- 300 Digital Cinema Media Block" is equivalent to the GDC System SX-4000, he submitted that as per the records available, no documents for such comparison were readily available in their files. 11. Heard both sides and perused the Appeal papers and other documentary evidence placed by both sides. 12. Admittedly, the goods imported are in the nature of monitors falling under the category of CTH 8528. The dispute is as to whether the product will fall under the classification of CTH 85285200 as claimed by the Appellant or would fall under CTH 85285900, as held by the Revenue. 13. On going through the CTH, it is observed that CTH 85284200, 85285200 and 85286200 all pertain to the Monitors which are capable of connecting for use with Automatic Data Processing Machine of Heading CTH 8471. Further, it is noted that in respect of the three categories of 'monitors' which are capable of either being used 'solely' or 'principally' used in Automatic Data Proces....
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....Customs Ruling No. HQ H092260 dated 20/03/2010 in respect of "Sony LMT 300" Digital Cinema Media Block is classified under CTH 8521 and therefore even the GDC System SX-4000 would be classifiable under 8521 has no documentary evidence to back up. Further many changes have been taking place in electronic and IT Industry in a fast and furious manner. Comparing a 2010 year product with a product manufactured in the year 2018, that too when they are of different brands with different configurations, does not in any way help the Department in arriving at their conclusion towards the CTH classification of the GDC (ADP) under CTH 8521. In the absence of any corroborative evidence, this would amount to presumption about the classification. Hence the classification attributed to GDC under CTH 8521, is without any merits and is required to be set aside. I do so. 17. Another point to be noted from the CTH is that in case of 8528 42 00, 8528 52 00 and 8528 62 00, this classification is to be applied just if they (the monitors) are 'capable of directly connecting to' and are designed for use with an "automatic data processing machine of heading 8471". The CTH under these Headings spe....