AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1455
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....ccounting of stocks, accounting of the amount received as sale proceeds etc., and it is a desktop computer based POS system. For assembly/manufacture of POS system, the appellants importer had imported a consignment of BA 63 display, cash drawer and cables by classifying it under Customs Tariff Item (CTI) 8471 6090, under Bill of Entry (B/E) No. 3439176 dated 03.10.2013 and self-assessed the same by claiming duty exemption/ 'NIL' Basic Customs Duty (BCD) vide Notification No.24/2005-Customs dated 01.03.2005, in terms of Section 17(1) of the Customs Act, 1962. 2.2 The Appraising Officer of the Customs Assessment Group had objected to the classification of the imported goods and had raised query seeking reply from the appellants as to why the imported goods should not be classified under CTI 8531 8000 with applicable Basic Customs Duty (BCD) of 10% ad valorem, as such classification under HS Code is also reflected in the supplier's packing list. After detailed analysis of the reply submitted to the objections raised and being not satisfied with such reply, the department had adjudicated the case, after giving personal hearing, seeking for revising the classification of imported go....
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....ng of the Indian customs tariff is CTH 853120 and not CTH 853180 as decided in the impugned order. Therefore, he claimed that the impugned order holding the classification of the original authority is incorrect. 3.3 Learned Advocate also submitted that the decision of the Tribunal in the case of Commissioner of Central Excise, Chennai Vs. Soumag Electronics 1999 (108) E.L.T. 167 (Tribunal) is not applicable to the present case, since the goods dealt in such case is of complete information display systems, and not in respect of part or unit of Automatic Data Processing Machine. He had also submitted a technical writeup of the goods under import along with representative picture of the product POS system, to state that these form part of the POS system, and functions only when these are connected to the POS system and cannot work in a standalone mode. 3.4 Learned Advocate submitted that the classification of imported goods declared by the appellants were duly supported by the Harmonized System of Nomenclature (HSN) which provides for coverage of POS system under the specific items covered under chapter heading 8471 and not under the scope of coverage of items under chapter head....
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.... be levied at such rates as may be specified under the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force, on goods imported into, or exported from, India. (2) The provisions of sub-section (1) shall apply in respect of all goods belonging to Government as they apply in respect of goods not belonging to Government." "Section 1. Short title, extent and commencement. - (1) This Act may be called the Customs Tariff Act, 1975. (2) It extends to the whole of India. (3) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint. Section 2. Duties specified in the Schedules to be levied. - The rates at which duties of customs shall be levied under the Customs Act, 1962 (52 of 1962), are specified in the First and Second Schedules. xxx xxx xxx xxx THE FIRST SCHEDULE - IMPORT TARIFF (Refer Section 2) THE GENERAL RULES FOR THE INTERPRETATION OF IMPORT TARIFF Classification of goods in this Schedule shall be governed by the following principles: 1. The titles of Sections, Chapters and su....
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.... last in numerical order among those which equally merit consideration. 4. Goods which cannot be classified in accordance with the above rules shall be classified under the heading appropriate to the goods to which they are most akin. 5. In addition to the foregoing provisions, the following rules shall apply in respect of the goods referred to therein: (a) Camera cases, musical instrument cases, gun cases, drawing instrument cases, necklace cases and similar containers, specially shaped or fitted to contain a specific article or set of articles, suitable for long-term use and presented with the articles for which they are intended, shall be classified with such articles when of a kind normally sold therewith. This rule does not, however, apply to containers which give the whole its essential character; (b) Subject to the provisions of (a) above, packing materials and packing containers presented with the goods therein shall be classified with the goods if they are of a kind normally used for packing such goods. However, this provision does not apply when such packing materials or packing containers are clearly suitable for repetitive use. ....
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....igit number and the rate of customs duty; (2) the list of tariff provisions is divided into Sections, Chapters and Sub- Chapters; (3) in column (3), the standard unit of quantity is specified for each tariff item to facilitate the collection, comparison and analysis of trade statistics." 6.3 From plain reading of the above legal provisions, it transpires that in order to determine the appropriate duties of customs payable on any imported goods, one has to make an assessment of the imported goods for its correct classification under the First Schedule to Customs Tariff Act, 1975 in accordance with the provisions of the Customs Tariff Act by duly following the General Rules for Interpretation (GIR) and the General Explanatory notes (GEN) contained therein. The First Schedule to the Customs Tariff Act, 1975 specifies the various categories of imported goods in a systematic and well-considered manner, in accordance with an international scheme of classification of internationally traded goods, i.e., 'Harmonized Commodity Description and Coding System' (HS). Accordingly, goods are to be classified taking into consideration the scope of headings / sub-headings, relat....
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....dule to the Customs Tariff Act for arriving at proper conclusion on the classification of the impugned goods. The relevant headings and their tariff entries in the First Schedule to the Customs Tariff Act, 1975 of contending Chapter headings 8471 and 8531 are extracted as below: "SECTION XVI MACHINERY AND MECHANICAL APPLIANCES; ELECTRICAL EQUIPMENT; PARTS THEREOF; SOUND RECORDERS AND REPRODUCERS, TELEVISION IMAGE AND SOUND RECORDERS AND REPRODUCERS, AND PARTS AND ACCESSORIES OF SUCH ARTICLES NOTES : 1. This chapter does not cover: .... 2. Subject to Note 1 to this Section, Note 1 to Chapter 84 and to Note 1 to Chapter 85, parts of machines (not being parts of the articles of heading 8484, 8544, 8545, 8546 or 8547) are to be classified according to the following rules: (a) parts which are goods included in any of the headings of Chapter 84 or 85 (other than headings 8409, 8431, 8448, 8466, 8473, 8487, 8503, 8522, 8529, 8538 and 8548) are in all cases to be classified in their respective headings; (b) other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the....
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....number of separate units. (C) Subject to paragraphs (D) and (E), a unit is to be regarded as being part of an automatic data processing system if it meets all of the following conditions : (i) it is of a kind solely or principally used in an automatic data processing system; (ii) it is connectable to the central processing unit either directly or through one or more other 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 automatic data processing machine are to be classified in heading 8471. However, keyboards, X-Y co-ordinate input devices and disk storage units which satisfy the conditions of (ii) and (iii) above, are in all cases to be classified as units of heading 8471. (D) Heading 8471 does not cover the following when presented separately, even if they meet all of the conditions set forth in paragraph (C) : (i) printers, copying machines, facsimile machines, whether or not combined; (ii) apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wi....
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.... drive 8471 70 60 --- CD-ROM drive 8471 70 70 --- Digital video disc drive 8471 70 90 --- Other 8471 80 00 - Other units of automatic data processing machines 8471 90 00 - Other And Chapter Heading Description of goods (1) (2) 8531 Electric sound or visual signalling apparatus (for example, bells, sirens, indicator panels, burglar or fire alarms), other than those of heading 8512 or 8530 8531 10 - Burglar or fire alarms and similar apparatus : 8531 10 10 --- Burglar alarm 8531 10 20 --- Fire alarm 8531 10 90 --- Other 8531 20 00 - Indicator panels incorporating liquid crystal devices (LCD) or light emitting diodes (LED) 8531 80 00 - Other apparatus 8531 90 00 - Parts 8.1 It could be seen that by applying the GIR 1, the position is made clear that Chapter Heading 8471 covers within its scope and ambit, mainly of two broad categories of goods: (i) first one i.e., "Automatic data processing machines and units thereof"; covered under CTHs 8471 30; 8471 41; 8471 50; 8471 60; 8471 70 and 8471 80; (ii) the second one i.e., "magnetic or optical rea....
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.... system. An illustrative picture of the POS system provided in the case file is extracted and given below: POS is a machine/appliance comprising both hardware and software components, intended to facilitate seamless sale/purchase transaction processing in retail environment. This integrated machine/appliance typically involves a computer or computer terminal, along with various peripherals such as barcode scanners, cash registers, and card readers etc. The software installed in the computer enables key functionalities like transaction processing, inventory management and sales reporting. POS systems are also instrumental in various business operations, including sales recording, inventory tracking, customer purchase monitoring, and processing diverse payment methods like cash, credit/debit cards, and mobile payments. Furthermore, they contribute to the generation of receipts or invoices, offering businesses efficiency, accuracy, and valuable insights into sales and inventory data for effective operational management In a typical retail environment, the customers walk up to checkout/ sales counter along with the goods they had selected for purchase, and the POS system allows t....
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....y proves that the impugned goods which are part of the POS computer system, shall be treated as input/output units of POS system. The customer display indicators does not function as independent information display panel so as to classify it under CTH 8531, as these function as a part of the POS machine/apparatus. 8.5 The Original authority had come to the conclusion that the imported goods are classifiable under CTI 8531 8000 on the basis of following findings: "5. I have carefully gone through the records of the case written submissions made by the importer. The Bill of Entry was under assessment by the group appraiser it is observed that the importer has claimed the classification under CTH 84716090 which covers 'other' importer (input) output units, not containy [containing' is the appropriate word instead of 'containy' as typed in the order.][containing] storage units in the same housing. 6. The importer has not submitted any evidence to short [show' is the appropriate word instead of 'short' as typed in the order] [show] that the impugned item is importer [input' is the appropriate word instead of 'importer' as typed in the order] [input] output unit of h....
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....ications such as customer display showing 'item/price information and operator instruction'. The vacuum fluorescent display technology (VPD) guarantees optimum clarity and legibility even under difficult lighting conditions. Power is supplied via the POS systems RS232c interface. Tilt and swivel adapters are available for mounting purposes for the display stand, and keyboard assembly. Therefore, the impugned goods are proven line display to show the item description and pricing to customer at the time of billing on the point of sale, thus it is observed that item in (is) only display unit. The supplier has also indicated H.S. Code of the impugned goods as 8531 in the packing list. The assessing authority has relied on the case law of Commissioner of Central Excise, Chennai Vs. Soumag Electronics Ltd. - 1999 (108) ELT 0167 Tribunal (Delhi), wherein it was held that information display systems classifiable under heading 8531 of the Central Excise Tariff Act, 1985 and not under heading 8471. The ratio of this case law is squarely applicable to the present case. Further, Rule 3 of the Interpretative Rules stipulates as under: Rule 3. When by application of rule 2(b) or for any....
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....pplication of GIR-3(a) alone, by ignoring the terms of headings which alone is sustainable inasmuch as the terms of heading solely determines appropriate classification for legal purposes. 8.8 Further, in order to evaluate the proper classification of imported goods, in terms of GIR-1, one has to take the assistance of the relative Section or Chapter notes, besides the description or terms of the headings. In terms of Section Notes 3, 4 and 5 to Section XVI containing Chapter 84, 85 deals with guiding principle for classification of appliances or machines. In terms of Section Note 3 the principal function would determine the classification; Section Note 4 states that if individual components which clearly contribute performance of specific function, then the whole machine shall also be classified under the respective entry in Chapter 84 or 85. Further Section Note 5 provide that the expression 'machine' shall refer to any machine, machinery, plant, equipment, apparatus or appliance cited in the headings of Chapter 84 or 85. In addition to the above, Note 5 to Chapter 84 prescribe the conditions that are required to be fulfilled in order to treat such goods as a part or input/out....
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.... which of these two classification is more appropriate for classification of impugned goods. Therefore, we need to examine the specific customs tariff entries under the two contending headings, the scope of coverage of goods under each of the specific tariff entries, in order to arrive at appropriate classification of imported goods. 9.2 In order to further examine the classification in terms of various customs tariff entries under the two contending sub-headings, we would like to examine the HS explanatory notes of the WCO, which describe in detail the scope and coverage of goods under Customs classification. The extract of HS classification in respect of relevant headings 8471 and 8531 are given below: 84.71 (A) AUTOMATIC DATA PROCESSING MACHINES The automatic data processing machines of this heading must be capable of fulfilling simultaneously the conditions laid down in Note 5 (A) to this Chapter. That is to say, they must be capable of: (1) Storing the processing program or programs and at least the data immediately necessary for the execution of the program; (2) Being freely programmed in accordance with the requirements of the ....
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.... in some cases, however, these elements may be in the form of separate units. (2) An input unit which receives input data and converts them into signals which can be processed by the machine. (3) An output unit which converts the signals provided by the machine into an intelligible form (printed text, graphs, displays, etc.) or into coded data for further use (processing, control, etc.). Two of these units (input and output units, for example) may be combined in one single unit. A complete automatic data processing system is classified in this heading, even though one or more units may be classified elsewhere when presented separately (see part (B) Separately presented units, below). These systems may include remote input or output units in the form of data terminals. Such systems may also include units, apart from the input or output units, designed to increase the capacity of the system for instance, by expanding one or more of the functions of the central unit (see Part ( B) below). Such units are inserted between the input or output units (start and end of the system), although adapting and converting units (channel adaptors....
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....and door chimes are usually designed to be operated from a low tension supply (primary cell or battery), but in certain cases they incorporate a transformer to step down the mains voltage. (B) Electric sound signalling apparatus, horns, sirens, etc. The sound is produced by a vibrating reed, by a rotating disc set in motion electrically or electronic sound generator; they include factory sirens, air raid sirens, ships' sirens, etc. (C) Other electrical signalling apparatus (winking or intermittent lights, etc.) for aircraft, ships, trains or other vehicles (other than for cycles or motor vehicles heading 85.12), but not radio or radar apparatus of heading 85.26. (D) Indicator panels and the like. These are used (e.g., in offices, hotels and factories) for calling personnel, indicating where a certain person or service is required, indicating whether a room is free or not. They include : (1) Room indicators. These are large panels with numbers corresponding to a number of rooms. When a button is pressed in the room concerned the corresponding number is either lit up or exposed by the falling away of a shutter or flap. (2) Number indic....
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....etectors not incorporating electric sound or visual alarm devices are classified in heading 85.36. (2) Apparatus based on the expansion of a bi-metal strip, liquid or gas - expansion beyond a certain point operating the alarm. In one type, the expansion of a gas forces a piston to move in a cylinder; a valve is incorporated so that a slow expansion does not set off the alarm, but only a sudden expansion due to a sudden rise in temperature. (3) Apparatus based on the variation in the electrical resistance of an element subjected to a change in temperature. (4) Apparatus based on photoelectric cells. A ray of light is focussed on the cell and, if obscured to a predetermined extent by smoke, operates the alarm. Similar apparatus fitted with a graduated indicator or a recording system fall in Chapter 90. In addition to the automatic fire alarms, the heading also covers non-automatic alarms, such as are mounted in streets, for calling the fire brigade. (G) Electric vapour or gas alarms, consisting of a detector and a sound or visual alarm, to warn of the presence of hazardous gaseous mixtures (e.g., natural gas, methane). (H) Flame a....
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....ctric sound signalling apparatus and electrical signalling apparatus. The list of items covered under the broader category of indicator panels are provided as room indicators, number indicators, office indicators, lift indicators, station indicating panels, indicators for race courses, stadiums, bowling alleys etc., burglar or fire alarm systems, flame alarms, alarms operating on the basis of photelectric cells. The impugned goods are not covered under the various items listed in the HSN for Chapter heading 85 31. Thus, the impugned goods are essentially required for working with POS computer system. This item/product is not covered by the phrase 'other apparatus' appearing in HSN description of chapter sub-heading 853180 and in the CTI 8531 80 00 at the six digit level of the First Schedule to the Customs Tariff Act, 1975. 9.5 From the above discussion and analysis, we are of the prima facie view that the impugned goods are classifiable under CTI 8471 60 90 as the imported goods at the time of import remained as identifiable 'parts of POS system' viz., BA 63 display, cash drawer and cables being part of Wincor Beetal Modular Point Of Sale (POS) systems. 10. We further find t....