TaxTMI 
TaxTMI 
2025 (1) TMI 1710
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....a Private Limited, India ('Applicant'), is a company having its registered head office located at 13th Floor, Prestige Minsk Square, Municipal No. 6, Cubbon Road, Bengaluru, Karnataka. The Applicant is a company incorporated under the Companies Act, 2013 and is engaged in the business of importing electronic consumer goods under the brand name 'Apple' such as iPhones, iPads, iPods, Mac Book (laptops) and computers for selling the same in India through online sales portal, channel partners and distributors located in India. 2.2 The Applicant in furtherance to its current business is proposing to engage in import of 'Apple Vision Pro' into India. Overview of Apple Vision Pro 2.3 Apple Vision Pro hereinafter referred to as the 'device', is designed to be worn on the user's head and acts as a spatial portable automatic data processing machine. The devices functions as an independent spatial computing machine but can also be connected to other Apple products such as Apple iPhone ('iPhone'), Apple iPad ('IPad) and Mac Book ("Mac"). For ease of reference an image of the device has been reproduced below: 2.4 The device facilitates....
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....a) Apple Vision Pro (HMD) b) Light Seal Cushions c) Battery d) Cover e) 30W USB-C power adaptor f) USB-C Charge Cable 2.9 The Apple vision pro along with the listed accessories will be imported in a consolidated pretty white box under a one single invoice, where a consolidated/single price is charged for the unit, i.e., the device and the accessories. Further, the specified accessories, namely, light seal, solo knit band and dual loop band (together referred to as 'kitted accessories') shall be imported by the Applicant on a standalone basis. The Apple Vision Pro and its accessories (imported in the pretty white box) and the kitted accessories (imported on a standalone basis) shall be assembled at the brick-and-mortar retail store and sold to customers as a single unit (i.e., Apple Vision Pro) for a consolidated/single price. Applicant's interpretation of Law/Facts 3.1 The Applicant submitted that the Apple Vision Pro (hereinafter referred to as the 'device'), is designed to be worn on the user's head and acts as a spatial portable automatic data processing machine. The device functions as an independent ....
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....ce for a precise fit according to the size of the face while blocking out stray light. 3.3.7 Digital Crown: It is a button provided to bring up to the Home view and control the level of immersion while using the Environments feature of the device while it also controls the amount of virtual background occupying the user's field of view, ranging from a mixed-reality view where apps and media appear to float in the user's real- world surroundings, to completely hiding the user's surroundings. 3.3.8 Top Button: The device can even capture spatial videos and spatial photos in the moment. 3.3.9 Power: A very compact external battery is provided which supports up to 2 hours of the general use and up to the 2.5 hours of the video playback. The battery pack connects to the headset using an unremovable 12-pin locking variant of the Lightning connector and can be even used while charging the battery. 3.3.10 Operating System: The operating system uses a 3D user interface navigated via finger tracking, eye tracking, and speech recognition. Users can select elements by looking at it and pinching two fingers together, move the element by moving the....
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....375] by the Court of Appeals for The Federal Circuit wherein the Hon'ble Judges observed as follows in relation to the requirement of automatic data processing device being 'freely programmable' by in accordance with the requirements of the user- "Customs believes that a freely programmable ADP machine is one that applications can be written for, does not impose artificial limitations upon such applications, and will accept new applications that allow the user to manipulate the data as deemed necessary by the user. ... This interpretation is further supported by the World Customs Organization's Explanatory Notes ("Explanatory Notes"), which, although not controlling, may inform our analysis. These notes provide that "machines which operate only on fixed programs, that is programs which cannot be modified by the user, are excluded [from heading 8471] even though the user may be able to choose between a number of such fixed programs." Explanatory Note 84.71(1)(A)." Further, reference in this regard is also drawn to the decision of the CESTAT, New Delhi in the case of Ingram Micro India Pvt. Ltd. vs. Principal Commissioner of Customs (Impo....
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....quirement for an automatic data processing machine as per Note 6A, chapter notes 6(C), 6(D) and 6(E) are not applicable. Accordingly, the device shall be classified as an automatic data-processing machines under heading 8471. Herein below is the extract of heading 8471- CTH Description 8471 Automatic data-processing machines and units thereof, magnetic or optical readers, machines for transcribing data onto data media in coded form and machines for processing such data, not elsewhere specified or included. -8471.30 Portable automatic data-processing machines, weighing not more than 10 kg, consisting of at least a central processing unit, a keyboard and a display. -- 84713010 Personal computer -- 84713090 Other 3.8 In the present case, the device, is designed and marketed as a spatial computing device which executes advanced computer vision algorithms. The device facilitates the users to execute computer programs, browse the internet, compose e-mails, watch videos etc. and navigates through the eyes, hands, voice or virtual keyboard as input devices with a special feature of added dimensions in the vision as it blends the digital content with the phy....
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....he GRI gives precedence to section notes/chapter notes while classifying a product and provides that classification shall be determined according to the terms of the headings and any relative section or chapter notes. Further, Rule 3 provides the principles for classification of products that are, prima facie, classifiable under two or more different CTH. 3.14 Accordingly, reference is drawn to Rule 3(b) of the GRI which reads as follows: "3(b) Mixtures, composite goods consisting of different materials or made-up different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3 (a), shall be classified as if they consisted of the material or component which gives them their essential character, in so far as the criterion is applicable". Thus, as per GRI 3(b), accessories imported along with the principal product shall be classified under the same CTH as that of the principal product. 3.15 Taking note of GRI 3(b), and as discussed hereinabove it can be said that as the device is put up in a set along with its accessories as a single unit for retail sale, the whole unit as such including the accessories will be classified ....
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....g with the device in a single box. * no separate charge is made for such supply, their price being included in the price of the article: To reiterate, a single price shall be charged for import of the complete unit, i.e., Apple Vision Pro along with the accessories. Thus, the price of the pretty white box imported shall be inclusive of the price of all the accessories. In this regard, the Applicant also submits that the price of the product imported for brick- and-mortar retail stores shall be lower than the price for the product imported for AOS sales. Reason being that few of the accessories (such as light seal, solo knit band and dual loop band) are not included in the pretty white box imported for sales through the brick- and-mortar retail store. 3.20 The applicant has also placed reliance on the judgement of Hon'ble Allahabad High Court in case of Samsung (India) Electronics Pvt. Ltd. Vs. Commissioner of Commercial Taxes U.P. Lucknow [2018 (2) ADJ 562]. 3.21 Basis the above, it is thus evident that where the accessories are imported in a single composite package along with the device for a single price (inclusive of the price of the accessories), the acce....
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....this Act. 6.3 Before deciding the issue, let me deliberate on the legal framework prescribed in Customs Tariff Act, 1975, Chapter/ Section notes along with HSN explanatory notes. As per Rule 1 of GRI, the titles of Sections, Chapters and sub-Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes. 6.3.1 The Applicant submitted that Apple Vision Pro is designed to be worn on the user's head and acts as a spatial portable automatic data processing machine. The device functions as an independent spatial computing machine but can also be connected to other Apple products such as iPhone, iPad and Mac. Accordingly, the device shall be classified as an automatic data-processing machines under heading 8471. 6.3.2 From the submissions of the applicant, and the information available on the webpage of M/s. Apple, it appears that the subject goods, namely Apple Vision Pro, have the following features, i.e., a pair of micro- OLED displays deliver more pixels than a 4K TV, VisionOS Operating System, 8-core CPU with 4 performance cores and 4 efficiency cor....
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....ssified 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 wired or wireless network (such as a local or wide area network); (iii) loudspeakers and microphones; (iv) television cameras, digital cameras and video camera recorders; (v) monitors and projectors, not incorporating television reception apparatus. (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." 6.3.4 Therefore, there is a need to examine....
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....the classification of Interactive Display System as an automatic data processing machine under CTH 8471, observed that for complying with the requirement for the goods being 'freely programmable', the goods should be capable of downloading and installing new programmes in accordance with their needs and usage. The relevant para of the judgement is reproduced as under: "19. The goods come with a pre-installed operating system, namely, Android 7.0. The said Android version is a customized operating system for these IFP. Further, the goods also have an OPS slot. With the use of the OPS Slot, additional hardware can be connected to the goods and the OPS Slot can also be used for installing other operating software such as Windows, etc. on the goods. Thus, the goods are machines on which the user is able to load and execute a program. In other words, the goods are capable of executing any application/program which is stored on its memory. A user can, with the use of either Android or other operating systems, download and install new programmes in accordance with their needs and usage. Thus, goods are machines which can be freely programmed in accordance with the need of....
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....ample, it can change the AR content based on the user's gaze or adjust the virtual environment based on the user's location and movement. A user can give a command and the same would be executed without any further intervention of the user. The CPU along with the operating system executes the command so given by the user by taking logical decisions during the processing run. This condition is fulfilled because the device doesn't require human intervention during its operation but makes logical decisions and adjustments to the program's execution in real time, based on its sensors and the environment. 6.3.5 From the above, it can be concluded that the Apple Vision Pro is equipped with the necessary hardware, including sufficient RAM and storage, to support the storage and execution of its operating system and software programs, enabling effective data processing. The software loaded onto the device is freely programmable, allowing users to customize the functionality according to their specific requirements. The device is capable of performing the arithmetical computations as specified by the user, and its processing program enables it to modify its execution dyna....
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....the data immediately necessary for the execution of the program; (2) Being freely programmed in accordance with the requirements of the user. (3) Performing arithmetical computations specified by the user; and (4) Executing, without human intervention, a processing program 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 user may be choose a number of such fixed programs. These machines have storage capability and also stored programs which can be changed from job to job. Automatic data processing machines process data in coded form. A code consists of a finite set of characters (binary code, standard six bit ISO code, etc.). The data input is usually automatic, by the use of data media such as magnetic tapes, or by direct reading of original documents, etc. There may also be arrangements for manual input by means of keyboards or the input may be furnished directly by certain instruments (e.g., measuring instruments). The input data are converted by the ....
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....t all the conditions outlined in Chapter Note 6(A) to Chapter 84 and the Explanatory Notes, however, the subject goods being an Automatic Data Processing Machine, alone would not entitle it being classifiable under CTH 8471, rather for it to fall under the said CTH 8471, it must not be specified elsewhere or included in the Customs Tariff. Thus, the marketing of the goods by the applicant as 'Spatial Computer' in itself is not sufficient to conclusive hold the classification of the impugned goods under CTH 8471. To conclusive arrive at a decision regarding the eligibility or otherwise of the claimed classification, it is of paramount importance to ascertain whether the subject goods is a machine performing any principal function other than data processing. 6.3.9 Thus, irrespective of the fact that the impugned goods marketed by the applicant as Spatial Computer, would merit classification under Heading 8471 only if the conditions as stipulated and discussed supra are adhered to. The rules of interpretation for classification, Section Notes and Chapter Notes as specified under Customs Tariff Act 1975 are applicable for classification of the impugned goods. It would not be....
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.... other apparatus for the 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), other than transmission or reception apparatus of heading 84.43, 85.25, 85.27 or 85.28". As the devices also have communication capabilities, including voice or video calls on wireless network, classification under heading 8517 needs to be examined. Chapter Note 6 (E) of Chapter 84 stipulates that machine performing a specific function other than data processing merits classification in appropriate headings /residual headings. In the instant case, these devices have computing and communication capabilities. However, for the product under consideration, automatic data processing appears to be the main function, while other functionalities of said machine 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 14.05.2013, clarification has been given by the Board regarding the classification of "tablet computers" under heading 8471 stating that, " ... The mobile phone calling function could b....
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....achines" have been categorically explained as under: "(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." From the above, it is amply clear that such 'video game consoles' and 'video game machines' alone fall under the purview of HSN Explanatory Note (2), whether or not they satisfy the conditions of Note 6(A) to Chapter 84. Thus, primarily, to fall within the ambit of the above Note, the goods necessarily have to be such video game consoles/machines as defined above. Further, Chapter Heading 9504 includes machines besides video game consoles, which can be automatic data processing machines. However, as per technical specification of the product, the impugned goods are neither 'video game consoles' nor 'video game machines', but are an entirely different product which, though have gaming capabilities, are also having a wide array of functionalities such as internet surfing, multimedia playing, watching videos, computing, voice calling etc., and can be put to ....
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....n be seen from the technical features of the subject goods that it is used predominantly as an automatic data processing (ADP) machine. In fact, communication and gaming are only auxiliary functions of the goods but same cannot construed to be its principal function. Thus, the subject goods having specific function of automatic data processing, falls within the ambit of Chapter Heading 8471 as per Chapter Note 6(A) to Chapter 84 and Explanatory Notes. 6.3.15 The CBEC vide Circular No. 20/2013-Customs dated 14.05.2013 has clarified that the tablet computer has same functionality as a laptop as the same can process data, execute programs and connect to the Internet via a wireless network in order to, for example, exchange and manage e- mails, exchange or download files, download software applications, conduct video or VoIP communication, apart from being connected to a cellular network to make calls. In other words, automatic data processing is the main functionality, while other features are auxiliary in nature. Therefore, the tablet computer shall be classifiable under HSN 8471 30, which is the same classification used for laptops. In the present case, the primary function....
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.... the physical world, creating an immersive and interactive environment. This technology uses a combination of Augmented Reality (AR), Virtual Reality (VR), Mixed Reality (MR), and other technologies to create a spatial computing platform. Spatial computing enables the users to interact with digital content more naturally and intuitively, using gestures, voice commands, and other input forms. Spatial computing uses a 3D environment as the primary computing platform rather than the traditional 2D Graphical User Interface (GUI). This environment can be a virtual or augmented reality, where the user can interact with digital objects and information in a 3D space. It allows for natural and intuitive interaction, such as gestures, body language, and spatial awareness. These interfaces are designed to be human-like and can naturally interact with the world around them instead of using a mouse and a keyboard. As per the research paper on "Spatial Computing: Concept, Applications, Challenges and Future Directions" cited as arXiv:2402.07912 [cs.HC] and submitted on 30.01.2024, it is submitted that over the years, User Interfaces (UIs) have seen constant development and improvement. Comman....
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....tted that the Apple Vision Pro utilizes a 3D user interface, which can be controlled through eye movements, hand gestures, or voice commands. This differs from traditional computers, which typically use a 2D graphical interface (GUI) that relies on mouse and keyboard input. While touchscreens are available on some devices, such as laptops and tablets, the interaction remains largely confined to 2D displays. However, despite these technological differences, the Apple Vision Pro should still be classified as a portable computer (automatic data processing machine), as it performs the principal function of computing and data processing. It is observed that with advancement in the technology, the efficiency and performance of the products are bound to go up and the law requires that the tariff entries are to be interpreted in line with the technological advancement. The Hon'ble Supreme Court in the case of Collector of Customs & Central Excise v. Lekhraj Jessumal & Sons [1996 (82) E.L.T. 162 (SC)] as held that words in the traffic schedule need to be interpreted by considering the rapid development of technology as the industry cannot be static. The Hon'ble Supreme Court held....
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....n, it is the microphone which has the technology of MEMS, which adds value to the microphone, and it is not the microphone which is adding value to the technology of MEMS. The inclusion of MEMS technology enhances the product's function but does not change its primary identity as a microphone." Applying the rationale of the above said judgements, it can be safely concluded that the Apple Vision Pro in the question is a portable computer, as it performs the essential function of computing and data processing. The product's additional features, such as the 3D User Interface, voice command, eye tracking and gestures movement etc., are nothing but technological advancement due to which the Apple Vision Pro cannot be made fall under any other tariff entry. 6.3.21 As discussed above, it is clear that the aforementioned goods, having the primary function of automatic data processing, fall within the scope of Chapter Heading 8471 (Automatic data- processing machines and units thereof, magnetic or optical readers, machines for transcribing data onto data media in coded form and machines for processing such data, not elsewhere specified or included), in accordance with Chapter ....
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.... and spare parts and maintenance or repairing implements for, any article, when imported along with that article shall be chargeable at the same rate of duty as that article, if the proper officer is satisfied that in the ordinary course of trade: (i) such accessories, parts and implements are compulsorily supplied along with that article, and (ii) no separate charge is made for such supply; their price being included in the price of the article. Further, reliance is placed on the case of Samsung (India) Electronics Pvt. Ltd. Vs. Commissioner of Commercial Taxes U.P. Lucknow [2018 (11) G.S.T.L. 367 (All.)], wherein the Hon'ble Allahabad High Court stated that: "37. Admittedly, the mobile phone and charger are sold as part of a composite package. The primary intent of the contract appears to be the sale of the mobile phone and the supply of the charger at best collateral or connected to the sale of the mobile phone. The predominant and paramount intent of the transaction must be recognized to be the sale of the mobile phone. In the case of transactions of the commodity in question, the Court must also bear in mind that a charger can possibly be purc....