TaxTMI 
TaxTMI 
2024 (2) TMI 1620
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....ports through the Air Cargo Complex, Mumbai: a. Mobile Computer RK95 (without SIM); b. Mobile Computer RS35; c. Mobile Computer RS35 (without SIM); d. Mobile Computer RS51; e. Mobile Computer RS51 HSWO (without SIM); f. Mobile Computer RS36; g. Mobile Computer RS36 (without SIM); h. Mobile Computer RS26; i. Mobile Computer RS26 (without SIM); and j. RK 25 (without SIM). 2. Applicant has stated following facts in support of the questions framed: That the applicant is engaged in providing industrial IOT solutions, IOT cloud data platform, RFID/ Barcode/Mobility/AIDC solutions etc. and importing Handheld mobile computers since 2018 and is now proposing to import new models of Handheld mobile computers along with the models already being imported by them. The aforesaid devices of ten (10) models mentioned above are collectively referred to as "Handheld mobile computers" which are computers used for scanning barcode and processing data in order to increase efficiency of functions such as inventory management etc. The products in question are to be sold further to the Applicant's distribut....
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....evant: -Rugged design -Fall proof -Water Resistant -Dust Resistant -Working environment (harsh usage and temperature range of -20°℃ to 50°℃) -Screen can be read even in sunlight -Extended Battery Life -Bar Code Scanner for reading 1D and 2D bar codes, apart from reading QR codes. The advantage is the reduction in scanning time. This scanner can scan 500 to 1000 codes per hour. -The laser can read short, mid and long range scanning capability; -No separate audio-jack; for voice communication, it is generally advised to have earphone. -It is primarily designed for scanning application and processing of scanned data and not for voice communication. -Specialized applications are developed to run on the mobile computers, which are not/cannot run on android based mobile phones; -The physical key-board is akin to what is found on a conventional computer; -Extra keys provided for scanning and for performing other data processing function; -User not free to update the android system, unless otherwise confirmed by Cipherlab; 3. Statemen....
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.... 6(A) Compliance of the condition by the Handheld mobile computers in question i. Storing the processing program or programs and at least the data immediately necessary for the execution of the program; These devices can capture barcodes, text fields, phone numbers, images, signatures and even check boxes. The data so captured is formatted and sent/stored in respective applications for visibility. These machines have storage capability and also stored programs which can be changed from job to job. They process data in a coded form. ii. Being freely programmed in accordance with the requirements of the user; The devices come configurable with off-the shelf, end- user applications allowing the programming of the various functions in accordance with the needs of the user. iii. Performing arithmetical computations specified by the user; and These devices automatically capture details pertaining to inventory, invoicing, real time delivery and subsequently process the same to perform relevant functions. These functions are performed with programming set in tune as basic logical sequence, comprising of data input, data processing and data output. Further, these Handhe....
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....ng system if it meets all of the following conditions: "It is of a kind solely or principally used in an automatic data processing system; It is connectable to the central processing unit either directly or through one or more other units; and 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 84.71". It can be seen that the above Note is applicable only for units of ADP Machine. In the present case, the Handheld mobile computers in question are ADP Machines themselves. Therefore, the above Note is not applicable to the Handheld mobile computers in question. Similarly, it is submitted that Chapter Note 6(D) is not applicable to ADP Machines but is instead only applicable to Units of ADP Machine. Therefore, even this Chapter Note is not applicable to the Handheld mobile computers in question. As far as Note 6(E) is concerned, it states that: "(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 clas....
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....r other wireless networks; other apparatus for 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 8443, 8525, 8527 or 8528." The relevant extract of Heading 85.17, w.e.f. 01.01.2022, is reproduced below: 8517 Telephone sets, including smartphones and other telephones for cellular networks or for other wireless networks; 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 8443, 8525, 8527 or 8528 -Telephone sets, including smartphones and other telephones for cellular networks or for other wireless networks: 851711 -- Line Telephone sets with cordless handsets: 851711 10 ---Push bottom type 85171190 ---Other 85171300 - Smartphones 85171400 - Other telephones for cellular networks or for other wireless networks 851718 - Other 85171810 ---Push button type 85171890 -....
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.... Designed to withstand huge falls and rough handling. Data edit Not available Can edit codes and scan partial codes. This is useful for specific industrial uses, and user need not spend time scanning whole codes and can get specific inputs instantly. Security Has conventional security features which are not too good Has exceptional Enterprise Level security features Cost (Android) Around INR 7,000 (for products having similar features and camera capability) Assessable value is upwards of INR 31,000. Enterprise level support No Yes Device life Shorter (2 years approx) Longer (4 years approx) Temperature sensitivity Higher. Can withstand upto 50℃ degrees The applicant further submitted that vide Finance Act, 2021, a new Custom Tariff Item has been introduced w.e.f. 01.01.22 i.e., Tariff Item 8517 13 00 which will cover "Smartphones". As per the definition given, the way it is worded, it is understood that the product (smartphone) is a telephone for cellular network, having additional features of ADP Machine and some few more features and the above amendment shall not be applicable to the products in question in ....
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....s of such tablet computer, with differences in the size of screen, dimensions etc. Board analysed the functions of a Tablet Computer and held that its principal function is that of a computer, and communication is merely incidental and therefore, the same is classifiable as an ADP Machine. Thus, the Circular likens the product to a laptop or computer and holds that as it satisfies the requirements under Note 6(A) to Chapter 84, it will be classified as an ADP Machine. The Circular also reaffirms the ruling of World Customs Organisation, regarding Tablet Computer. Thus, the Circular so issued in respect to 'Tablet Computers' will apply to these models of mobile computers as well. The relevant portion of the said circular is reproduced below: "3. A Tablet Computer is designed to be primarily operated by using its touchscreen. It 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 ("Voice over Internet Protocol") communications, etc. In addition, it can also be connected to a cellular network to mak....
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.... or without SIM Slot. c. Neither of the products are marketed as a replacement to a conventional device like cellular phones or mobile phones. d. Both devices are portable alternatives to laptops and computers. Further, Handheld mobile computers combine PC and scanning functions into a single device that can be outfitted with off-the-shelf or custom software applications that perform everyday tasks, such as monitoring deliveries, tracking assets, and managing inventory. Further, because they run on familiar operating systems such as Windows, Android, they offer the same functionality as a desktop computer or laptop. These processors are also equipped with a barcode scan engine and act as their own host, which means one can instantly update and edit information as it is captured. Thus, the Circular applies to Mobile Computers as well and supports its classification under Heading 84.71. The applicant submits that WCO Ruling on RFID Readers is not applicable. During its 68th Session, World Customs Organization considered RFID readers having inter-alia SIM capability, and has held that the same is classifiable under Heading 85.17. The decision is not....
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....e applications that perform everyday tasks such as monitoring deliveries, tracking assets, and managing inventory. Because they run on familiar operating systems such as Windows/Android, they offer the same functionality as a desktop computer or laptop. These processors are also equipped with a barcode scan engine and act as their own host, which means one can instantly update and edit information as it is captured. The applicant has suggested Customs Tariff heading 8471 as an appropriate classification for these devices. 5.2 General Rules of Interpretation (GRI) 1 of the Customs Tariff Act, 1975 provides that the classification of goods shall be "determined according to the terms of the headings and any relative section or chapter notes." In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, GRIs 2 through 6 may be applied in order. In view of the provisions of GRI 1 it is clear that in order to merit classification under heading 8471 these devices need to satisfy the requirements of chapter note 6(A) to chapter 84, the said chapter note is reproduced below: - 6 (A) For the purposes of hea....
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....d in the headings appropriate to their respective functions or, failing that, in residual headings. As the impugned devices, as described by the applicant, appear to be akin to ADP machines performing capturing of data and its further processing, notes 6(D) and 6(E) do not appear to have application in this case. 5.3 In respect of possible alternate heading 8517, there is a need to examine the features of these devices in the context of note 3 to section XVI. Tariff Heading 8517 covers, "Telephone sets, including smartphones and other telephones for cellular networks or for other wireless networks; 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 in question also have communication capabilities, including 4 out of 10 having cellular connectivity, the classification under heading 8517 needs to be examined. Note 3 to section XVI of the tariff stipulates that, "Unless the context otherwise requires, composite machines consisting of two or m....
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....committee has classified RFID/barcode readers with a mobile operating system capable of scanning and cellular connectivity under subheading 8517 13. This subheading covers smartphones. Note 5 to chapter 85 states that "For the purposes of heading 85.17, the term "smartphones" means "telephones for cellular networks, equipped with a mobile operating system designed to perform the functions of an automatic data processing machine such as downloading and running multiple applications simultaneously, including third-party applications, and whether or not integrating other features such as digital cameras and navigational aid systems". The note clearly states that these devices are telephones for cellular networks designed to perform the functions of ADP machines. However, the devices under consideration are principally not telephones for cellular networks. In fact, 6 out of 10 models do not have the functionality of cellular connectivity, which shows that the SIM is not an integral part of these devices, as these devices are able to perform their primary function with or without the SIM card. These devices do not appear to be convenient for the purpose of telephony as a principal fu....