TaxTMI 
TaxTMI 
TaxTMI 
2024 (11) TMI 1596
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....t of said Signo Readers. 2. Submission by the Applicant: 2.1 The Applicant is a company incorporated in India having its registered office at Unit No. 101, 1st Floor Tower B, The Millenia Towers, Murphy Road, Ulsoor, Bengaluru and is engaged in the import, sales, and distribution of HID brand products, including access control cards, readers, and printers. The present application has been filed by the applicant seeking clarification in relation to the classification of the product "HID Signo Reader" 2.2 The applicant intends to import the subject products "HID Signo Reader" from HID Global Corporation, USA, and HID Asia Pacific Ltd, Hong Kong. 2.3 The Applicant has been importing the said product in the past with classification under Custom Tariff Item (CTI) 8517 62 90. They have provided a sample Bill of Entry and Commercial Invoice in respect of past imports for reference. 2.4 The applicant further informed that the Irish Customs on the basis of their application classified the Signo Reader under Customs Tariff Sub-Heading (CTSH) 8471 90. In light of this ruling, the applicant is seeking to establish a uniform classification for the product "Signo Reader" under CTS....
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....D(r) Signo(tm) Keypad Reader 20K Contactless (RFID and Bluetooth) with keypad for PIN authentication 3 40 HID(r) Signo(tm) Reader 40 Contactless (RFID and Bluetooth) 4 40K HIDR Signo(tm) Keypad Reader 40K Contactless (RFID and Bluetooth) with keypad for PIN authentication 2.9 In the future, in addition to the above models, HID will be introducing an RFID only version of the Signo Reader under the following part number (PN) prefixes: Sr. No PN Prefix Description Type of Reader 1 20TKS1 HIDR Signo(tm) Reader 20, LF/HF Contactless (RFID) 2 20TKS3 HIDR Signo(tm) Reader 20, HF Contactless (RFID) 2.10 The Signo Reader acts as a digital credential physical access reader and, in some models, includes a keypad for PIN authentication as an additional method of authentication. 2.11 The Signo Reader is typically wall-mounted next to a building entrance such as a door equipped with an electronic lock and comes in 2 different sizes e.g., Model 20 and Model 40. The Signo Reader also offers an option that includes a keypad, providing dual factor authentication: Model 20K and Model 40K. The sample image of the product is enclos....
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....ller sends a signal to the electronic door lock to open, allowing entry to the cardholder. 2.17 In contrast, Bluetooth Technology enables the Signo Reader to communicate with Bluetooth-enabled mobile devices such as smartphones, tablets, and wearables. These devices actively transmit digital credentials to the reader using a 2.4 GHz radio frequency. The term "actively" is used to highlight that these devices have their own power source-a battery-which allows them to initiate communication with the reader. The Signo Reader receives the Bluetooth signal and demodulates it into binary data, which is then processed by the access controller in a similar manner to the RFID process. 2.18 The key difference between the two technologies is the power source for the transmission of the digital credential. Passive RFID smart cards rely on the reader's magnetic field for power, while Bluetooth devices use their own battery to actively transmit data. Both methods, however, result in the Signo Reader converting RF signals into binary data, which is then used by the access controller to verify and grant or deny access based on the credentials. 2.19 To summarize, when a person presents....
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....e Customs Tariff which reads "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". 3.3 It is imperative to note here that the principal function of the Signo Reader is to process the data retrieved from the RFID smart cards and/or received from the Bluetooth devices by converting the data (i.e., UID) into another medium (i.e., binary bit stream) for further processing, in order to grant physical access to the user. Though, the technology used to receive the data might be different, however, the purpose for which the machine is used is the same. 3.4 The Applicant submits that in case of determining the classification of an article it is pertinent to take into account the basic character and purpose of the machine. Classification of a product cannot be determined solely on the basis of one of the components. Thus, the basic character of the machine and the purpose for which it is used is required to be considered. Applying the same rationale in the instant case, it would be pertinent to look into the basic character of the '....
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....rinter 8471 60 25 ---- Plotter 8471 60 29 ---- Other 8471 60 40 --- Keyboard 8471 60 50 --- Scanners 8471 60 60 --- Mouse 8471 60 90 --- Other 8471 70 - Storage units 8471 70 10 --- Floppy disc drives 8471 70 20 --- Hard disc drives 8471 70 30 --- Removable or exchangeable disc drives 8471 70 40 --- Magnetic tape drives 8471 70 50 --- Cartridge tape 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 3.7 It is submitted that the heading 8471 consists of two parts, as indicated by the use a "semicolon", viz., - a. Automatic data processing machines and units thereof b. Magnetic or Optical readers, Machines for transcribing data on to data media in coded form and machines for processing such data, not elsewhere specified or included. 3.8 The first part includes "Automatic data processing machines and units thereof ... ". The definition of term "automatic data processing machines" is prov....
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....der CTI 8471 6090 as units of ADP machine. 3.12 Alternatively, Applicant submits that the product Signo Readers will also fall for classification in the second part of the heading 8471. The Applicant wishes to submit, that the second part of the heading 8471 consists of two groups viz., - a. Magnetic & Optical Readers b. Machines for transcribing data onto media in coded form and machines for processing such data. 3.13 A perusal of the Explanatory Notes of Chapter 84 provides that a Magnetic or optical readers read characters, generally in a special form, and convert them into electric signals (impulses) which can be directly used by machines for transcribing or processing coded information. Magnetic Readers reads the data printed with a special magnetic ink whereas in Optical readers, reads the data directly by a series of photoelectric cells. The relevant extract of the Explanatory notes is enumerated for your ready reference as below: "Magnetic or optical readers read characters, generally in a special form, and convert them into electric signals (impulses) which can be directly used by machines for transcribing or processing coded information. ....
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....dent that the product falls under the group 'Machines for transcribing data onto media in coded form and machines for processing such data' 3.18 Without prejudice to above submissions, in order to substantiate its claim of classification under 8471 90 00, the Applicant places reliance on the Advance Ruling No. NYI84081 dated 02 August 2002, issued by the Director, National Commodity Specialist Division wherein a similar product 'Proximity 2000 Hands Free' was taken into consideration. The Proximity 2000 Hands Free Reader used contactless technology that transmits a 132-kilohertz RF (Radio Frequency) signal that activates an "active" proximity card. When the active proximity cards are within range of the Proximity 2000, the card receiver picks up the signal from the reader to activate the card. Once activated, the card responds by transmitting a unique identification code at 66-kilohertz back to the reader. The lithium battery provides a strong output signal from the card to the reader. This technology provides active proximity cards with two to three times greater range than that of passive proximity cards. Thus, the product Proximity 2000 and the Signo Reader wo....
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....D 8471 60 90 OR 8471 90 00 Other u Free - Social Welfare Surcharge 3.25 It is submitted that as the product in the present case is free from BCD, no Social Welfare Surcharge shall be applicable on the imported goods. IGST 3.26 It is submitted that as per the Applicant, IGST on the subject goods is payable @ 18% under SI. No. 360 of Schedule-III of Notification No. 01/2017- Integrated Tax (Rate) dated 28 June 2017. S. No. Chapter or Heading or Sub- heading or Tariff Item Description of Goods 360 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 3.27 To summarize, the following levies would be payable on "Signo Reader" of all variants sought to be imported by the Applicant. Sr No Particulars Rate 1 Basic Customs Duty Free 2 Social Welfare Surcharge 0% 3 IGST 18% Notes 1 IGST rate is as per SI. No. 360 of Schedule-III to Notification No. 01/2017- Integrated Tax (Ra....
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....ch converts data (radio frequency / magnetic field) into binary data and transfer it further to the access controller for further processing. Thus, it is evident that the product falls under the group 'Machines for transcribing data onto media in coded form and machines for processing such data'. Therefore, for the reasons explained above, authorised representative submitted that the product would fall under Tariff Entry 8471 60 90 or 8471 90 00. 4. I have taken into consideration all the materials placed before me in respect of the subject goods including all the submissions and citations made by the applicant during the personal hearing. Accordingly, I proceed to pronounce a ruling on the basis of information available on record as well as existing legal framework having bearing on the classification of the goods in question under the first schedule of the Customs Tariff Act, 1975, specifically Chapter 84 & 85, its corresponding Chapter notes, supplementary notes and relevant HSN explanatory notes. 4.1 The first question requires ruling on classification of the goods i.e. Signo Reader to be imported. At the outset, we find that the issue raised in the first question....
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....ital access is retrieved / or sent to the reader via mobile phones etc. 4.6 Chapter Note 6(A) of Chapter 84 of Customs Tariff Act, 1975 defines 'automatic data processing machines' as devices capable of storing programs and data, executing user-specified arithmetic computations, and autonomously modifying its execution based on logical decisions during the processing run without human intervention. The Signo readers themselves do not constitute an automatic data processing machine, however it forms a part/ unit of the overall physical access control system. It satisfies all three conditions stipulated in Chapter Note 6(C) of Chapter 84 of Customs Tariff Act, 1975 to be classified as a unit of a data processing machine viz 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. In the case at hand, the subject import goods "Signo Reader" essentially transcribes the data onto media in coded form and perfo....
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.... 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 (i) 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 the 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 a....
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....ne. The device takes input in the form of finger print scan and after processing the information, the said processed information is sent to Automatic Data Processing Machine which collects data for making reports of attendance and timing and for entry and exit. The devices also operate lock of the gate on the basis of the data captured by the said device and processed by Automatic Data Processing Machine. Chapter note 5 (C) to chapter 84 readers as follows :- "2. The Chapter Note 5(C) to Chapter 84 reads as follows - (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." 4. It is noticed that the device imported by the appellant is used solely or principally in automatic data processing system whereby access and exit ....
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....mmunication capabilities required for classification under HS Code 8517. They do not transmit voice, data, or video signals over telecommunication networks. Signo readers perform data processing functions, such as decoding, encryption, and transmission. This data processing aspect aligns more closely with the characteristics of automatic data processing machines under HS Code 8471. HID Signo reader does not fall within the category of telecom products, therefore, it is reasonable to conclude that classification under CTH 8517 is ruled out. Hence I find that, while Signo readers may have some electrical components, their primary function and the specific data processing capabilities they offer, make them more suitable for classification under HS Code 8471. 4.10 To determine whether the HID Signo Reader should be classified under Tariff Item 8471 60 90 or 8471 90 00 of the First Schedule to the Customs Tariff Act, 1975, I find it necessary to closely examine the function of the device. 4.11 Signo readers are primarily designed for access control and identification, which involves data processing functions. They can read, decode, and transmit data, aligning with the characterist....