TaxTMI 
TaxTMI 
2023 (11) TMI 1431
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....oposed item of import, Augmented Reality (AR) device namely, Qualcomm X-Reality (QXR) version 1 (QXR v1) and version 2 (QXR v2) [subject goods, in short]. 3. The applicant has inter-alia stated that, Qualcomm is head-quartered in San Diego, California and they are a Research & Development (R&D) centre for Qualcomm which plays a key role in developing next-generation mobile technologies. It is further stated that, they have recently imported Augmented Reality ("AR") devices namely, Qualcomm X-Reality ("QXR") Version 1 ("QXR v1") and Version 2 ("QXR v2") for use in its product development and enhancement, as sample products at INHYD4 & INBLR4 (Port Code); they had written to respective Customs Authority seeking provisional assessment of the bills of entry as there is lack of clarity in respect of classification of the subject goods and thus they have filed an application for advance ruling for appropriate classification. 4. The applicant has also stated that, the subject goods are a self-contained automated device that uses wearable device having transparent lenses providing a digital overlay of the user's natural field of vision to display information or imagery; the devic....
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.... designers and customers can review building projects to finalize details prior to construction, and retailers can test virtual displays before committing to a physical one; augmented reality is when a rendered image is overlaid onto the real world; the mobile game Pokémon GO, famously brought AR to the mainstream by showing computer-rendered monsters standing on lawns and sidewalks as players roam their neighbourhoods; AR graphics are visible through cell phones, tablets and other devices, bringing a new kind of interactive experience to users; navigating directions, for example, rather than following a 2D map, a windshield can super impose directions over one's view of the road, with simulated arrows directing the driver exactly where to turn; in this technology, it is a transparent display that presents data to the user's screen in front of their eyes, hence the user need not look away from their usual viewpoints; additional data displayed could be routes, location, plans, black spots, chats with other device users, and even 3D images and videos; Augmented Reality glasses based on this technology display 3D holograms overlaid on the real world where the user is lo....
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....ical sophistication, using wearable device, having transparent lenses providing a digital overlay of the user's natural field of vision to display imagery or information; the devices are capable of performing multiple functions; in terms of the Tariff under Customs Act, the most relevant heading for the subject product 'QXR', are considered to fall under Chapter Heading 8471 or 8517 or 8518 or 8525 or 8528 or 8543 or 9004; the subject goods are goods with highly enhanced technological capabilities and it appears that a particular tariff heading, does not sufficiently determine its classification as the subject goods have multiple functions. 6.2 In view of the above facts, the applicant has inter-alia referred to Note No. 3 to Section XVI which prescribes that machines performing two or more complementary or alternate functions are to be classified, basis the "principal function"; as per Note No.3 to Section XVI, "3. Unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines designed for the purpose of performing two or more complementary or alternative functions are to be classified ....
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.... be made to the HSN Explanatory Notes to heading 85.43 which clearly mentions that in order to classify a product under heading 85.43, the product should be electrical appliance and apparatus but not falling in any other heading of Chapter 85 and also it should not be covered more specifically by a heading of any other chapter of the nomenclature. 6.3 The applicant has also referred to ruling in the case of Amazon Kindle device, wherein the Authority, in the case of Amazon Seller Services Pvt. Ltd, has analysed various tariff heading for classification and finally concluded that the said apparatus ought to be classified as device having individual functions under 8543; drawing reference to the EU BTI Ruling No. DEBTI11350/20-1 dated 13-Jul-2020 wherein while classifying augmented reality system under 8543, it has held that, "Augmented reality system-consists of a device to be worn on the head with two transparent color displays, several cameras, motion and position sensors, a microphone and two loudspeakers, with one that can be connected via a cable, processing unit consisting of a processor, main memory and memory, graphics controller, Bluetooth and WLAN radio module ....
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....s covered in CTH 851762 as the device also receive and transmit the data, the device while playing video and audio regenerates voice, images and other data; therefore, item appears to be appropriately classifiable under 871762 and more appropriately under 85176290. 7.2 However, the applicant has countered the comments of the concerned Commissionerate and inter-alia stated that the conclusion is wrong on facts and under law; the subject goods does not have transmission or reception capability of its own; it obtains the transmission and reception capability when connected with the mobile device; accordingly, it cannot be concluded that the smart glasses are transmission or reception apparatus of heading 851762; moreover mobile device and the subject goods are accessories to each other; the comments of the concerned Commissionerate has intended to create difference between electrical and electronic devices however the wordings electrical and electronic devices are interchangeably used; if the analogy is applied to state that the device is not electrical device, then it cannot also be classifiable under heading 8517 or Chapter 85 entirely which covers, all electrical machinery and e....
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....d testing of Augmented Reality devices; the device features a Qualcomm chipset that is engineered to deliver functionality for the development, testing, deployment and visual augmentation of the real world; it also allows to develop, test and measure products used for device development and is ideal for comparative testing of digital content on top of the user's view of the real world for XR viewer devices are intended for use only by engineering/development personnel for testing purposes; the subject goods does not have transmission or reception capability on its own; it obtains the transmission and reception capability, when connected with the mobile device/companion device; while reception, conversion and transmission of voice, images or other data is one of the functions performed by the said device, it also has multiple other primary functions such as taking pictures, video recording, displaying, it has functions to sense movements and guide user to navigate; it can be used as display and has features of ADP. As regards details of the constituents in one set of the goods intended for import, the applicant has stated that the details are listed in para 22 of the application....
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....s, I intend to issue ruling in the instant application recognizing the fact that the subject goods had earlier been imported as sample consignment. 10. Finding that the application is valid in terms of the provisions of the Customs Act and the CAAR Regulations, 2021, having heard the applicant, and recognizing the importance of timely pronouncement of rulings, I proceed to examine the question on merits. In this regard, it is also felt that reference to Harmonized Commodity Description and Coding System of the World Customs Organization, to which India is a signatory, would also be useful. 11.1 I note that determination of classification of the aforesaid devices would involve interpretation of General Rules for Interpretation of Import Tariff (GRI, in short). Rule 1 of the GRI lays down that 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. Rule 3 of the GRI provides, "3. When by application of rule 2(b) or for any other reason, goods are, prima-facie, classifiable under two or more headings, classifi....
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.... available in the public domain on the internet, it is also gathered that, sensors collect data about the environment, a software algorithm creates a virtual map of the environment, digital content is placed within the virtual map. In today's environment when convergence of technology is the norm, every other device is multifunctional, and characteristics of these devices are such that they do not fit in the scope of a particular tariff heading. Moreover a number of functions performed by these device appears to be important and essential; the subject goods are also multifunctional devices however nature of goods and functions performed by various components of the subject goods is such that it may not be feasible to say that any function is principal or essential. In such a situation, the subject goods may not be classifiable in terms of rule 1, rule 3(a) and rule 3(b) of GRI. In general, multi-function machines are classified according to the principal function of the machine, while they can carry out different operations. Where it is not possible to determine the principal function and where, as provided in Note 3 to Section XVI, the context does not otherwise require, it is....