2008 (5) TMI 92 - AT - Customs

Automatic Teller Machines (ATM) Not. No. 25/2005 exempts parts intended for manufacture of ATMs from customs duty model which has no cash/cheque depositing facility, cannot be recognized as an ATM machines which not only dispense cash but also perform depositing cash/cheques can be recognized as ATM further physical verification done by bank personnel is not relevant for considering any machine as ATM - hence parts imported for machines which are ATM, are only eligible for exemption

Summary

Issues Involved:
1. Classification of 'P75' and 'P77' models as Automatic Teller Machines (ATMs) or Automatic Bank Note Dispensers.
2. Eligibility for exemption under Notification No. 25/2005-Cus. for imported components used in manufacturing these machines.

Issue-wise Detailed Analysis:

1. Classification of 'P75' and 'P77' Models
P75 Model:
The 'P75' model is capable of performing multiple banking functions, including cash dispensing, cash/cheque depositing, fund transfer, bill payment, balance enquiry, mobile phone top-up, and airline ticket booking. The machine issues an envelope for deposits, which the customer places into a slot. Upon bank authorization, the envelope is pulled inside, and a receipt is issued. The machine meets the requirements of an ATM as per HSN Explanatory Notes and the Board's Circular No. 41/2002-Cus. The Tribunal concluded that the 'P75' model is an ATM because it allows customers to deposit money and check account balances without direct contact with bank personnel.

P77 Model:
The 'P77' model lacks a cash or cheque depositing facility, which is a critical function of an ATM as per HSN Explanatory Notes and the Board's Circular No. 41/2002-Cus. Consequently, the 'P77' model was classified as an Automatic Cash Dispenser and not an ATM. The Tribunal upheld this classification, denying the benefit of exemption for components imported for manufacturing the 'P77' model.

2. Eligibility for Exemption under Notification No. 25/2005-Cus.
P75 Model:
Given the classification of the 'P75' model as an ATM, the components imported for its manufacture are eligible for exemption under Notification No. 25/2005-Cus. The Tribunal allowed the assessee's appeals concerning the 'P75' model, modifying the Commissioner's orders accordingly.

P77 Model:
Since the 'P77' model was classified as an Automatic Cash Dispenser, the components imported for its manufacture do not qualify for the exemption under Notification No. 25/2005-Cus. The Tribunal dismissed the assessee's appeal regarding the 'P77' model and upheld the Revenue's appeal, confirming the denial of exemption.

Conclusion:
- The 'P75' model is classified as an ATM, and the components imported for its manufacture are eligible for exemption under Notification No. 25/2005-Cus.
- The 'P77' model is classified as an Automatic Cash Dispenser, and the components imported for its manufacture are not eligible for the exemption.
- The Tribunal allowed the assessee's appeals for the 'P75' model and dismissed the appeals related to the 'P77' model.