2022 (11) TMI 1421 - AAR - Customs

Classification of goods proposed to be imported - hree different models of Laser jet printer i.e., HP Laser jet 108a (HP 108), HP Laser jet MFP 136a (HP 136) and HP Laser jet MFP 438nda (HP 438) - to be classified under Sub-heading 8443 32 40 and 8443 31 00 of the Customs Tariff Act, 1975 or not - eligibility to claim benefit of exemption under SI. No. 2 of Notification No. 24/2005-Cus dated 1-3-2005. Whether or not, the items, i.e printers in question, in absence of formatter board and firmware have the essential character of a printer? HELD THAT - In the case of JAYPEE FORGES VERSUS COLLECTOR OF CENTRAL EXCISE, BOMBAY 1995 (9) TMI 180 - CEGAT, NEW DELHI it is observed that the factors, which determine the essential character will vary as between different kinds of goods and may be determined not only by the nature of the material used but as well by the use to which the goods are intended. Further, the Hon'ble Orissa High Court held in State of Orissa v. Gestetnet Duplicators (P.) Ltd. 1974 (1) TMI 87 - ORISSA HIGH COURT that it is a matter of common experience that the identity of an article is associated with its primary function; it is only logical that it should be so; when a consumer buys an article, he buys it because it performs a specific function for him; there is a mental association in the mind of the consumer between the article and the need it supplies in his life; it is the functional character of the article which identifies it in his mind. The printers proposed to be imported without the formatter boards and firmware possess the essential character of a complete printer though they may not be functional at the time of import. Item, HP 136 and HP 438 are correctly classifiable under Sub-heading 8443 31 00 of the Customs Tariff - Item, HP 108 is rightly classifiable under CTI 8443 32 40 of the Customs Tariff - Item, HP 136 and HP 438 are eligible for exemption under SI. No. 2 of Notification No. 24/2005-Cus.

Summary

Issues Involved:
1. Classification of HP 136 and HP 438 printers without formatter boards.
2. Classification of HP 108 printer without formatter board.
3. Eligibility for exemption under SI. No. 2 of Notification No. 24/2005-Cus for HP 136 and HP 438.

Issue-wise Detailed Analysis:

1. Classification of HP 136 and HP 438 Printers Without Formatter Boards:
The applicant sought to classify HP 136 and HP 438 under Customs Tariff Item (CTI) 8443 31 00. These printers, despite being imported without formatter boards, possess essential characteristics of complete printers. The formatter board is a PCB used for controlling various printer functions, but its absence does not strip the printers of their essential character. The General Rules for Interpretation (GRI) Rule 2(a) supports this classification, as it states that incomplete or unfinished articles with the essential character of a finished article should be classified as the finished article. The ruling referenced multiple case laws and HSN Explanatory Notes to reinforce that machines missing certain components but retaining their essential features should be classified under the same heading as the complete machine. Thus, HP 136 and HP 438 were ruled to be correctly classifiable under Sub-heading 8443 31 00.

2. Classification of HP 108 Printer Without Formatter Board:
The applicant proposed that HP 108, a single-function printer, should be classified under CTI 8443 32 40. Similar to HP 136 and HP 438, HP 108, even without the formatter board, retains the essential characteristics of a complete printer. The ruling applied Rule 2(a) of the GRI, which supports classifying incomplete articles with the essential character of a finished article under the same heading as the complete article. Hence, HP 108 was ruled to be rightly classifiable under CTI 8443 32 40.

3. Eligibility for Exemption Under SI. No. 2 of Notification No. 24/2005-Cus for HP 136 and HP 438:
The applicant sought exemption from Basic Customs Duty (BCD) for HP 136 and HP 438 under SI. No. 2 of Notification No. 24/2005-Cus, which provides exemption for goods falling under Sub-heading 8443 31 00. Since HP 136 and HP 438 were classified under Sub-heading 8443 31 00, they were deemed eligible for the exemption. The ruling confirmed that these items are eligible for the benefit of nil rate of BCD as per the specified notification.

Conclusion:
The ruling concluded that HP 136 and HP 438 are correctly classifiable under Sub-heading 8443 31 00, and HP 108 under CTI 8443 32 40. Furthermore, HP 136 and HP 438 are eligible for exemption under SI. No. 2 of Notification No. 24/2005-Cus.