2018 (3) TMI 279 - AT - Customs

Classification of imported goods - Video Server - classified under CTH 85177090 or under CTH 85219090? - benefit of N/N. 24/2005-CUS - Held that - The description appearing in the catalogue clearly shows that the video servers are a device which is acts as an intermediary between the cameras and the network. In other words it receives images taken by the cameras and converts them into a digital form and feeds the same into the network - With reference to the assertion of Revenue that the said video server has memory to store the video images, the Commissioner (Appeals) has countered that the temporary storage/buffer of video image on the RAM/Memory does not make the video server recording and reproducing apparatus. The RAM of any device is meant only to assist the function of the internet circuit it cannot be treated as recording /storage device. Appeal dismissed - decided against Revenue.

Summary

Issues: Classification of imported video servers under Customs Tariff Act, 1975 and eligibility for exemption under Notification No. 24/2005-CUS.

Classification Issue Analysis:
The appeal involved a dispute regarding the classification of imported video servers under the Customs Tariff Act, 1975. The Revenue contended that the video servers should be classified under heading 85219090 as video recording devices, while the respondent claimed they should be classified under heading 85177090. The Revenue argued that the video servers were not eligible for exemption under Notification No. 24/2005-CUS, which exempts goods falling under heading 85.17. The Tribunal examined the product description from the catalogue, which indicated that the video servers acted as an intermediary between cameras and the network, converting analogue video signals into digital streams for transmission over an IP network. The Commissioner (Appeals) clarified that any recording occurred on a computer or client workstation, not on the video server itself. Despite the Revenue's assertions about memory storage on the video server, the Commissioner (Appeals) emphasized that temporary storage on RAM did not make the video server a recording device. Ultimately, the Tribunal upheld the Commissioner (Appeals) findings, dismissing the Revenue's appeal.

Exemption Issue Analysis:
Regarding the eligibility for exemption under Notification No. 24/2005-CUS, the Tribunal found that the video servers did not fall under heading 85.17, which was the category eligible for exemption. The Revenue's argument that the video servers were recording and reproducing apparatus was countered by the Commissioner (Appeals) who highlighted that the recording did not occur on the video server itself but on external devices. The Tribunal agreed with the Commissioner (Appeals) that the features cited by the Revenue, such as access to live video and audio streams directly, did not make the video server a recording device. The distinction between temporary memory storage and actual recording capabilities was crucial in determining the eligibility for exemption. As the grounds of appeal did not provide sufficient arguments to challenge the Commissioner (Appeals) findings, the Tribunal dismissed the Revenue's appeal, affirming the decision regarding the exemption under Notification No. 24/2005-CUS.

This detailed analysis of the judgment highlights the key arguments, findings, and reasoning involved in the classification and exemption issues addressed in the case.