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2022 (2) TMI 308 - AT - CustomsClassification of imported goods - (ViewBoard) ViewSonic IFP6550-2/65 Interactive Display System - (ViewBoard)-ViewSonic-IFP7550-2/75 Interactive Display System - case set up by the appellant at the time of assessment was that the goods were Automatic Data Processing Machines ADPM and not Monitors and, therefore, classifiable under CTI 8471 90 00 and not under CTI 8528 52 00? - HELD THAT - The impugned goods are IFP having an in-built CPU (ARM Cortex A.73 dual-core 1.2GHz Processor), a 2GB RAM and Android 7.0 Operating software. In addition, they also have an internal storage capacity of 16GB. Thus, goods are machines which are capable of storing data or programmes for the execution of programmes and satisfy condition no. (i) of Chapter Note 5(A) to Chapter 84. The goods are capable of working as an ADPM on a standalone basis and can also be used in conjunction with other ADPM, but this would not mean that the goods would cease to be ADMP in their own right, capable of working on a standalone basis. The large size display (65 inches and 75 inches) is only a feature/specification of the product and this cannot be construed to be its function, much less its principal function. The Deputy Commissioner and the Commissioner (Appeals), therefore, committed an error in holding that the large size of display would mean that the goods are meant for display purpose to a large gathering and, therefore, in terms of Note 5(E) of Chapter Note 84, the goods would merit classification as per the specific use - Commissioner (Appeals) committed an error in rejecting the contention of the appellant that the goods were ADPM by taking recourse to trade parlance, namely, that buyers intending to purchase a computer will not select the goods because of the large size display and, therefore, the goods should be specified according to the use. The Commissioner (Appeals) also committed an error in holding that even if the goods are capable of being used as ADPM considering their features, they would still merit classification under CTH 8528 in view of the provisions of GRI (3)(c). The goods in dispute, on the other hand, are much more than mere display devices and, therefore, cannot be classified under CTH 8528 as monitors. The HSN Explanatory Notes to CTH 8528 also mention that the viewable image sizes of the monitors do not generally exceed 30 inches and that they usually cannot be operated by a remote control. The goods, in the present case, are of 65 inches and 75 inches and do have a remote control. The goods, therefore, would not merit classification under CTH 8528. What also needs to be noted is that classification of a product is determined according to the terms of the Headings and any relative section or Chapter Note. GRI (1) also provides that titles of Sections, Chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification is determined according to the terms of the Headings and any relative Section or Chapter Notes. It is only when such Headings or Notes do not otherwise require that the provisions (2),(3),(4),(5) and (6) of GRI would apply. There is no manner of doubt that the goods would merit classification under CTI 8471 41 90 as claimed by the appellant and not under CTI 8528 52 00 as claimed by the Department - the differential duty of ₹ 13,37,043/- paid by the appellant by challan dated 28.01.2020 shall be refunded to the appellant with applicable rate of interest - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Classification of Interactive Display Systems under Customs Tariff Items (CTI). 2. Applicability of General Rules for the Interpretation of Import Tariff (GRI). 3. Determination of principal function of the goods. 4. Reliance on trade parlance and previous classifications by other customs authorities. 5. Refund of differential duty paid under protest. Issue-wise Detailed Analysis: 1. Classification of Interactive Display Systems under CTI: The primary issue in both appeals was the classification of "ViewBoard ViewSonic IFP6550-2/65” Interactive Display System" and "ViewBoard ViewSonic IFP7550-2/75” Interactive Display System." The appellant claimed classification under CTI 8471 41 90 (Automatic Data Processing Machines), while the Department argued for CTI 8528 52 00 (Monitors). The Deputy Commissioner rejected the appellant's self-assessment under CTI 8471 90 00 and re-assessed the goods under CTI 8528 52 00, asserting that the goods were primarily used for display purposes. 2. Applicability of General Rules for the Interpretation of Import Tariff (GRI): The Deputy Commissioner and Commissioner (Appeals) applied GRI 3(c) to determine the classification, concluding that the goods should be classified under CTI 8528 52 00 because this heading occurs last in numerical order among those which equally merit consideration. However, the Tribunal noted that GRI 3(c) should only be invoked when no clear picture emerges from applying GRI 1, which was not the case here. 3. Determination of Principal Function of the Goods: The Tribunal emphasized that the goods, with an in-built CPU, RAM, storage, and operating system, meet all the criteria of an Automatic Data Processing Machine (ADPM) as per Chapter Note 5(A) to Chapter 84. The large display size was considered a feature/specification rather than the principal function. The goods were capable of performing arithmetical computations, storing and executing programs, and operating independently, thereby satisfying the conditions for classification under CTI 8471. 4. Reliance on Trade Parlance and Previous Classifications by Other Customs Authorities: The Commissioner (Appeals) erred in rejecting the appellant's claim based on trade parlance, asserting that buyers would not select the goods as computers due to their large display size. The Tribunal noted that classification should be determined according to the terms of the Headings and Chapter Notes, not trade parlance. Additionally, the Tribunal referenced a similar case (Cloudwalker Streaming Technologies Pvt. Ltd. vs. Commissioner of Customs) where goods with similar features were classified under CTI 8471. 5. Refund of Differential Duty Paid Under Protest: The Tribunal ordered the refund of the differential duty of ?13,37,043/- paid by the appellant under protest, along with applicable interest, as the goods were found to be correctly classifiable under CTI 8471 41 90. Conclusion: The Tribunal set aside the orders of the Commissioner (Appeals) and Deputy Commissioner, ruling that the goods in question merit classification under CTI 8471 41 90. The appeals were allowed, and the differential duty paid by the appellant was ordered to be refunded with interest.
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