2023 (7) TMI 1065 - AAR - Customs

Classification of goods proposed to be imported - Thermal Printer Ribbons (TPR) - classifiable under Tariff Item 8443 99 59 of the First Schedule to the Customs Tariff Act, 1975 or not? - rate of duty applicable on the import of Thermal Printer Ribbons - HELD THAT - TPR consist of the following core components viz., supply and take-up spools, thermal transfer ink ribbon, geared and non-geared flanges, a RFID tag (communicates information to the printer) and a cleaning roller. The product does not consist of Ink cartridge or Ink nozzle spray. It is the ink in the ribbon which melts from the heat in the print head and is transferred on the Card. It has been submitted that Thermal Printer Ribbon is a part of Thermal Transfer Printing Machinery and therefore falls for classification under Heading 8443 Printing machinery used for printing by means of plates, cylinders and other printing components of heading 8442; Other printers, copying machines, and facsimile machines, whether or not combined; parts and accessories thereof . The applicant has relied upon judgment of the CESTAT, Mumbai in the case of M/S HONEYWELL AUTOMATION INDIA LTD. VERSUS COMMISSIONER OF CUSTOMS, ACC, MUMBAI 2017 (10) TMI 409 - CESTAT MUMBAI whereunder it was held that Thermal Printer is a printing device capable of being connected to an Automatic Data Processing Machine or a network to print output and thus would be covered under CTH 8443 32 90. Based on the established ratio of CESTAT, Mumbai's decision in case of Honeywell Automation India Ltd. applicant has further stated that since Thermal Printer Ribbon (TPR) is an integral part of the Thermal printer and without TPR the thermal printers cannot function, the TPR be classified as a part of Thermal Printer under CTH 8443 99 -Parts and accessories of goods of sub heading 8443 31, 8443 32 and further Tariff item 8443 99 59 -Other. Applicant while basing their argument on functionality and physical characteristics of the product has further submitted that TPR cannot be classified under Chapter Heading 9612 as the Thermal Printer Ribbon is different from typewriter/computer printer ribbons because of the difference in the physical characteristics and printing process. CTH 9612 comprises of Typewriter or similar ribbons, inked or otherwise prepared for giving impressions, whether or not on spools or in cartridges . The product in question cannot be described as a typewriter or similar ribbons, inked or otherwise, prepared for giving impressions. A typewriter ribbon is typically narrow and thin while the Thermal Printer Ribbon in the present case is wide. Further, the purpose of the typewriter ribbon is to serve as a medium for printing text on paper by impression from impact - In contrast, the purpose of ribbon in TPR is to serve as a medium for printing graphic images and text on an ID plastic card by use of heat. In the thermal printing process, pigmented dye and/or resin is never transferred to the card by means of impact but due to the heat on the printer head. In summary, the functionality and the physical characteristics of Thermal Printer Ribbon and typewriter ribbon are clearly not akin. Thermal Printing Ribbon (TPR) proposed to be imported by the applicant falls under CTH 8443 99 59 of the First schedule to the CTA, 1975. Rate of duty applicable to the Thermal Printer Ribbon falling under the CTH 8443 99 59 is BCD- Nil IGST -18%.

Issues Involved:
1. Classification of "Thermal Printer Ribbons" (TPR) under the Customs Tariff Act, 1975.
2. Correct classification if the initial classification is found incorrect.
3. Applicable rate of duty on the import of "Thermal Printer Ribbons".

Detailed Analysis:

Issue 1: Classification under Tariff Item 8443 99 59
The applicant, HID India Pvt. Ltd., engaged in the import and distribution of HID brand products, sought an authoritative ruling on the classification of "Thermal Printer Ribbon" (TPR) designed for use with thermal ID card printers (DTC and HDP printers). The applicant argued that TPR should be classified under Customs Tariff Heading (CTH) 8443, which covers "Printing machinery used for printing by means of plates, cylinders and other printing components of heading 8442; Other printers, copying machines, and facsimile machines, whether or not combined; parts and accessories thereof."

The applicant contended that TPR is an integral part of thermal printers, without which the printers cannot function. This aligns with the decision in Honeywell Automation India Ltd. vs. CC, ACC, Mumbai 2018 (359) E.L.T. 402 (Tri. - Mumbai), which classified thermal printers under CTH 8443 32 90. The applicant further cited Section Note 2 of Section XVI, which supports classifying parts and accessories of machines under their respective headings if they are essential for the machine's operation.

Issue 2: Alternative Classification under Chapter Heading 9612
The applicant also addressed the possibility of classifying TPR under Chapter Heading 9612, which includes "Typewriter or similar ribbons, inked or otherwise prepared for giving impressions, whether or not on spools or in cartridges." The applicant argued that TPR differs significantly from typewriter ribbons in both physical characteristics and functionality. Typewriter ribbons are narrow and thin, designed to transfer ink by impact, whereas TPR uses heat to transfer dye or resin onto ID cards. The applicant supported this argument with the US Customs and Border Protection (CBP) Advance Ruling and a Brazilian Advance Ruling, both of which classified similar products under sub-heading 8443.99.

The judgment agreed with the applicant's contention, noting that TPR is not inked to give impressions by impact but by heat transfer, making it unsuitable for classification under CTH 9612. The Explanatory Notes for CTH 9612 and the dictionary definition of "impression" further supported this conclusion.

Issue 3: Applicable Rate of Duty
The judgment concluded that TPR should be classified under CTH 8443 99 59, which covers "Other parts and accessories of goods of sub-heading 8443 31, 8443 32." The applicable rate of duty for TPR under this classification is Basic Customs Duty (BCD) - Nil and Integrated Goods and Services Tax (IGST) - 18%.

Conclusion:
The ruling determined that "Thermal Printer Ribbon" (TPR) proposed to be imported by the applicant is classifiable under CTH 8443 99 59 of the First Schedule to the Customs Tariff Act, 1975. The applicable rate of duty is BCD- Nil and IGST - 18%.

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