2023 (7) TMI 1248 - AAR - Customs

Classification of goods proposed to be imported - proposed import of Self-ordering Kiosk in disassembled form where its display unit connection box and stand would be imported simultaneously in a single consignment or where its display unit and connection box (without stand) would be imported simultaneously in a single consignment or where its display unit connection box and stand would be imported on a standalone basis in separate consignments - to be classified under HSN 8470 5010 or under HSN 8471 4190? - exemption under N/N. 24/2005 - Customs dated 01-03-2005. HELD THAT - Self-ordering Kiosk is a multi-functional device having capability to perform a number of functions; Self-ordering Kiosk has been designed to not just be a simple data processing machine but it performs a specific function of facilitating sale of products/services and enable customers to make payments via an interactive display interface; it possesses integrated payment terminals printing function bar-code/QR code scanning function; component/part of Self-ordering Kiosk i.e connection box is its integral part designed to function solely/principally with it with a pre-defined bracket where display unit is placed for the Self-ordering Kiosk to start functioning and carries out various functions in Self-ordering Kiosk inter-alia receipt printer barcode leader QR code reader payment terminals wi-fi connectivity NFC connectivity; component/part of self-ordering kiosk i.e display unit is an integral component/part designed to function solely/principally with self-ordering kiosk and aids its various functions viz. Touch-enabled display panel processor memory interface storage unit and operating system; stand is designed to be used solely with Self-ordering Kiosk is also an integral part of Self-ordering Kiosk but it is an optional accessory. Further the applicant has declared that no processing whatsoever would be carried out on the imported goods post importation into India. On going through the comments of the concerned Commissionerate regarding classification of Self-ordering Kiosks imported in disassembled form into India where Display Unit Connection Box Stand would be imported simultaneously in a single shipment or where display unit and connection box would be imported simultaneously in a single shipment the display unit and connection box would merit classification under Sub-heading 84798999 whereas the stand would merit classification under Sub-heading 94032010/94032090 and as regards applicability of exemption under Notification under serial number 7 of Notification No. 24/2005 -Customs dated 01-03-2005 the opinion is in negative. Further the concerned Commissionerate has opined that the components/parts of Self-ordering Kiosk namely display unit connection box and stand imported on standalone basis in different/separate consignments at different point of time the part display unit merit classifiable under Sub-heading 85285900 and the connection box is classifiable under Sub-heading 84798999 whereas the stand being not a part of the Self-ordering Kiosk but is in the nature of optional accessory would merit classifiable under Sub-heading 94032010/94032090 as the case may be; that the components/parts of Self-ordering Kiosk namely display unit connection box and stand appears to be not classifiable under heading 8470 the said goods are not entitled for exemption specified at serial number 7 of Notification No. 24/2005 - Customs dated 01-03-2005 when imported on standalone basis in different/separate consignments over a period of time. Reference drawn to Note 6(E) of Chapter 84 is relevant for the purposes of classification as the Self-ordering Kiosks have specific end-use in retail environment and enables a smart solution to browse products/services and provide multiple payment options; therefore the Self-ordering Kiosk performs a specific function other than data processing; thus by virtue of Note (E) of Chapter 84 the Self-ordering Kiosk would not be classifiable as an ADP under the heading 8471. Classification of Self-ordering Kiosk in dis-assembled form - HELD THAT - Display Unit is a comprehensive component/part which acts as an interface with the customer and performs several functions on its own; moreover Connection Box facilitates payments against sale of products; it is an integral part in functioning of Self-ordering Kiosk . Further both Display Unit and Connection Box are designed to function solely/principally with the Self-ordering Kiosk . In view of the observations the Self-ordering Kiosk imported in disassembled form into India where display unit connection box are imported simultaneously in a single shipment would be classifiable under Sub-heading 84705010 and will be entitled for exemption stipulated under serial number 7 of Notification No. 24/2005 - Customs dated 01-03-2005. Where Self-ordering Kiosk imported in disassembled form into India where display unit connection box are imported simultaneously in a single shipment along with Stand then in terms of rule 2(a) of GRI as presented Display Unit and Connection box the incomplete or unfinished articles has the essential character of the complete or finished Self-ordering Kiosk or Cash Register . Stand being an optional accessory not compulsorily supplied along with other components forming Self-ordering Kiosk simultaneously in a single shipment will merit classification under the heading appropriate to it under heading 9403 in terms of rule I of GRI. Applicability of exemption vide Notification No. 24/2005-Cus. dated 01.03.2005 on import of different goods - HELD THAT - It is noticed that under serial number 7 of the said notification all goods falling under heading 8470 are exempt from whole of duty of Customs leviable thereon under the First schedule of the Customs Tariff Act 1975 and under serial number 9 of this notification all goods falling under Sub-heading 84732100 or 84732900 are exempted. Thus exemption from customs duties under serial number 7 and 9 is based on the classification of goods under said heading and Sub-heading respectively. Classification of components/parts of Self-ordering Kiosk namely (1) Display Unit (2) Connection Box (3) Stand imported on standalone basis in different/separate consignments at different point in time - HELD THAT - Display Unit is a comprehensive component/part which acts as an interface with the customer and performs several functions on its own; moreover Connection Box facilitates payments against sale of products; it is an integral part in functioning of Self-ordering Kiosk . Further both Display Unit and Connection Box are designed to function solely/principally with the Self-ordering Kiosk . Thus Display Unit or Connection Box imported on standalone basis would merit classification under Subheading 84732900 in terms of Note 2(b) of Section XVI read with heading 8470 read with rule 1 of GRI thereby concluding that parts and accessories which are designed for use solely or principally with a machine classifiable under headings 8470 - 8472 would be classifiable under the heading 8473. and Stand would merit classification under heading 9403 classification of Stand at the Sub-heading level would depend upon its constituent material and end-use.

Summary

Issues Involved:
1. Classification of 'Self-ordering Kiosks' imported in disassembled form.
2. Eligibility for exemption under Notification No. 24/2005-Customs.
3. Classification of components/parts imported on a standalone basis.
4. Eligibility for exemption for components/parts under Notification No. 24/2005-Customs.

Summary of Judgment:

Issue 1: Classification of 'Self-ordering Kiosks' imported in disassembled form
- Question 1 & 3: The ruling sought classification when 'Self-ordering Kiosk' is imported in disassembled form with Display Unit, Connection Box, and Stand (Question 1) or without Stand (Question 3).
- Decision: The 'Self-ordering Kiosk' imported in disassembled form, where Display Unit and Connection Box are imported simultaneously, in a single shipment, would be classified under Sub-heading 84705010 as 'Cash Registers'. The Stand, being an optional accessory, will merit classification under heading 9403.

Issue 2: Eligibility for exemption under Notification No. 24/2005-Customs
- Question 2 & 4: The ruling sought whether 'Self-ordering Kiosks' imported in disassembled form would be entitled to exemption specified at serial number 7 of Notification No. 24/2005-Customs.
- Decision: 'Self-ordering Kiosks' imported in disassembled form, where Display Unit and Connection Box are imported simultaneously, would be eligible for exemption under serial number 7 of Notification No. 24/2005-Customs. The Stand, being an optional accessory, is not eligible for the exemption.

Issue 3: Classification of components/parts imported on a standalone basis
- Question 5: The ruling sought classification of components/parts of 'Self-ordering Kiosk' imported on a standalone basis.
- Decision: The Display Unit and Connection Box, when imported on a standalone basis, would merit classification under Sub-heading 84732900 as parts of an 'Electronically Operated Cash Register'. The Stand would merit classification under heading 9403.

Issue 4: Eligibility for exemption for components/parts under Notification No. 24/2005-Customs
- Question 6: The ruling sought whether components/parts of 'Self-ordering Kiosk' imported on a standalone basis would be entitled to exemption specified at serial number 9 of Notification No. 24/2005-Customs.
- Decision: The Display Unit and Connection Box, when imported on a standalone basis, would be eligible for exemption under serial number 9 of Notification No. 24/2005-Customs. The Stand, being classified under heading 9403, is not eligible for the exemption.

Conclusion:
The judgment provides clarity on the classification and eligibility for exemption of 'Self-ordering Kiosks' and their components when imported in disassembled form or on a standalone basis. The 'Self-ordering Kiosk' is classified as a 'Cash Register' under Sub-heading 84705010, with eligibility for exemption under Notification No. 24/2005-Customs, while the Stand is classified separately under heading 9403 and is not eligible for the exemption.