2023 (12) TMI 1112 - AT - Customs

Classification of imported goods - T4 Fingerprint Time Attendance System and K200 Proximity Time Attendance System - to be classified under Customs Tariff Heading 8471 4190 or under 8543 7099? - crossing over the remand directions or not - HELD THAT - The claim of the appellant that the authorities have gone beyond the remand directions is baseless in as much as from the orders it is seen that the authorities have limited themselves to the directions in deciding the classification. The Tribunal while remanding the case also observed that He will not be hindered in the exercise by our views on the issue appearing in the order . Therefore the authorities have only restricted themselves in analysing the impugned item as per its features to arrive at the correct classification. As noted by the Original Authority, the device captures the data from the employee s card or the data of the particular employee who key in the PIN into the device. The device does not do anything except for collecting the data at the time of entry or exit and this data is transmitted to a central server for further processing like marking the attendance, preparation of payroll or for other purposes. These facts are not in dispute. Based on the General Rules of Interpretation and the Chapter Notes, the item needs to be classified in the heading akin to it or where the specific description is provided. In this case, the data collection device imported by the appellant is nothing but a card reader working in conjunction with the server. Thus, this device functions as proximity readers/badge readers, which are specifically classified under Chapter Heading No.8543. Since the specific function of the imported item is to mark attendance or to take note of the persons of the employees for the purpose of attendance or payroll or leave, they cannot be classified under Chapter 84 as it excludes from this Chapter as per the Chapter Note 5(E). This Tribunal, recently, in the case of COMMISSIONER OF CUSTOMS, BANGALORE VERSUS M/S. KRONOS SYSTEMS INDIA PVT. LTD. 2023 (10) TMI 1006 - CESTAT BANGLORE , in an identical issue held the product to be rightly classifiable under Chapter 8543. Thus, by following the decisions of this Bench, it is found that the product is rightly classifiable under Chapter 8543 - the impugned order is upheld and the appeal is dismissed.

Summary

Issues Involved:
1. Classification of imported goods under the appropriate Customs Tariff Heading.
2. Determination of whether the imported devices are freely programmable as per the requirements of the user.

Summary:

Issue 1: Classification of Imported Goods
The appellant, M/s. Enterprise Software Solutions Lab Ltd., Bangalore, imported T4 Fingerprint Time & Attendance System and K200 Proximity Time & Attendance System. The assessing authority classified them under CTH 8543, while the appellant argued for CTH 8471. The Tribunal remanded the case to re-examine the classification. The core issue was whether the devices should be classified under CTH 8543 as "electrical instruments not specified elsewhere" or under CTH 8471 as "Automatic Data Processing Machines (ADPM)."

Tribunal's Observation:
The Tribunal noted that the devices work in conjunction with a server and process data in digital format, scanning fingerprints and comparing them with stored data. The Tribunal emphasized the need to determine if the devices are "freely programmable."

Commissioner (Appeals) Findings:
In the de novo proceedings, the Commissioner (Appeals) held that the devices are not freely programmable by the user but can be customized by the manufacturer. The Commissioner concluded that the devices do not meet the criteria for classification under CTH 8471 and should be classified under CTH 8543.

Issue 2: Freely Programmable Nature of Devices
The appellant contended that the Commissioner (Appeals) misinterpreted the Tribunal's remand directions and argued that the devices are capable of being freely programmed according to the user's requirements. The appellant cited various case laws to support their claim that the devices should be classified under CTH 8471.

Tribunal's Final Decision:
The Tribunal found that the authorities adhered to the remand directions and analyzed the devices' features to determine the correct classification. The Original Authority identified the devices as biometric and proximity card readers, rejecting the classification under CTH 8471. The Tribunal upheld the classification under CTH 8543, citing previous rulings where similar devices were classified under this heading.

Conclusion:
The Tribunal concluded that the imported devices are not freely programmable as required for classification under CTH 8471 and are more appropriately classified under CTH 8543. The appeal was dismissed, and the impugned order was upheld.

(Order pronounced in open court on 22/12/2023.)