2010 (11) TMI 20 - SC - Customs

Classification - and Duplicating machines, printers and Multi-Functional Machines - Xerox machines - Held that - that the correct classification for the imported Multi-Functional Machines involved in this case, namely models Xerox Regal 5799, Xerox Workcentre XD 100 and Xerox Workcentre XD 155df should be under Customs Tariff Chapter heading 84.71.60 (as Input output units) - there has been no case made out for classification of the goods under the residuary heading 84.79.89

Summary

Issues Involved:
1. Classification of imported Multi-Functional Machines under the Customs Tariff Act.
2. Interpretation of relevant Chapter Headings and Notes under the Customs Tariff Act.
3. Application of General Rules for the Interpretation of the Import Tariff Schedule.

Issue-wise Detailed Analysis:

1. Classification of Imported Multi-Functional Machines:
The primary issue in this appeal is whether the imported Multi-Functional Machines (Xerox Regal 5799, Xerox Work Centre XD100, and Xerox Work Centre XD155df) should be classified under Chapter Heading 8479.89 (Residual Heading) as claimed by the Revenue or under Chapter Heading 8471.60 as claimed by the appellants.

2. Interpretation of Relevant Chapter Headings and Notes:
The appellants argued that the Multi-Functional Machines, which perform functions of printers, fax machines, copiers, and/or scanners, should be classified under Chapter Heading 8471.60 as units of Automatic Data Processing Machines (ADPM). The Revenue, however, classified them under the residual heading 8479.89, arguing that these machines are capable of functioning independently of a computer and thus do not qualify as units of ADPM.

3. Application of General Rules for the Interpretation of the Import Tariff Schedule:
The appellants relied on Rule 3(a) and Rule 3(b) of the General Rules for the Interpretation of the Import Tariff Schedule, which prioritize specific headings over general ones and classify goods based on their essential character. They also pointed to Note 3 of Section XVI, which states that machines designed to perform multiple functions are classified based on their principal function.

Detailed Judgment:

Arguments by Appellants:
The appellants contended that the Multi-Functional Machines serve as input and output devices for ADPMs and should therefore fall under sub-heading 84.71.60. They argued that the machines meet the three-fold test of Chapter Note 5(B) as they are principally used in ADPM, connectable to a Central Processing Unit, and able to accept and deliver data in a usable form. They further argued that Chapter Note 5(E) does not apply as the machines are presented independently and not in conjunction with an ADPM.

Arguments by Revenue:
The Revenue argued that the machines perform functions other than data processing and should be classified under the residual heading 8479.89. They contended that the machines are not solely or principally used with an ADPM and that no single function, such as printing, is predominant.

Court's Analysis:
The Court examined the relevant Chapter Headings and Notes, including Chapter Note 5 of Chapter 84 and the General Rules for Interpretation. It noted that the Multi-Functional Machines have a predominant printing function, with 85% of the components in Xerox Regal 5799 and 74% in Xerox XD155df dedicated to printing. This satisfies the three-fold test of Chapter Note 5(B). The Court also found that Chapter Note 5(E) does not apply as the machines are presented independently and not with an ADPM.

Conclusion:
The Court concluded that the correct classification for the imported Multi-Functional Machines should be under Chapter Heading 84.71.60. The appeal was allowed, and the order of the Tribunal was set aside.

Judgment:
The appeal is allowed, and the order passed by the Tribunal is set aside. The imported Multi-Functional Machines are to be classified under Chapter Heading 84.71.60. Each party will bear its own costs.