Gaming laptops are “Automatic data Processing Machines” and not “Video Game Console”

[CA Bimal Jain]

The CESTAT, Chennai in M/S. ASUS INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS, CHENNAI - 2023 (8) TMI 362 - CESTAT CHENNAI  held that, gaming laptops are classifiable under Customs Tariff Heading 8471 as “Automatic data processing machines” even though it is being marketed as a gaming computer that is capable of running high end graphic intensive games.

Facts:

M/s. Asus India Private Limited (“the Appellant”) filed four Bills-of-Entry during April 2017 describing the goods as ‘Computer System Desktop’ and has classified them under CTH 8471 3090 as “automatic data processing machines”.

The imported product is categorized under the ‘ROG’ series. The product has following components: 7th Generation Intel Core i7 processor, Nvidia GeForce GTX 1080 graphics.

The Revenue Department (“the Respondent”) on examination found that the imported products are personal computers with accessories like mouse, power adapter and gaming console. However, as per the website of the supplier the goods were specially designed for gaming purposes with a principal function of gaming.

The Revenue Department re-classified the imported goods under CTH 9504 5000 which interalia covers “Video game consoles and machines”.

During the adjudication, the Appellant submitted that the imported goods are not Electronic Games but a personal computer, which is a multi-tasking device including computing capability, internet surfing, multimedia playing and editing, word processing, etc.

The Appellant differentiated the video game consoles by providing example of “Electronic Games (Console)” such as PS4, XBOX, etc. which are particularly designed for gaming purpose.

Since, the imported goods are neither video game consoles from which an image is reproduced on a television receiver, monitor or other external screen or surface nor video game machines having self-contained video screen, whether or not portable. Thus, the imported goods are personal computers and could not be classified under CTH 9504.

The Appellant filed an appeal before the Appellate Authority who vide Order dated March 28, 2018 (“the Impugned Order”) observed that CTH 8471 is for classification of goods such as automatic data processing machines and units thereof, which can be put to use in many places such as industry, trade, scientific research etc., whereas the goods classifiable under CTH 9504 are video game consoles whose principal function is of entertainment.

Since, the imported goods are specially designed for gaming purpose only, and as their principal function is gaming, they are classifiable under CTH 9504 as game consoles.

Further observed that, although the product satisfied the condition of the Notes for CTH 8471 and do multi-tasking, but as mentioned in the HSN Explanatory Note 2 to Chapter 9504 and terms of Rule 3(a) of the General Rules for the Interpretation the  heading which provides the most specific description shall  be preferred over the headings providing a more general  description. Thus, the imported goods merited classification under CTH 9504.

Aggrieved by the Impugned Order the Appellant filed the appeal before the CESTAT, Chennai.

Issue:

Whether the gaming laptops will be classified as ‘automatic data processing machines’ or ‘video game consoles’?

Held:

The CESTAT, Chennai in M/S. ASUS INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS, CHENNAI - 2023 (8) TMI 362 - CESTAT CHENNAI  held as under:

• Observed that, the imported products are automatic data processing machines, but the objective and characteristics indicate that they are intended for entertainment purposes (game-playing). As per the product literature the imported goods are designed for the purpose of playing games and reportedly, even has gaming software.
• Noted that, an automatic data processing machine or personal computer are capable of storing the processing programmes and is also freely programmable in accordance with the requirements of the user and capable of computing and executing without human intervention. Whereas video game consoles are simply plug and play devices, which are more user friendly, and meant purely for gaming or entertainment purposes and are not capable of computing, internet surfing, word processing, etc.
• Further noted that, any computer system which has additional features for playing games, continues to be a computer system and can also be used for general purposes other than as an entertainment device.
• Stated that, the imported goods are freely programmable whereas video game consoles only operate on fixed programmes. Thus, they are more appropriately classifiable under CTH 8471 as automatic data processing machines.
• Set aside the Impugned Order and allowed the appeal.

(Author can be reached at [email protected])