2023 (1) TMI 495 - AAR - GST

Classification of traded goods - Interactive Flat Panels (IFPs) - qualifies under Chapter heading 84714190 or otherwise - applicability of Entry No. 360 of Schedule- III of Notification No. 03/2017 -Central Tax (Rate) dated 28-06-2017 - HELD THAT - BenQ Interactive Flat Panel RP75O2 Black 75 , imported and subsequently supplied to the applicant by their supplier namely i.e., M/s Benq India Private Limited would merit classification under chapter heading 8471 only when the stipulations as mentioned in the Section note and chapter note stands complied. In case the impugned machine consisting of individual components (whether separate or interconnected by piping, by transmission devices, by electric cables or by other devices) intended to contribute together to a clearly defined function covered by one of the headings in Chapter 84 or Chapter 85, then the same as a whole would merit classification in the heading appropriate to that function, as stipulated in Section note 4 to Section XVI supra. Similarly, chapter note 5(E) to chapter 84 supra stipulates that Machines incorporating or working in conjunction with an automatic data processing machine and performing a specific function other than data processing are to be classified in the headings appropriate to their respective functions or, failing that, in residual headings. The rate of tax applicable on such goods depends upon the classification of the same and the effective rates of the same is specified in schedules appended to Notification no. 01/2017-CT(Rate) dated 28.6.2017 and subject to the adherence of stipulations, the applicable Rate of tax is 9% CGST 9%SGST on goods classifiable under 8471, in terms of entry no. 360 to Schedule-Ill to Notification no. 01/2017-CT(Rate) dated 28.06.2017. In case the goods in question are classifiable under heading other than 8471 owing to it functionality as discussed, the said goods will attract rate of tax as specified in the schedules appended to Notification no. 01/2017-CT(Rate) dated 28.6.2017 on such supplies on the basis of description specified therein.

Summary

Issues Involved:
1. Classification of Interactive Flat Panels (IFPs) under Chapter heading 84714190.
2. Applicable tax rate on IFPs under Entry No. 360 of Schedule-III of Notification No. 03/2017-Central Tax (Rate) dated 28-06-2017.

Issue-wise Analysis:

1. Classification of Interactive Flat Panels (IFPs) under Chapter heading 84714190:

The applicant, M/s Savex Technologies Pvt. Ltd., requested an advance ruling on whether their product, BenQ Interactive Flat Panel RP7502 Black 75"�, qualifies under Chapter heading 84714190. The product in question is described as having features such as an in-built CPU, GPU, 4GB RAM, 32GB storage, and a pre-installed Android operating system. It also supports other operating systems like Windows and Linux through an OPS slot and can connect to various devices and peripherals.

The applicant argued that the IFPs meet the criteria for classification under heading 8471, which covers "automatic data processing machines and units thereof."� They emphasized that the IFPs have the capability to store and execute programs, are freely programmable, perform arithmetic computations, and execute processing programs without human intervention. They also compared the IFPs to all-in-one PCs and tablet computers, highlighting similarities in specifications and functionalities.

The ruling authority examined the provisions of the CGST Act, 2017, and the Customs Tariff Act, 1975, which is based on the Harmonized System of Nomenclature (HSN). They noted that for a product to be classified under heading 8471, it must meet the conditions specified in Note 5(A) to Chapter 84, which defines "automatic data processing machines."�

The authority concluded that the classification of the IFPs under heading 8471 depends on whether the product performs any function other than data processing. If the IFPs incorporate or work in conjunction with an automatic data processing machine and perform a specific function other than data processing, they should be classified under the appropriate headings for those functions.

2. Applicable tax rate on IFPs under Entry No. 360 of Schedule-III of Notification No. 03/2017-Central Tax (Rate) dated 28-06-2017:

The applicant sought clarification on the applicable tax rate for the IFPs, asserting that the rate should be 9% CGST and 9% SGST under Entry No. 360 of Schedule-III of Notification No. 01/2017-CT (Rate) dated 28-06-2017.

The ruling authority referred to the relevant notification, which specifies the GST rates for various goods based on their classification under the Customs Tariff Act. The authority reiterated that the applicable tax rate depends on the correct classification of the IFPs. If the IFPs are classified under heading 8471, they would attract a tax rate of 9% CGST and 9% SGST as per Entry No. 360 of Schedule-III. However, if the IFPs are classified under a different heading due to their functionality, the applicable tax rate would be determined based on the corresponding entry in the notification.

Conclusion:

The ruling authority concluded that the BenQ Interactive Flat Panel RP7502 Black 75"� would qualify under Chapter heading 84714190 only if it satisfies the stipulations mentioned in the Section note and Chapter note of Section XVI and Chapter 84, respectively. If the IFPs perform any function other than data processing, they should be classified under the appropriate headings for those functions. The applicable tax rate would be 9% CGST and 9% SGST if classified under heading 8471, as per Entry No. 360 of Schedule-III to Notification No. 01/2017-CT (Rate) dated 28-06-2017. If classified under a different heading, the tax rate would be as specified in the corresponding entry in the notification.