2023 (10) TMI 1006 - AT - Customs

Classification of imported goods - 553 series for 4500 Full A/N Prox. Exp Memory - to be classified under Chapter Heading 8473 3020 as part of the computers or classifiable under chapter 8543? - HELD THAT - 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 respondent is nothing but a card reader working in conjunction with the server - 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). In the case of COMMISSIONER OF CUSTOMS BANGALORE-CUS VERSUS M/S. SHAKYA TECHNOLOGIES LTD 018 (8) TMI 1029 - CESTAT BANGALORE , a similar product viz., fingerprint scanner was classified under Chapter Heading 8543 7099 as per the observations made by the Tribunal at para 5.1, wherein it has held that We find that the Head 8543 covers electrical machines and apparatus having individual functions not specified or included elsewhere in the chapter. Therefore, the classification of the Finger Print Reader would be more appropriate under this heading. Hence, based on the discussions above and by following the decision of this Bench, the product is rightly classifiable under chapter 8543. Appeal allowed.

Summary

Issues Involved:
The issues involved in this case are the classification of imported goods under Chapter Heading 8473 and Chapter Heading 8543, and the authority's decision on whether the imported item is an automatic data processing machine.

Classification under Chapter Heading 8473:
The respondent imported a data collection device described as a Kronos 4500 Touch ID terminal with various integrated readers. The appellate authority analyzed the product and concluded that it should be classified under Chapter Heading 8471 4190 as it functions as an automatic data processing machine with standalone capabilities. The authority accepted that the terminal is not just a badge reader but includes it as one of the input devices.

Revenue's Appeal and Classification under Chapter Heading 8543:
The Revenue appealed the decision, arguing that the item does not process data locally and should be classified under Chapter Heading 8543 as it acts upon the program run by the central server and has the characteristics of a proximity card reader. The Revenue contended that the impugned order incorrectly classified the product under a heading not pleaded before the original authority.

Legal Error in Classification:
The Original Authority noted that the importer claimed the goods as parts of computers under Chapter Heading 8473, but the Commissioner (A) classified them under Chapter 8471 41 90 as Automatic Data Processing Machines, contrary to the importer's claim. The Commissioner (A) was held to have erred in law by classifying the item under a heading not part of the original order, as per the decision in Precision Industries Pvt. Ltd. case.

Classification under Chapter Heading 8543:
The device in question, a data collection device, captures data from employee cards or PIN entries and transmits it to a central server for further processing. It was determined that the item functions as a proximity reader/badge reader, falling under Chapter Heading 8543 as per Chapter Note 5(E) to Chapter 84, which classifies machines performing specific functions in headings appropriate to their respective functions.

Precedent and Final Decision:
Referring to a similar case involving a fingerprint scanner, the Tribunal upheld the classification under Chapter Heading 8543 based on the specific function of the product. Following this precedent and the rules of interpretation, the Tribunal found that the imported product was rightly classifiable under Chapter Heading 8543, and the appeal was allowed.