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TMI Blog2012 (6) TMI 603X X X X Extracts X X X X X X X X Extracts X X X X ..... l or dominant purpose is to act as input or output unit, then it would qualify and will be covered by Entry 41A at Sr. No.3. However, in case multi functional machine is a duplicator or a photocopying machine, which incidentally can be used as a printer or a scanner etc., the said machine would not qualify and cannot be treated and regarded as input or output unit of automatic data processing machine and will be covered by the residuary tax rate - Decided partly in favor of assessee. - ST APPEAL NO. 6 OF 2010 - - - Dated:- 4-5-2012 - SANJIV KHANNA AND R.V. EASWAR, JJ. Gajendra Maheshwari and Ms. Rajeshwari for the Appellant. H.C. Bhatia and K.K. Ahuja for the Respondent. JUDGMENT Sanjiv Khanna, J. Ricoh India Limited has preferred the present appeal under Section 81 of the Delhi Value Added Tax Act, 2004 (VAT, Act, for short) against the order dated 10th March, 2010 passed by the Appellate Tribunal, Value Added Tax, New Delhi (for short, the tribunal) in Appeal No.319/ATVAT/07-08. By the impugned order, the tribunal has affirmed the order dated 13th December, 2007, passed by the Commissioner, Department of Trade and Taxes, disposing of the application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax. There are three entries in the schedule II and the goods mentioned in said entries are taxable @ 1%. Goods mentioned in schedule III are taxable @ 4% (enhanced to 5% after 13.1.2010). There are 12 entries in Schedule IV and the goods mentioned in the said entries are taxable @ 20%. All other goods which are not classified and mentioned in the Schedules I to IV are taxable @ 12.5%. The main and principal dispute is whether the products sold by the appellant are covered by Entry No.41A of the third schedule of the VAT Act or are unclassified goods that attract tax @12.5%. In case the goods in question are covered by Entry No.41A of the third schedule of the VAT Act, the tax payable is @ 4%, otherwise, the tax is payable @ 12.5%. 6. During the relevant period, Entry No.41A of the third schedule has undergone three amendments. During the period 1st April, 2005 to 7th August, 2005, Entry Nos. 41 an 41A were as under:- Entry no. Description 41 IT Products including computers, telephone and parts thereof, teleprinter a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ata processing machines comprising in the same housing at least a central processing unit and an input and output unit whether or not combined, micro computer/processor, large/mainframe computer, computer presented in form of systems, digital processing units, storage units, input units, output units, Teletypewriter, Data entry terminal, Line printer, Dot Matrix printer, Letter quality daisy wheel printer, Graphic printer, Plotter, Laser jet printer, Key board, Monitor, storage units, floppy disc drive. Winchester/hard disc drives, Removal/exchangeable disc drives, magnetic tape drives, Cartridge tape drive, other units of automatic data processing machines, Uninterrupted power supply units (UPS). 8471 x x x Note-(1) The Rules for the interpretation of the provisions of the Central Excise Tariff Act, 1985 read with the Explanatory Notes as updated from time to time published by the Customs Cooperation Council, Brussels apply for the interpretation of this entry and the entry number 84 of this Schedule. Note.-(2) Where any commodities are described against any heading or, as the case may be, sub-heading, and the description in this entry and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Graphic printer @ 16% 8471 60 25 Plotter @ 16% 8471 60 26 Laser jet printer @ 16% 8471 60 27 Ink jet printer @ 16% 8471 60 29 Other @ 16% Relevant Section Note 3. Unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines designed for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function. 4. Where a machine (including a combination of machines) consists 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 whole falls to be class ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not differ from the nominal diameter by more than 1% or by more than 0.05 mm, whichever is less. Other steel balls are to be classified in heading 7326. 7. A machine which is used for more than one purpose is, for the purposes of classification to be treated as if its principal purpose were its sole purpose. 10. Post 1st January, 2007, amendment was made to the tariff item 8443 and 8471 and the relevant changes are as under:- Tariff Item (HSN Code) Description of goods 8443 Printing Machinery used for printing by means of plates, cylinders and other printing components of heading 8442; other printers, copying machines and facsimile machines, whether or not combined; parts and accessories thereof 8443 31 00 Machines which perform two or more functions of printing, copying of facsimile transmission, capable of connecting to an automatic data processing machine or to a network. 8471 Automatic Data Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncorporating television reception apparatus. (E) Machines incorporating or working in conjunction with an automatic data processing machines and performing a specific function other than data processing are to be classified in the heading appropriate to their respective functions, or, failing that, in residual headings. 6. .. 7. A machine which is used for more than one purpose is, for the purpose of classification, is to be treated as if its principal purpose was its sole purpose .. 11. We may first notice the decision of the Supreme Court in Xerox India Ltd. v. Commissioner of Customs, 2010 (260) ELT 161 (SC). The Supreme Court in the said case held that the multi functional machines in the said case, which were principally performing the function of a printer, should be classified under the head 8471.60 and the said goods could not be classified under the residuary head 84.79.89 for the purpose of taxation under the Customs Act, 1962. In the said case, the Supreme Court noticed Chapter Note 5 of Chapter 84 and referred to Rule 3(a) of General Rules of Interpretation and Note 3 of Section XVI, applicable to Chapter 84 and observed as under:- (13) It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal is allowed and the order passed by the Tribunal in Appeal No. C/300/2002-B dated 05.11.2002 is set aside. Parties to bear their own costs. 12. The contention of the appellant is that the aforesaid decision is squarely applicable and has been wrongly ignored and not applied by the tribunal. The contention of the respondent is to the contrary. Reference by both the parties was made to the four notes in the VAT Act applicable to Entry 41, which have been quoted above with reference to application of the Rules of Interpretation of the provisions of Central Excise Tariff Act, 1985 read with the explanatory notes. 13. At first, we deem it appropriate to examine the four notes in the VAT Act. Note (1) stipulates that Rules for Interpretation of the provisions of the Central Excise Tariff Act, 1985 read with the explanatory notes as updated from time to time published by the Customs Cooperation Council, Brussels will apply for interpretation. Note (2) states that where commodities described in any heading or sub-heading in the specified entries in the VAT Act are different from the corresponding description in the Central Excise Tariff Act, 1985, then the commodities descr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the heading, but can be a sub-heading under the Central Excise Tariff Act, 1985. 14. Thus, Rule (1) is a general rule of interpretation and is not subject to Rules (2) to (4). Rules (2) to (4) require that we should examine the description in column (2) and compare it with the description of the goods mentioned in the relevant entry in the Central Excise Tariff Act, 1985. If the same are identical, then we should apply the same interpretation, as has been given to the entry in Central Excise Tariff Act, 1985. If the entries are not identical or the commodity falls under the heading other in the Central Excise Tariff Act, 1985, then we have to look at the second column of the schedule to find out whether the commodities are covered by the said column. In case commodities/goods are not covered by the description given in the column, then commodities/goods will fall under the residuary tax rate. 15. The aforesaid notification containing Notes (1) to (4) is applicable with effect from 31st November, 2005 and do not apply to the period prior thereto. Therefore, for the period prior to 31st November, 2005, we need not refer to Entry No.8471 of the Central Excise Tariff Act, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipal and predominant purpose was to act as a computer printer or scanner or as an input or output devise of the computer, the multi functional machine would qualify and fall under entry 41A clause XXIII. However, if the machine was designed and manufactured for some other primary purpose, then it would not be covered by Entry 41A clause XXIII. Mere description or the nomenclature given by the manufacturer or trader is not relevant and the assessee should justify and establish their claim. We have applied the doctrine/test of principal and dominant purpose, as it is the most appropriate and logical test. The said test was applied by the Supreme Court in the case of Xerox India Ltd. ( supra ) for the purpose of Customs Act. A multi functional printer or machine may be able to perform several functions, but an ancillary or incidental function would not be relevant. The relevant determining factor in such cases even for the period before 31st November, 2005, would be the dominant or main purpose. This would prevent misuse and mis-declaration by the seller, who may try and sell a photocopier and a duplicating machine as a computer peripheral when, in fact, the main purpose and object ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aforesaid, we need not go into and examine the issue of amendment made in Entry No.8471.60 with effect from 1st January, 2007, whereby multi functional machines have been specifically classified under the tariff head 8443 and are no longer classified under the head 8471.60. Whether or not the reference in the notification issued under the VAT Act is Legislation by Reference or Legislation by Incorporation is not relevant and need not to be decided. We record that the multi functional machines/printers do not find mention in any specific entry or description in 8471.60. They would fall under the head others as combined output and input units. Similarly, under column (2) in the heading description in Entry 41A of the notification issued under the VAT Act, they can/may fall under the general description as input or output unit. 21. The next aspect, which has to be decided, is whether or not a multi functional printer/machine is an input or output unit under Entry 41A of the VAT Act. In order to decide this issue, we feel that the doctrine of dominant or principal purpose has to be applied. Note 1 read with the Rules of interpretation of Central Excise Tariff Act and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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