9911796707
TMI Blog2019 (10) TMI 274X X X X Extracts X X X X X X X X Extracts X X X X ..... of the First Schedule shall, so far as may be, apply to the interpretation of this notification - the Automatic Data Processor machine with Input/ Output Units are listed under CTH 8471 while monitors capable of directly connecting to and designed for use with ADP is specified under CTH 8528. Section Note 4 to Section XVI indicates that where a machine consists of individual components, 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 classified in the heading appropriate to that function. In the instant case in the tax invoice submitted by the applicant the product description is given as Desktop Computer which in common parlance and technical sense known as a system unit which is otherwise known as a central processing unit along with its connected peripheral units of input output devices. In this case the processing unit gives essential character to the product in question. Hence, the desktop consisting of CPU, monitor, Keyboard and mouse supplied by the applicant is a single supply classified under CTH 8471. The applicable rate of tax for CTH 8471 is 9%-CGST under SI.No. 360 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be classifiable under CTH 8471 50. Under GST these goods are liable to be taxed at 9% under SI.no.360 of Schedule III to Notification 1/2017-Central Tax (rate) dated 28.06.2017. 2.2 The applicant's interpretation of law in respect of the question raised above is as follows:- * The company is involved in supply of desktops or personal computers consisting of CPU, Monitor, Keyboard and mouse or a combination of input/output units. The said supply is nothing but a single supply of desktop classifiable under HSN 8471 and the rate of GST applicable is 18%. * Notification 1/2017- Central Tax (Rate) dated June 28, 2017 provides that supply of desktops or personal computers consisting of CPU, monitor, keyboard and mouse or a combination of input/output units are liable to be taxed at 9%. * GST rate notification schedule refers to the HSN description of goods and services at the 4 digit level. Thus for classification at the 8 digit level it is relevant to understand classification of the product under the Customs Tariff read with the General Rules of interpretation under Customs * The description of the product under the GST notification is verbatim of the customs tariff head ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uters". Further, they have relied on the decision in the cases of Dell India Private Limited vs Commissioner of Customs, Bangalore = 2008 (3) TMI 146 - CESTAT, BANGALORE ' and Dell India Private Limited vs Commissioner of Customs, New Delhi = 2008 (10) TMI 217 - CESTAT, NEW DELHI wherein the tribunal has held that import of CPU along with monitor is eligible for the benefit of exemption Notification No 06/2006-CE dated March 1, 2006 and the Supreme Court's decision in case of Commissioner of Customs Vs Acer India Private limited = 2007 (10) TMI 8 - SUPREME COURT, wherein the Apex court has observed that "A desktop computer is a combination of a CPU with monitor, mouse and key board imported together as a set. What is, thus, covered by the above is a set of items brought together and capable of being put together to make a computer." This landmark decision of the Hon'ble Apex Court reaffirms the trade parlance/ commercial parlance test with respect to desktops. 2.4 The Applicant has further stated that under the erstwhile Excise Tariff Act also, the desktops were classified and cleared under tariff entry 8471, which covers processing units with or without input and output units. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... board and mouse. Hence, from the perspective of intention of Applicant as well as customer perception, it can be deduced that the supply does not constitute two supplies but is in fact a single supply for a consolidated consideration. In view of this fact, the supply made by them is a single supply of a desktop with defined configurations. Further, another aspect to note is that the shipment to the customer is in a single packaging constituting all the components of the desktop. d) Manner in which the product is advertised/marketed: The product is advertised as a single product, which serves as additional evidence to confirm that the supply indeed is a single supply. Hence, in view of the above, a "desktop" is widely understood and accepted as a combination of the CPU with keyboard, monitor, mouse, etc or with any combination of input/ output units and accordingly liable to GST at 18% as applicable for HSN 8471. 2.6 The applicant has also stated that notwithstanding their earlier arguments and the primary argument that the supply qualifies as a single supply, they submit that even if the supply of desktop is not viewed as a single supply it would still qualify as a "composite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 22.05.2019. The authorized representatives of the applicant appeared and furnished a written submission regarding the product in question. They sated that CPU alone will be classifiable under CTH 8471 and CPU with various input/output units will be classified under CTH 847150. They submitted that their argument is supported by the Supreme Court order given in their application. They stated that the question only pertain to hardware and do not include software (OS/ Office) or warranty. They also stated that their product is sold as desktop in their marketing brochures where CPU with monitor, keyboard, mouse are all sold together. 3.2 The applicant in their written submission dated 22.05.2019 has explained the terms both in common parlance and technical sense 'Computer' as the central processing unit; 'Desktop Computer' as consisting of CPU or system unit, peripheral unit such as keyboard, mouse, monitor etc., The functions of CPU, motherboard, memory, input devices, such as keyboard, mouse, output devices such as monitor, sound card, video card, are all part of the desktop computer 3.3 The question on which ruling is sought is as under: What is the rate of GST applicable on su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable rate of GST on such supply. 4.3 In terms of explanation (iii) and (iv) contained in the notification no. 1/2017-C.T.(Rate), dated 28.06.2017, "Tariff item", "sub-heading", "heading" and "Chapter" shall mean respectively a tariff item, sub-heading and Chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification. We find that the 'Automatic Data Processor machine with Input/ Output Units are listed under CTH 8471 while monitors capable of directly connecting to and designed for use with ADP is specified under CTH 8528. Accordingly, to arrive at the classification, the relevant Section notes to Section XVI (consisting of Chapter 84 and chapter 85), Chapter notes of Chapter 84 of the Customs Tariff and the entries related to CTH8471 and CTH 8528 are examined as under: Chapter heading 8471 of Customs Tariff is given below: 8471 AUTOMATIC DATA PROCESSING MACHINES AND UNITS THEREOF; MAGNETIC OR OPTICAL READERS, MACHINES FOR TRANSCRIBING DATA ON TO DATA MEDIA IN CODED FORM AND MA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution, by logical decision during the processing run. (B) Automatic data processing machines may be in the form of systems consisting of a variable number of separate units. (C) Subject to paragraphs (D) and (E), a unit is to be regarded as being part of an automatic data processing system if it meets all of the following conditions :- (i) it is of a kind solely or principally used in an automatic data processing system; (ii) it is connectable to the central processing unit either directly or through one or more other units; and (iii) it is able to accept or deliver data in a form (codes or signals) which can be used by the system. Separately presented units of an automatic data processing machine are to be classified in heading 8471. However, keyboards, X-Y co-ordinate input devices and disk storage units which satisfy the conditions of (ii) and (iii) above, are in all cases to be classified as units of heading 8471. (D) Heading 8471 docs not cover the following when presented separately, even if they meet all of the conditions set forth in paragraph (C):- (i) printers, copying machines, facsimile machines, whether or not combined; (ii) apparatus for the transm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in an automatic data processing system, they are connectable to the central processing unit either directly or through one or more other units; and are able to accept or deliver data in a form (codes or signals) which can be used by the system. As per Chapter Notes 5(c) keyboards and mouse if presented separately are to be classified under 8471. However, as per the Chapter Note 5(D) mentioned above, monitors when supplied separately do not fall under CTH 8471. In the event the applicant supplies monitors separately under a different purchase order or invoice or a different line item in an invoice, they cannot be classified under 8471. In that case they would have to be classified under 8528 depending on the type of monitor. However, in the purchase order and sample invoice submitted it is seen that the applicant is supplying "Desktop Computer" for which a single price is quoted in the price list depending on the specifications of each of the unit and CPU. Section Note 4 to Section XVI indicates that where a machine consists of individual components, intended to contribute together to a clearly defined function covered by one of the headings in Chapter 84 or Chapter 85, then the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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