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TMI Blog2022 (2) TMI 308X X X X Extracts X X X X X X X X Extracts X X X X ..... that the goods would cease to be ADMP in their own right, capable of working on a standalone basis. The large size display (65 inches and 75 inches) is only a feature/specification of the product and this cannot be construed to be its function, much less its principal function. The Deputy Commissioner and the Commissioner (Appeals), therefore, committed an error in holding that the large size of display would mean that the goods are meant for display purpose to a large gathering and, therefore, in terms of Note 5(E) of Chapter Note 84, the goods would merit classification as per the specific use - Commissioner (Appeals) committed an error in rejecting the contention of the appellant that the goods were ADPM by taking recourse to trade parlance, namely, that buyers intending to purchase a computer will not select the goods because of the large size display and, therefore, the goods should be specified according to the use. The Commissioner (Appeals) also committed an error in holding that even if the goods are capable of being used as ADPM considering their features, they would still merit classification under CTH 8528 in view of the provisions of GRI (3)(c). The goods in dispute, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the goods namely (i) (ViewBoard) ViewSonic IFP6550-2/65" Interactive Display System; and (ii) (ViewBoard)-ViewSonic-IFP7550-2/75" Interactive Display System. The appellant claims that the classification would be under Customs Tariff Item [CTI] 8471 41 90, though, earlier at the time of self-assessment, the appellant had claimed it to be under CTI 8471 90 00. The Department claims that it should be under CTI 8528 52 00. The Deputy Commissioner rejected the self-assessment done by the appellant under CTI 8471 90 00 and ordered for re-assessment of the goods under CTI 8528 52 00. The case set up by the appellant at the time of assessment was that the goods were Automatic Data Processing Machines [ADPM ] and not Monitors and, therefore, classifiable under CTI 8471 90 00 and not under CTI 8528 52 00. At the appellate stage, the appellant contended, on a re-consideration of the matter, that the goods were more specifically and correctly classifiable under CTI 8471 41 90. 4. In order to appreciate the issue involved in this appeal, it would be necessary to examine the technical nature of the product. The appellant has stated that the goods are Interactive Flat Panel Display [IFP], ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the form of systems u Free - 8471 50 00 - Processing units other than those of sub-headings 8471 41 or 8471 49, whether or not containing in the same housing one or two of the following types of unit: storage units, input units, output units u Free - 8471 60 - Input or output units, whether or not containing storage units in the same housing : 8471 60 10 --- Combined input or output units --- Printer : u Free - 8471 60 24 ---- Graphic printer u Free - 8471 60 25 ---- Plotter u Free - 8471 60 29 ---- Other u Free - 8471 60 40 --- Keyboard u Free - 8471 60 50 --- Scanners u Free - 8471 60 60 --- Mouse u Free - 8471 60 90 --- Other u Free - 8471 70 - Storage units : 8471 70 10 --- Floppy disc drives u Free - 8471 70 20 --- Hard disc drives u Free - 8471 70 30 --- Removable or exchangeable disc drives u Free - 8471 70 40 --- Magnetic tape drives u Free - 8471 70 50 --- Cartridge tape drive u Free - 8471 70 60 --- CD-ROM drive u Free - 8471 70 70 --- Digital video disc drive u Free - 8471 70 90 --- Other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss setting as an interactive whiteboard either in a standalone configuration or in conjunction with the consumer‟s existing automatic data processing (ADP) machine. The interactive display panels come in varying LED screen sizes. These machines are equipped with a capacitive touch overlay that allow users to manipulate display data, type and input/manipulate data as well as control the functions of the installed applications to manipulate display data, type, and input/manipulate data as well as control the functions of the installed applications. There are numerous input and output connection ports to include USB, HIDMI, VGA, RS232, CVBS and PC Slot that are accessible on the side of the unit. These machines processes applications compatible with the Android operating system (OS)/Windows Operating System, joins wired or wireless networks, accesses and manipulates folders and files, and performs general computing tasks such as internet browsing, email, and editing office documents." (emphasis supplied) 7. In regard to CTI 8528 52 00, the Deputy Commissioner observed as follows: "From perusal of the terms of the above tariff headings, it appears statute has described three ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence of processor, the principal function of the product is the function of automatic data processing. However, it may also be argued that owing to large size of the display, the principle function of the machine appears to be to cater to Display requirement to a large gathering. This fact is further buttressed by the description of the product given on the website of the importer which states: "Featuring 4K Ultra HD resolution and an immersive 20-point touch screen, the ViewSonic® VicewBoard®) IFP7550/IFP6550 delivers incredible collaborative capabilities for 21st century boardrooms and classrooms. ********* Since, in the instant matter, it is not possible to determine the principal function objectively, the classification shall be decided as per GIR 3(c). ********* In the instant matter, the classification dispute is whether goods are to be classified as ADP machine meriting classification under 8471 or Display monitors under 8528. Since both the headings equally merit consideration, after applying Rule 3(c) of GRI, the impugned goods merit classification under 8528 52 00." (emphasis supplied) 9. As noticed above, before the Commissioner (Appeals) the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sufficiently discharged by the department in the instant case and due reasoning has been afforded for changing the classification of impugned goods. 5.6 Thus, I note that the impugned goods are not ADPM per se but capable of being connected to ADPM falling under 8471 and used accordingly. Thus they merit classification under CTH 85285200." (emphasis supplied) 10. Shri Amit Jain learned counsel for the appellant made the following submissions: (i) The goods are appropriately classifiable under CTI 8471 41 90. Chapter Note 5(A) to Chapter 84 and the Harmonized Commodity Description and Coding System [HSN] Explanatory Notes define what constitutes an ADPM. The Chapter Note states that ADPM is a machine which is capable of storing a processing program; is freely programmable; performs arithmetical computations; and can execute a processing program by logical decision during the processing without intervention of humans. The goods fulfill the criteria laid down in Note 5A to Chapter 84.The HSN Explanatory Notes also provide that ADPM must have a CPU, an input and output unit. These requirements are also satisfied by the goods and, therefore, they would qualify as ADPM; (ii) The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court in Commissioner of Central Excise, Nagpur vs. Simplex Mills Co. Ltd. [2005 (181) E.L.T. 345 (S.C.)]; (ix) Trade parlance meaning should not be relied upon when the goods are defined statutorily. In this connection reliance has been placed on the judgment of the Supreme in Akbar Badruddin Jiwani vs. Collector of Customs [1990 (47) E.L.T. 161 (S.C.)]; (x) Similar goods imported by the appellant have been permitted clearance by the Customs at Air Cargo Complex, Mumbai, Chennai Port, Nhava Sheva Port & ICD Dadri, under CTH 8471 and, therefore, the goods should not have been classified differently at a different port. In this connection reliance has been placed on the judgment of the Calcutta High Court in Opal Exports Pvt. Ltd. vs. Collector of Customs [1992 (60) E.L.T. 232 (Cal.)]; and (xi) Differential duty of ₹ 13,37,043/- paid by the appellant under protest on 28.01.2020 is liable to be refunded with interest. 11. Shri Sunil Kumar, learned authorized representative appearing for the Department, however, supported the impugned order and made the following submissions: (i) The goods are appropriately classifiable under CTI 8528 52 00 since not only i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the other rules must also be applied for determining the classification of an article. Therefore, all the relevant rules of interpretation in the Import Tariff come into play in the process of classification. Concluding sentence of HSN Explanatory Notes to Rule 1 as well as the decision of the Supreme Court in Khandelwal Metal & Engineering Works [1985 (20) E.L.T. 222 (S.C.)] support this contention; (vii) The assessment order of other Custom Houses do not have any binding affect, more particularly when speaking orders have not been passed. Cross Ruling of US Customs and the WCO Classification Ruling would also not come to the aid of the appellant as classification is required to be determined by application of GRI; and (viii) Classification of a similar product, namely, interactive electronic whiteboard under CTH 8528 has been upheld by the Principal Bench of the Tribunal in Commr. of Cus. (Import & General), New Delhi vs. Integral Computer Ltd. [2016 (337) E.L.T. 580 (Tri. -Del.)] 12. The submissions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the Department have been considered. 13. It is not in dispute that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing used as ADPM, but agreed with the Deputy Commissioner that in such a situation GRI 3(c) should be resorted, as a result of which the goods would merit classification under CTH 8528 since this entry is after CTH 8471. 16. As references have been made to the General Rules for the Interpretation of Import Tariff and Notes to Chapter 84 as also the HSN Explanatory Notes to Chapter Heading 8471, it is necessary to reproduce the relevant portions: 2. The General Rules for the Interpretation of Import Tariff Classification of goods in this Schedule shall be governed by the following principles: 1. The titles of Sections, Chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions: 2. (a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished articles has the essential character of the complete or finished article. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sented with the articles for which they are intended, shall be classified with such articles when of a kind normally sold therewith. This rule does not, however, apply to containers which give the whole its essential character; (b) Subject to the provisions of (a) above, packing materials and packing containers presented with the goods therein shall be classified with the goods if they are of a kind normally used for packing such goods. However, this provisions does not apply when such packing materials or packing containers are clearly suitable for repetitive use. 6. For legal purposes, the classification of goods in the sub-headings of a heading shall be determined according to the terms of those sub headings and any related sub headings Notes and, mutatis mutandis, to the above rules, on the understanding that only sub headings at the same level are comparable. For the purposes of this rule the relative Section and Chapter Notes also apply, unless the context otherwise requires. Chapter 84 Notes 1. ***** 2. ***** 3. ***** 4. ***** 5.(A) For the purposes of heading 8471, the expression "automatic data processing machines" means machines capable of: (i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. Part of the data and program or programs may be temporarily stored in auxiliary storage units such as those using magnetic discs, magnetic tapes, etc. But these automatic data processing machines must have a main storage capability which is directly accessible for the execution of a particular program and which has a capacity at least sufficient to store those parts of the processing and translating programs and the data immediately necessary for the current processing run. Automatic data processing machines may comprise in the same housing, the central processing unit, an input unit (e.g., a keyboard or a scanner) and an output unit (e.g., a visual display unit), or may consist of a number of interconnected separate units. In the latter case, the units form a "system" when it comprises at least the central processing unit, an input unit and an output unit (see Subheading Note 2 to this Chapter). The interconnections may be made by wired or wireless means. A complete automatic data processing system must comprise, at least: (1) A central processing unit which generally incorporates the main storage, the arithmetical and logical elements and the control elements; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chine; (ii) They do not incorporate a channel selector or video tuner; (iii) They are fitted will connectors characteristic of data processing systems (e.g., RS-232C interface, DIN, D-SUB, VGA, DVI, HDMI or DP (display port) connectors); (iv) The viewable image size of these monitors does not generally exceed 76 cm (30 inches); (v) They have a display pitch size (usually smaller than 0.3 mm) suitable for close proximity Viewing: (vi) They may have an audio circuit and built-in speakers (generally, 2 watts or less in total); (vii) They usually have control buttons situated in the front panel; (viii) They usually cannot be operated by a remote control; (ix) They may incorporate tilt, swivel and height adjusting mechanisms, glare-free surfaces, flicker-free display, and other ergonomic design characteristics to facilitate prolonged periods of viewing at close proximity to the monitor; (x) They may utilize wireless communication protocol to display data from an automatic data processing machine of heading 84.71. (emphasis supplied) 17. It would be seen from the aforesaid that Chapter Note 5(A) and the HSN Explanatory Notes to CTH 84.71 provide what should constitut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfied, the goods qualify as ADPM classifiable under CTH 8471. 23. The goods also have an in-built processing unit, an input unit and an output or may have separate processing, input and output unit interconnected with each other and so the requirements set out in the HSN Explanatory Notes to CTH 8471 also stand satisfied. 24. The goods are capable of working as an ADPM on a standalone basis and can also be used in conjunction with other ADPM, but this would not mean that the goods would cease to be ADMP in their own right, capable of working on a standalone basis. The large size display (65 inches and 75 inches) is only a feature/specification of the product and this cannot be construed to be its function, much less its principal function. The Deputy Commissioner and the Commissioner (Appeals), therefore, committed an error in holding that the large size of display would mean that the goods are meant for display purpose to a large gathering and, therefore, in terms of Note 5(E) of Chapter Note 84, the goods would merit classification as per the specific use. 25. The Commissioner (Appeals) committed an error in rejecting the contention of the appellant that the goods were ADPM by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his item comprising varying configurations with value of ₹76,24,692/-, and bill of entry no. 3846255/06.05.2021, for 6 nos of the item in knocked down (SKD) condition with declared value ₹ 6,13,482/-, were claimed for assessment at the rate of duty corresponding to tariff item 8471 4190 of First Schedule to Customs Tariff Act, 1975 with attendant exemption from basic customs duty, under notification no. 24/2005-Cus dated 1st March 2005, available to all goods covered by heading 8471 of First Schedule to Customs Tariff Act, 1975. The original authority ordered assessment to duty at 10% ad valorem corresponding to tariff item 8528 5900 of First Schedule to Customs Tariff Act, 1975. The impugned proceedings, vide order-in-appeal no. 851(Gr.V)/2021(JNCH)/2021 dated 8th October 2021 of Commissioner of Customs (Appeals), Nhava Sheva, Mumbai - II, upheld the re-classification leading to this appeal. ********** 8. The heading deployed by customs authorities pertains to "monitors and projector‟ and, while the impugned goods may appear to have some of the characteristics of "monitors‟, it is abundantly clear from the descriptions in the catalogue that these do con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Simplex Mills Co. Ltd. and the relevant portion is reproduced below: "11. The rules for the interpretation of the Schedule to the Central Excise Tariff Act, 1985 have been framed pursuant to the powers under Section 2 of that Act. According to Rule 1 titles of Sections and Chapters in the Schedule are provided for ease of reference only. But for legal purposes, classification "shall be determined according to the terms of the headings and any relevant section or Chapter Notes". If neither the heading nor the notes suffice to clarify the scope of a heading, then it must be construed according to the other following provisions contained in the Rules. Rule-I gives primacy to the Section and Chapter Notes along with terms of the headings. They should be first applied. If no clear picture emerges then only can one resort to the subsequent rules. The appellants have relied upon Rule 3. Rule 3 must be understood only in the context of sub-rule (b) of Rule 2 which says inter alia that the classification of goods consisting of more than one material or substance shall be according to the principles contained in Rule 3. Therefore when goods are prima facie, classifiable under two or mor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he titles of Sections and Chapters are provided for ease of reference only which having regard to Chapter 84 providing for nuclear reactors, boilers, machinery and mechanical appliances; parts thereof are required to be referred to for reference only. However, for legal purposes, the classification is to be determined according to the terms of the headings. The subject matter of the heading is important. Once a particular subject matter falls within the specified classification, the determination of valuation for the purpose imposition of duty must be done according to the terms of the heading and any relative Section or Chapter Notes unless such headings or Notes otherwise do not require. For our purpose, therefore, the rule of interpretation as contained in Chapter Notes would be given effect to for the purpose of classification in preference to the general rules of interpretation. 61. Rule 3, on the other hand, refers to a situation where any reference in a heading to a material or substance includes a reference to mixtures or combinations of that material or substance with other materials or substances, as a result whereof the goods are prima facie classifiable under two or m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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