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TMI Blog2023 (6) TMI 657X X X X Extracts X X X X X X X X Extracts X X X X ..... touch interaction, handwriting recognition, freehand touch, go typing and applications such as calculator, stopwatch, buzzer. They are wall mounted, do not incorporating tilt, swivel or height adjustment mechanism and are available in dimensions 55 , 65 , 75 , 86 and 98 . They are used in classrooms for teaching and in companies for presentations, meetings etc. It is pertinent to mention that the principles for classification of goods are governed by the General Rules of Interpretation (GRI) and Harmonized Commodity Description and Coding System (Harmonized System or HSN). According to Rule 1 of the General Rules of Interpretation (GRI), 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. - Chapter 8471 of Customs Tariff Act, 1975 covers, Automatic data processing machines and units thereof; magnetic or optical readers, machines for transcribing data onto data media in coded form and machines for processing such data, not elsewhere specified or included . Whether the features and specifications of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 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. In a standalone configuration, the devices under consideration process applications compatible with the various Android operating system join wired or wireless networks, access and manipulate folders and files, and perform general computing tasks such as Internet browsing, email, and editing office documents. Therefore, from the working and features of the impugned goods, it appears that these are neither units of ADP machines nor ADP machines presented in the form of systems, but ADP machines themselves. It is found that the subject goods are capable of performing plethora of functions independently on standalone basis and these devices are much more than mere display devices. In fact, display is only one of the features of the goods and cannot be construed to be its only function, much less its principal function. Also, the subject goods satisfy all the conditions laid down under Note 6(A) of Chapter 84, thereby validating the expression automatic data ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RACTIVE DISPLAY SYSTEM 8 IFP6550-2 VIEWSONIC IFP6550-2 /65 INTERACTIVE DISPLAY SYSTEM 9 IFP6550-3 VIEWSONIC IFP6550-3 /65 INTERACTIVE DISPLAY SYSTEM 10 IFP6550-5 VIEWSONIC IFP655O-5 /65 INTERACTIVE DISPLAY SYSTEM 11 IFP6552-1A VIEWSONIC IFP6552-1A /65 INTERACTIVE DISPLAY SYSTEM 12 IFP6552-1B VIEWSONIC IFP6552-1B /65 INTERACTIVE DISPLAY SYSTEM 13 VIEW BOARD 75 INTERACTIVE FLAT PANEL IFP7530 VIEWSONIC IFP7530(VS 17776) /75 INTER-ACTIVE DISPLAY SYSTEM 14 IFP7532 VIEWSONIC IFP7532 /75 INTERACTIVE DISPLAY SYSTEM 15 IFP7532-2 VIEWSONIC IFP7532-2 /75 INTERACTIVE DISPLAY SYSTEM 16 IFP7550 VIEWSONIC IFP7550 /75 INTERACTIVE DI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve an in-built Central Processing Unit and RAM for execution of programs. They have pre-installed operating system, namely, Android 7.0 that is customized for the subject goods, along with an Open Pluggable Specification Slot, thus enabling the user to download and install new programmes and operate other operating systems like Windows etc. As informed, the products use Ultra Fine Touch Technology to offer more precise writing and faster processing time, it has an air quality sensor, germ resistant screen, two touch pens (stylus), remote control and 70-80% glare free surfaces with a flicker free display. They are touch enabled with additional features such as multi-touch interaction, handwriting recognition, freehand touch, go typing, etc. along with applications such as calculator, stopwatch, buzzer, etc. The subject goods have slots for HDMI, VGA, LAN, USB, RS232 and audio ports, along with a high internal storage capacity. They are used in classrooms for teaching and in companies for presentations, meetings, etc. Their physical features include being wall mounted, not incorporating tilt, swivel or height adjustment mechanism and being available in different sizes ranging from 24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8471 41 10 --- Micro Computer 8471 41 20 --- Large or main frame computer 8471 41 90 --- Other 8471 49 00 -- Other, presented in the form of systems Note 5(A) to Chapter 84 5.(A) For the purposes of heading 8471, the expression automatic data processing machine means machine capable of: (i) storing the processing programme or programmes and at least the data immediately necessary for the execution of the programme; (ii) being freely programmed in accordance with the requirements of the user; (iii) performing arithmetical computations specified by the user; and (iv) executing, without human intervention, a processing programme which requires them to modify their execution, by logical decision during the processing run. 2.2 The applicant has taken recourse to the elucidation provided in the Explanatory notes of Chapter heading 8471, regarding what constitutes as an Automatic Data Processing Machine . They have inter alia submitted the following: i. An Automatic data process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mand given by the user would be executed by the subject goods without any further intervention from the user. The CPU along with the operating system executes the command so given by the user by taking logical decisions during the processing run. It is thus alleged by the applicant that the subject goods satisfy all the four essential conditions mentioned in Note 5(A) to Chapter 84 and therefore, qualify to be considered as ADPMs, classifiable under Heading 8471. 2.3. Concurrently, the applicant has submitted that the subject goods are not classifiable under Chapter 8528 of Customs Tariff Act, 1975, that covers, Monitors and projectors, not incorporating television reception apparatus; reception apparatus, whether or not incorporating radio-broadcast receivers or sound or video recording or reproducing apparatus . It is contended that Chapter 8528 deals with monitors that are capable of receiving and displaying signals when attached to devices like, automatic data processing machine, video camera or recorder, etc.; that these monitors do not have capability of two-way communication; that they are not capable of processing any data on their own, nor are they capable of stori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification in respect of the models at Sl.No 8 and Sl.No. 17 had already decided by the Hon ble CESTAT, New Delhi in the case of Ingram Micro India Pvt. Ltd. v Principal Commissioner of Customs (Import), New Delhi. However, from the perusal of the said order no inference can be drawn to the said case law, even though the description is matching, in the absence of details like the supplier, technical features etc., it cannot be inferred them as one and the same. However, this Commissionerate is in the process of all relevant documents from the concerned Commissionerate. 2. Moreover, the applicant s submissions are that classification of similar products has already decided by Hon ble CESTAT, Mumbai in the case of Cloudwalker Streaming Technologies Pvt. Ltd. v CC (NS V) Raigad, which was upheld by Supreme Court. In this regard, it is to submit that the Apex Court dismissed the appeal based on monetary limits keeping the question of law open and without prejudice to the rights and contentions of the respective parties. Hence, it cannot be said that the issue of classification of similar products has attained its finality. 3. Further, it is to submit that this Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ranscribing Data onto Data Media in Coded Form and Machines for Processing Such Data, Not Elsewhere Specified or Included . The Sub-heading 84714190 covers, inter alia, Other automatic data processing machines Comprising in the same housing at least a central processing unit and an input and output unit, whether or not combined. 2. As per Chapter Note 6 to the Chapter 84: (A) For the purposes of heading 8471, the expression automatic data processing machine means machine capable of i) storing the processing programme or programmes and at least the data immediately necessary for the execution of the programme, ii) being freely programmed in accordance with the requirements of the user; iii) performing arithmetical computations specified by the user; and iv) executing, without human intervention, a processing programme which requires them to modify their execution, 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 sys ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the ability to present a surprisingly natural handwriting experience. IFPDs support communication and collaboration in ways never before possible in the meeting room. Most IFPDs have a number of built-in software integrations, like Cast, Chrome etc which come pre-installed on all displays. An interactive flat panel does not require a projector because all hardware is contained in a flat panel display, 4. It is further observed that there are various types of Interactive Devices and known by various names in the industry i.e., Interactive Whiteboard/ Smartboard, Interactive Flat Panel Display, Interactive Intelligent Panels etc. is an advanced technology used in classroom teachings, conferences etc. The Interactive Display Systems can be used to present documents, information and videos to different groups, educational purposes i.e., e-learning for example to a group of students in a classroom or during a meeting in a business environment 5. It is also observed as per Note 6(D) to Chapter 84, Heading 8471 does not cover the monitors and projectors not incorporating television reception apparatus when presented separately even if they meet all the conditions mentioned in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors and projectors, not incorporating television reception apparatus: reception apparatus for television, whether or not incorporating radio broadcast receivers or sound or video recording or reproducing apparatus: Cathode-ray tube monitors: 8528 42 -- Capable of directly connecting to and designed for use with an automatic data processing machine of heading 84.71 8528.52 --Other Other monitors: 8528.52 -- Capable of directly connecting to and designed for use with an automatic data processing machine of heading 84.71 8528.59 -- Other 11. Since, the description mentioned in the application is Interactive Flat Panel , the main function of subject goods is interaction through display. Essentially, it acts as a display monitor, meaning that you can select to view documents, videos and even web links on a larger scale. 12. Further, as per Chapter Note 3 to Section XVI states that Unless the context otherwise requires, composite machines consisting of two or more machines filled 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as held that Interactive Electronic White Board is a teaching device mainly used for class room teaching or in conferences and meetings and work and gets the display function by combined action with a computer and projector cannot be considered as a simple input or output device and is to be identified with its primary function of display and has classified the goods under sub- heading 8528 5100 i.e., other monitors (now CTI 8528 5900) . The issue is squarely covered in the present case. 6. The application was listed for hearing on 18.04.2023. the applicant was represented by Shri. T. Viswanathan, Advocate, Ms. Srinidhi Ganeshan, Mr. Chandrashekhar Thakur and Ms. Sonali Mote. They reiterated the CAAR-I application and submitted their stand regarding the grounds of application, relevant extracts of the tariff, previous rulings and technical writeup, while providing a detailed list of models vis-a-vis decision/judgement status under CESTAT or CAAR. They requested to issue ruling on same models which were covered under other CAAR rulings on the ground that the CAAR rulings are applicant specific and ratio of other CAAR rulings cannot be imported and applied to other applicant s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub heading 84714190 of Customs Tariff Act, 1975. 7.1. The Jurisdictional authority. Commissioner of Customs, Chennai-II (Import), has categorically stated that the claim of the applicant (classification under CTH 8471) is not accepted for the following reasons: i. The subject goods are not merely an ADPM, in fact it has many other additional inbuilt features with the main purpose to interact through display as per the intended use i.e., training, conferences, educational purposes, teaching via e-learning etc. The goods are mainly Display devices incorporating and working in conjunction with an automatic data processing machine i.e., inbuilt CPU. The primary function of the goods is to display the given input data/ images/pictures/videos etc. ii. ADP machines performing specific functions other than Data processing are required to be classified as per their respective functions. Even though the functions of an ADP machines are inbuilt, the subject goods viz., Interactive Flat Panels being primarily used as Display System cannot be considered as a simple input or output device and is to be identified with its primary function of display by applying Note 6 (E) of Chapter 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion is the primary function. Thus, reliance is being placed by the Chennai Commissionerate on Section Note 3 to Section XVI, which pertains to classification of multi-function machine, to contend that the product must be classified under Heading 8528. This argument is grossly incorrect. 3. The above argument could be considered only if Heading 8471 only covered the processing aspect (without the display). However, this is not the case. ADP System under Heading 8471 expressly includes an ADPM when combined with an output unit. That is, ADPM with display attached is specifically covered under Heading 8471. Thus, Heading 8471 covers not just one aspect of the product in question, but the complete product itself. 4. However, heading 8528 only covers the display monitor, when imported without the ADPM. Therefore, while Heading 8471 covers the product in question as a whole, Heading 8528 covers only one aspect of the product. Thus, Section Note 3 Chapter Note 5(E) has been wrongly attempted to be applied by the Chennai Commissionerate to the present case. 5. The fact is, heading 8471 specifically and completely covers the product in question, while Heading 8528 covers onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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. and iii. Chapter Note 3 to Section XVI that states Unless the context otherwise requires, composite machines consisting of two or more machines filled 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 8.1 It is pertinent to mention that the principles for classification of goods are governed by the General Rules of Interpretation (GRI) and Harmonized Commodity Description and Coding System (Harmonized System or HSN). According to Rule 1 of the General Rules of Interpretation (GRI), 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. Chapter 8471 of Customs Tariff Act, 1975 covers, Automatic data processing machines and unit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds come with a pre-installed operating system, namely, Android, that is the customized operating system for these device. It has an OPS slot, enabling connection of additional hardware and installing other operating software such as Windows, etc. It is capable of downloading and installing new programmes in accordance with the needs of the user and executing any application/program stored on its memory. Therefore, the goods satisfy condition as per 6(A)(ii). Interactive Display System, perform the arithmetical computations specified by the user which satisfy condition 6(A)(iii) of the chapter notes. It is submitted that Interactive Display System, have a processing program, which make them capable of modifying its execution by logical decision during the processing run, so it satisfies condition 6(A)(iv) of the chapter notes. From forgoing discussions, it is clear that the subject goods satisfy all the requirements as mandated under Note 6(A) (previously referred to as 5 (A)) to Chapter 84 of the Customs Tariff Act, 1975. Accordingly, the subject goods justify the expression automatic data processing machine as is mandated in Note 6(A) of Chapter 84. 8.3 Note 6(B) to chapter 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... risdictional Commissionerate, Chennai Import -II have contended against applicant s request to classify the subject goods under Chapter heading 8471 and have submitted that the appropriate heading for classification of impugned goods shall be Chapter heading 8528. However, on careful consideration of all parameters of the case, I find that the subject goods are capable of performing plethora of functions independently on standalone basis and these devices are much more than mere display devices. In fact, display is only one of the features of the goods and cannot be construed to be its only function, much less its principal function. Also, the subject goods satisfy all the conditions laid down under Note 6(A) of Chapter 84, thereby validating the expression automatic data processing machine . Further, I find that the subject goods are comprised of below mentioned elements mentioned in the HSN Explanatory notes to Chapter heading 8471, 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; in some cases, however, these ..... X X X X Extracts X X X X X X X X Extracts X X X X
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