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TMI Blog2022 (10) TMI 1179X X X X Extracts X X X X X X X X Extracts X X X X ..... re also equipped with a barcode scan engine and act as their own host, which means one can instantly update and edit information as it is captured. Note 6(C) to Chapter 84 specifies the conditions for a unit to be classified as being part of an automatic data processing system. However, from the working and features of the impugned devices, it appears that these are not units of ADP machines, but ADP machines themselves. Note 6(D) to Chapter 84 lists certain separately presented products that are to be excluded from Heading 8471, even if they can be classified as part of an ADP system. Note 6(E) to Chapter 84 mentions that a machine incorporating or working in conjunction 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. As the impugned devices, as described by the applicant appear to be akin to ADP machines performing the tasks of data capture and its further processing, the Notes 6(D) and 6(E) do not appear to have application in this case. As per Circular No. 20/2013-Cus., dated 14-5-2013, the difference betw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer, reset), Soft Keys (Three touch keys: Back, Home, Menu), are powered by Qualcomm or Mediatek Octa-core processor and possess the Android (7/8/9/10/11 or 12) operating system. They are equipped with front and rear cameras, battery and gorilla glass. They support GPS, Bluetooth and wi-fi system. They have multi touch capacitive screen, motion sensor equipped and have micro-SD card extension capability. As per the applicant, these devices are computers used for scanning barcode and processing data in order to increase efficiency of functions in supply chain management such as inventory management, asset tracking, stock taking etc. The product carries a processing ability of a laptop and the functionality of a scanner in a single wireless device. They essentially perform 1D and 2D barcode scanning and additionally, have features like Wi-Fi/Bluetooth connectivity, data transfer etc. The predominant use of these handheld mobile computers is in warehousing/logistics/inventory operations for data capturing/storage and its transmission for allied functions. The applicant further submits that although many models of handheld mobile computers do not have the feature of connecting to a cel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... --- --- Other - Other automatic data processing machines To qualify as an ADP Machine, the goods have to satisfy all the conditions mentioned in Note 5(A) to Chapter 84 and should not be covered by Notes 5(D) and 5(E). Note 5A is extracted below : 5(A) For the purposes of heading 84.71, the expression "automatic data processing machines" means machines capable of : (i) Storing the processing program or programs and at least the data immediately necessary for the execution of the program; (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 program which requires them to modify their execution, by logical decision during the processing run. The applicant has submitted that the handheld mobile computers in question comply with the above requirements, and therefore, are classifiable as ADP machines under CTH 84.71 as tabulated below :- Table-3 Condition to be fulfilled by an ADP machine, as mentioned in Note 6(A) Compliance with the condition of the proposed imports (i) Storing the processing program/s and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssifiable under Heading 84.71 only. More specifically the products ought to be classified under Customs Tariff Item 8471 30 90 since they qualify the description given under sub-head 8471 30 i.e., they are portable automatic data processing machines, weighing not more than 10 kg, consisting of at least a central processing unit, a keyboard and a display and are not personal computers. Further, the products have specific professional grade barcode scanners in built into the device which feature emphasise how the scanning and processing function for the device is the primary function. This is what sets the device apart from the conventional phone/communication devices available in the market. 2.4 It is submitted that without prejudice to the foregoing submissions, Chapter Note 5(D) and 5(E) read with Note 5(C) are not applicable to the classification of Mobile Computers in question. Note 5(C) of Chapter 84 states that a unit can be treated as part of ADP system if the conditions mentioned therein are satisfied. However, this is subject to the Chapter Notes 5(D) and 5(E) ibid. The relevant portion of the Chapter Note 5(C) are extracted below : "Chapter Note 5 - (C) Subj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d are classifiable under Heading 84.71 and more specifically, classifiable under Customs Tariff Item 8471 30 90. 2.7 The applicant submits that the product being an AUTOMATIC DATA PROCESSING MACHINE cannot be classified under the Heading 85.17 of the Customs Tariff. The Heading 8517 covers "Telephone sets, including telephones for cellular networks or for other wireless networks; other apparatus for transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network) other than transmission or reception apparatus of Heading 8443, 8525, 8527 or 8528". The relevant extract of Heading 85.17, w.e.f. 1-1-2022, is reproduced below : TABLE-4 8517 TELEPHONE SETS, INCLUDING TELEPHONES FOR CELLULAR NETWORKS OR FOR OTHER WIRELESS NETWORKS: OTHER APPARATUS FOR THE TRANSMISSION OR RECEPTION OF VOICE, IMAGES OR OTHER DATA, INCLUDING APPARATUS FOR COMMUNICATION IN A WIRED OR WIRELESS NETWORK (SUCH AS A LOCAL OR WIDE AREA NETWORK), OTHER THAN TRANSMISSION OR RECEPTION APPARATUS OF HEADING 8443, 8525, 8527 OR 8528 - Telephone sets, including telephones for cellular networks or for other wirel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be classified under the residuary entry of 8517 62 90 or 8517 69 90. 2.8 The applicant contends that the proposed imports are not classifiable under Heading 85.17 for the reasons that the proposed imports are not primarily meant for communication purposes. Communication abilities like that of a traditional telephone/mobile telephone is only an ancillary function that these mobile computers perform. And the fact that Handheld mobile computer is different from conventional cellular phones, as evident from below :- TABLE-5 Feature Conventional Cell Phone/Smartphone Portable Computer Scanning Can scan only a few codes per hour, using apps. Mobile Scans the code through a camera, whereas handheld Mobile Computer scans the barcode through the scan engine with its own decode capabilities which is many times faster and accurate. Ruggedness Not rugged. Can break on fall Extremely rugged. Designed to withstand huge falls and rough handling with a 5 ft. drop test and 200 tumbles or more. Data edit Not available Has the ability to read a variety of barcodes encoded in different formats, which conventional smartphone cannot do. Also, the device can also be programmed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not as smartphones or telephones. (e) Conventionally also, the products considered as smartphones are different from the proposed imports. In view of the above, the handheld mobile computer models proposed to be imported are not smartphones as defined under Note 5 to Chapter 85 supra. 2.10 In support of their contention, the applicant submitted Circular No. 20/2013, dated 14-5-2013 wherein a clarification regarding classification of "Tablet Computer" was issued which states that 'the difference between a "smartphone" and a "tablet computer", is not based on whether the product has a voice calling function or not, but on the principal features that a producer has intended for the device when designing and developing it. Accordingly, the tablet computers are more appropriately classifiable in Heading 8471, sub-heading 847130, by application of General Rules for Interpretation (GRI) of Import Tariff, Note 3 to Section XVI and Note 5(A) to Chapter 84 and 6". The Circular also reaffirms the ruling of the World Customs Organisation, regarding tablet computers. As per the applicant, handheld mobile computers are similar to tablet computers based on the following characteristics ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of similar products. Shri Y. Shreenivas Murthy, Assistant Commissioner, representative of Chennai Air Cargo represented the Chennai Customs online. He stated his agreement with feedback received from ADC (Advance Ruling), New Customs House, Chennai. He requested to issue a ruling by upholding classification under CTH 8471 30 50. 5. I have considered all the materials placed before me in respect of the subject devices. I have also gone through the submissions made by the applicant during the personal hearing. I have also gone through and taken on record the comments received from jurisdictional Commissionerate of Air Cargo Commissionerate, Chennai. Now, I proceed to pronounce my rulings on the basis of the above submissions, comments of jurisdictional authority and all the information available on record. The issue before me to decide is the correct classification of handheld mobile computers. These are portable devices used in enterprise environments to run mobile apps, capture barcodes, take photos and videos, and provide voice and data communications for workers and managers. These devices combine personal computer and scanning functions (applies to mobile computers and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as seen in Para 2.2, appear to be able to satisfy the requirements of an ADP machine. Note 6(C) to Chapter 84 specifies the conditions for a unit to be classified as being part of an automatic data processing system. However, from the working and features of the impugned devices, it appears that these are not units of ADP machines, but ADP machines themselves. Note 6(D) to Chapter 84 lists certain separately presented products that are to be excluded from Heading 8471, even if they can be classified as part of an ADP system. Note 6(E) to Chapter 84 mentions that a machine incorporating or working in conjunction 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. As the impugned devices, as described by the applicant appear to be akin to ADP machines performing the tasks of data capture and its further processing, the Notes 6(D) and 6(E) do not appear to have application in this case. 5.2 In respect of possible alternate Heading 8517, there is a need to examine the features of these devices in the context of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the device when designing and developing it". Thus, as per the said circular, tablet computers are classifiable under Heading 8471 and not under Heading 8517 despite the fact that the product is having cellular connection functionality, considering its principal function as automatic data processing. Similarly, in this case, the principal function of the impugned devices is barcode scanning and data processing for monitoring deliveries, tracking assets and managing inventory. Therefore, these devices appear to merit classification under Heading 8471 and not under Heading 8517. 5.3 With regard to the classification opinion of the 68th session of the Harmonized System Committee, it is observed that the committee has classified RFID/barcode readers with a mobile operating system capable of scanning and cellular connectivity under sub-heading 8517 13. This sub-heading covers smartphones. Note 5 to Chapter 85 states that 'For the purposes of Heading 85.17, the term "smartphones" means telephones for cellular networks, equipped with a mobile operating system designed to perform the functions of an automatic data processing machine such as downloading and running multiple applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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