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TMI Blog2022 (6) TMI 1408X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the context of note 3 to section XVI of the tariff. Heading 8517 covers telephone sets, including smartphones and other 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 84.43, 85.25, 85.27 or 85.28 - the 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. Cellular connectivity is essentially used for GPS and information sharing, where wi-fi is not available. Cellular connectivity is also used for making calls. However, as mentioned earlier, 18 out of 32 models do not h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 SCANPAL EDA71 With SIM 11 SCANPAL EDA71 Without SIM 12 Mobile Computer CK65 Without SIM 13 SCANPAL EDA61K With SIM 14 SCANPAL EDA61 K Without SIM 15 CT45 With SIM 16 CT45 Without SIM 17 CT45XP With SIM 18 CT45XP Without SIM 19 CT40 With SIM 20 CT40 Without SIM 21 CT40 XP With SIM 22 CT40 XP Without SIM 23 CT60 With SIM 24 CT60 Without SIM 25 CT60 X ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e computers using wi-fi or wireless connectivity. Only when such wireless internet is not available, the devices can use the cellular network to function (if devices have SIM card capability and have been fitted with the SIM card). Thus, the cellular network is used sparingly in cases such as during last-mile delivery, when wi-fi is not readily available etc. In fact, the calling function provided in products with SIM is a supplementary function since the same has been provided as an additional mode of connectivity apart from Bluetooth, wi-fi and GPS. 2.1 The applicant has submitted that the portable computers proposed to be imported by them are classifiable under heading 84.71 as automatic data processing (ADP) machines, for the following reasons: a. These devices satisfy the criteria set out in heading 84.71 to be classified as ADP machines; b. The principal function performed by these devices is that of processing data, and thus, they merit classification as suggested; c. The proposed imports are commercially known as Mobile Computer , Tablet Computers and Vehicle-Mounted Computers and not as phone/communication devices/mobile phones. 2.2 As per the applican ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned devices as the products are in itself ADP machines. Thus, the proposed imports satisfy all the conditions to be fulfilled by ADP machines. 2.3 The applicant further stated that without prejudice, even if it is assumed that these devices viz. mobile computers, tablet computers and vehicle-mounted computers models proposed to be imported are capable of performing more than one function, i.e., capable of functioning other than as an ADP machine, the function of the ADP machine is the principle function and therefore, shall be treated as an ADP machine in terms of Note 3 to Section XVI. The proposed imports are marketed to businesses for ease of logistics and not as a substitute for a communication device. That the portable computer is used to transmit other data, apart from the inventory-related data, the function is only an incidental function and the classification is to be based as if the principal function were the sole purpose. Commercially too, the products are known as computers and not as phone/communication devices . As per the trade parlance, the proposed imports are known in the market as mobile computers, tablet computers and vehicle-mounted computers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 57/2021 -Cus dated 30.06.2017 (S. No. 4) whereby, the applicable rate of basic customs duty shall be NIL. 2.5 In respect of subheadings 85176290 and 85176990, the applicant states that these are residuary entries and will only apply products not classified elsewhere. As explained above in detail, the imported portable computers are classifiable under heading 8471, and if not under 8471, then alternatively under subheading 851713 or 851714. Thus, these products cannot be classified under the residuary entry of 85176290 or 85176990. 2.6 In support of their contention, the applicant submitted Circular No. 20/2013 dated 14.05.13 wherein it was held 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, subheading 847130, by application of General Rules for Interpretation (GRI) of Import Tariff, 1 [Note 3 to Section XVI and Note 5(A) to Chapter 84] and 6 . The Circular also reaffirms the ruling of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Air Cargo Complex, Mumbai. Their application, therefore, was forwarded to the jurisdictional commissioner of customs for comments. However, no reply has been received, though reminders have also been sent. 4. Personal hearing was held on 12.04.2022 at 1230 Hrs. Shri T Vishwanathan, advocate Ms. Srinidhi Ganeshan, advocate; Ms. Tridipa Banerjee, advocate; Shri Blaise D'Souza, director; Shri Chandrashekhar Thakur, sr. manager represented the applicant. No one appeared on behalf of the commissioner of customs. Sh. Viswanathan explained the product features with specimens for each of the product categories. My attention has been drawn to the relevant portions of the tariff, explanatory notes etc. Rulings of Singapore Customs on the handheld computer and the BIS certificate for the products were also submitted. An adjudication order passed by the Additional Commissioner of Customs, ACC, Mumbai has also been submitted in their support. 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. No reply has been received from the jurisdictional commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration meet the criteria as laid down in the relevant chapter note reproduced above. The impugned devices, 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 capturing of data and its further processing, the notes 6(D) and 6(E) do not appear to have application in this case. 5.1. In respect of possibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a voice calling function or not, but on the principal features that a producer has intended for the device when designing and developing it 'l 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. 5.2. In 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 subheading 851713. This subheading 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 fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed in para. 5.1. Further, the difference between a smartphone and the devices under consideration is already outlined in para 2.4. The impugned devices have many features such as higher scanning capacity, data editing functionality, ruggedness and enterprise-level security features, which a smartphone for cellular connection lacks. These devices are used by enterprises to capture data. The products are used in inventory management, store receiving, order processing, package tracking, tracing delivering etc. These devices use wi-fi connectivity and Bluetooth for information sharing. Cellular connectivity is essentially used for GPS and information sharing, where wi-fi is not available. Cellular connectivity is also used for making calls. However, as mentioned earlier, 18 out of 32 models do not have cellular connectivity. On a similar device, the TC77 series touch computer, which is a handheld mobile computer used for asset inventory management purposes, Singapore Customs ruled (ref. No. CRL21 1217-0036) that the product is classifiable under subheading 84713090. Therefore, notwithstanding the WCO classification advice to the contrary, it is my considered opinion that the devices u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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