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TMI Blog2023 (7) TMI 1248X X X X Extracts X X X X X X X X Extracts X X X X ..... ing function bar-code/QR code scanning function; component/part of 'Self-ordering Kiosk' i.e 'connection box' is its integral part, designed to function solely/principally with it, with a pre-defined bracket, where 'display unit' is placed for the 'Self-ordering Kiosk' to start functioning and carries out various functions in 'Self-ordering Kiosk', inter-alia receipt printer, barcode leader, QR code reader, payment terminals, wi-fi connectivity, NFC connectivity; component/part of self-ordering kiosk' i.e 'display unit' is an integral component/part, designed to function solely/principally with 'self-ordering kiosk' and aids its various functions viz. Touch-enabled display panel, processor, memory interface, storage unit and operating system; 'stand' is designed to be used solely with 'Self-ordering Kiosk , is also an integral part of 'Self-ordering Kiosk' but it is an optional accessory. Further, the applicant has declared that no processing whatsoever would be carried out on the imported goods, post importation into India. On going through the comments of the concerned Commissionerate regarding c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts; it is an integral part in functioning of 'Self-ordering Kiosk'. Further, both, 'Display Unit' and 'Connection Box' are designed to function solely/principally with the 'Self-ordering Kiosk'. In view of the observations, the 'Self-ordering Kiosk' imported in disassembled form into India, where display unit, connection box are imported simultaneously, in a single shipment, would be classifiable under Sub-heading 84705010 and will be entitled for exemption stipulated under serial number 7 of Notification No. 24/2005 - Customs, dated 01-03-2005. Where 'Self-ordering Kiosk' imported in disassembled form into India, where display unit, connection box are imported simultaneously, in a single shipment along with 'Stand', then in terms of rule 2(a) of GRI, as presented, 'Display Unit' and 'Connection box', the incomplete or unfinished articles has the essential character of the complete or finished 'Self-ordering Kiosk' or 'Cash Register'. 'Stand' being an optional accessory, not compulsorily supplied along with other components forming 'Self-ordering Kiosk', simultaneously in a sing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g India Electronics Private Limited, 6th Floor, DLF Centre, Sansad Marg, New Delhi-110001, having IEC No. 0595032818 and PAN- AAACS5123K (applicant, in short) has filed an application dated 10.04.2023, received in this office on 17.04.2203, seeking advance ruling under section 28-H of the Customs Act, 1962 before the Customs Authority for Advance Rulings, New Delhi (CAAR, New Delhi in short). The application was accordingly registered under Serial No. 09/2023 dated 17.04.2023. 2. The applicant vide the aforesaid application has sought ruling on the following questions:- Question 1: Whether the 'Self-ordering Kiosks' imported in disassembled form into India, where Display Unit, Connection Box Stand would be imported simultaneously, in a single shipment would merit classification under HSN: 8470 5010, as Electronically Operated Cash Register or as an Automatic Data Processing Machine housing a Central Processing Unit, Input Unit Output Unit in same housing, under HSN: 8471 4190? Question 2: Whether the 'Self-ordering Kiosks' imported in disassembled form into India, where Display Unit, Connection Box Stand would be imported simultaneously, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for businesses to renovate their environment and customer experience and to reallocate their resources more efficiently and effectively, allowing staff to focus on other core competencies; the 'Self-ordering Kiosks' are primarily designed to facilitate sale of products/services and enable customers to make payments; it allows the end customers to select preferred products or services from a pool of options available; it enables the customers to make payment for sale of products/services at the 'Self-ordering Kiosk' itself, without the need of human intervention; 'Self-ordering Kiosks' have specific end-use in retail environment; it enables a smart solution to browse products/services and provide multiple payment options for the interest audience of the customer; in addition to sale, the 'Self-ordering Kiosk' also maintains a record of sale transactions; further, the display-interface of 'Self-ordering Kiosk' is capable of being customised/freely programmed (in case of Self-ordering Kiosk,'s comprising of windows operating system), based on specific needs of the customer; 'Self-ordering Kiosk' is capable and suitable for a range o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 (CESTAT)]; on the basis of the judgement in the said matter, it can be concluded that if a machine has elements of an ADP but has been purposefully designed to perform a specific function other than data processing, in such cases Note 6(E) to Chapter 84 would be applicable and the machine would be classified on the basis of the function, which it is designed to perform; the aforesaid position was also reiterated by AAR-Customs, in Sharp Business Systems (India) Limited [2022 (381) ELT 565 (AAR-Cus)]; in the present case, the 'Self-ordering Kiosk' has an inbuilt data processing unit; input unit for receipt of data output unit for conversion of data into dissemination form; however, the 'Self-ordering Kiosk' has been designed to not just be a simple 'data processing machine'; the Self-ordering Kiosks perform a specific function of facilitating sale of products/services and enable customers to make payments; it allows the end customers to select preferred products or services from a pool of options available; and it enables the customers to make payment for sale of products/services at the 'Self-ordering Kiosk' itself, without the need of hu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 'Self Ordering Kiosks , Explanatory Notes to heading 8470 American Authority's judgement in Daniel Vaugeois (supra), the 'Self-ordering Kiosk' would be classifiable under the Sub-heading 84705010. 4.3 As regards applicability of exemption Notification No. 24/2005 - Customs, dated 01-03-2005, the applicant has stated that, all goods which are classified under the heading 8470, would be entitled to claim exemption from payment of Basic Custom duty; in addition, no other condition has been prescribed for allowing exemption; therefore, import of 'Self-ordering Kiosk' in disassembled form into India, where display unit, connection box stand would be imported simultaneously, in a single shipment, would be classifiable as 'Electronically Operated Cash Register' under Subheading 84705010 and would be entitled to exemption stipulated under serial number 7 of Notification No. 24/2005 - Customs, dated 01-03-2005. 5. Comments in the subject application have been received from the concerned Commissionerate wherein it is inter-alia stated that, when the 'Self-ordering Kiosks' is imported in disassembled form into India, where Display Unit, Conn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;Self-ordering Kiosk', the applicant has stated that in order to arrive at classification for 'Self-ordering Kiosk', the department has relied on Note 6(E), Chapter 84 which states, (E) Machines 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 . Further, the concerned Commissionerate has stated that a machine whose principal function is 'Display Function', is not classifiable under any specific heading, thus, the 'Self-ordering Kiosk' would be classifiable under the residual heading of Chapter 84 i.e. 8479 8999 however, the applicant has denied that the principal function of 'Self-ordering Kiosk' is 'display function. The applicant further denies that, 'Self-ordering Kiosk' can be classified under residual heading of Chapter 84 i.e. 84798999 and 'stand' cannot be classified as the 'Self-ordering Kiosk', itself. However, the applicant reiterates that the entire 'Self-ordering Kiosk' when imported i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner of Central Excise [2022 (382) EL T 442 (SC)] and stated that on the basis of judgement in Thermax case, it can be concluded that the additional purpose cannot alter the primary functionality of the product. 6.2 The applicant has contended that the specific function of a 'Self-ordering Kiosk' is that of a cash register which is classified under Sub-heading 84705010; in support of such contention referred to the Explanatory Note to heading 8470, which states as under: (C) CASH REGISTER This group comprises cash registers whether or not incorporating a calculating device. These machines are used in shops, offices, etc., to provide a record for all transactions (sales, services rendered, etc.) as they occur, of the amounts involved, the total of the amounts recorded and, in some cases, the code number of the article sold, quantity sold, time of transaction, etc. Data may be introduced either manually by means of a keyboard and a stop, lever or handle, or automatically, e.g., by means of a bar-code reader. Like calculating and accounting machines, some cash registers also have ancillary facilities for the automatic input of recurrent or pre-set data ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 56) ELT 173 (SC)] and stated that on the basis of Note 6(E) of Chapter 84 and Supreme Court's judgement in NI Systems (supra), it can be concluded that a machine must be classified based on the specific 'function' performed by it. Further, if such specific function is covered by any appropriate heading' in the HSN, then the machine should be classified in the respective heading. However, if the specific function is not covered by any appropriate heading in the HSN, only then it will become eligible to be classified under the residual heading. The applicant has further stated that the Hon'ble Supreme Court in the case of Hindustan Poles Corporation v. Commissioner of Excise [2006 (196) ELT 400 (SC)], has also held that when one particular item is covered by one specified entry, then the Revenue is not permitted to travel to residuary entry and the residuary entry is meant only for those categories of goods which clearly fall outside the ambit of specified entries; given that there is an 'appropriate heading' in the form of Cash Register under HSN 8470.50, 'Sell-ordering Kiosk' cannot be classified under the residual heading, thus, there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terface with the customer; it performs several functions on its own such as receiving input signals, processing of data, storage of data, hosting the Operating System; the 'Display Unit collects input-signals and processes data, on its own based on an in-built processer, display of information constitutes merely an intermediate function of the Display-Unit of Self-ordering Kiosks' and cannot be treated as its main function and therefore, cannot be classified as a mere monitor under heading 8528; similarly, CAAR has upheld the contention in the case of Compuage Infocomm Ltd. [2023 (383) ELT 343 (CAAR)]. The applicant has further stated that rule 1 of GRI provides basis for classification of an imported good: the classification shall be determined according to the terms of headings and any relative Section or Chapter Notes; Note 2 of Section XVI, provides principles for classification of parts, when they are imported on standalone basis and it provides, 2. Subject to Note 1 to this Section. Note I to Chapter 84 and to Note 1 to Chapter 85. parts of machines (not being parts of the articles of heading 8484, 8544, 8545. 8546 or 8547) are to be classified according to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while furnishing comments on the application for advance ruling, the concerned Commissionerate has admitted that 'connection box' has been designed solely/principally for use in 'Self-ordering Kiosk'; further, the concerned Commissionerate has also admitted that classification of 'connection box' would be made as per Note 2(a) of Section XVI; however, the concerned Commissioner has stated that 'connection box' when imported on standalone basis, would be classified under heading 84798999, which is denied by them, at the very outset; in light of the discussion in foregoing paras, a part which is designed to be specifically used solely/principally with a machine classified under heading 8470 would be classified in the heading 8473, specifically Sub-heading 84732900. 6.5.3 The applicant has also stated that, the concerned Commissionerate has classified 'stand' under Sub-heading 94032010 when imported on standalone basis however they deny such suggestion at the very outset; the 'stand' is an accessory of 'Self-ordering Kiosk'; it is required to be used at commercials places/establishments where 'Self-ordering Kiosk' is r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;s response, wherein it is opined that the classification of the subject goods would be under CTH 8479 under the residuary category; the department in their comments considered, 'display' being the principal function of the machine thus in absence of specific heading, they are classified as residuary machine under CTH 8479; in support of their contention, the AR mentioned that the subject goods not only record all the transaction as they occur but also complete the transaction, working as data processor, as well, hence, the product is Electronic Cash Register and classified under appropriate Sub-heading of heading 8470; as regards the question of importing the components in combination such as display unit and connection box together, the AR pointed out that appropriate classification would again be under CTH 8470 with applicability of exemption under Notification No. 24/2005 because, only due to the logistic reasons, import of the subject goods is in disassembled form which can only be used as self-ordering kiosk on assembling the components after coming to India; lastly, on the question of importing the display unit, connection box and stand on standalone basis in multip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;Self-ordering Kiosk' is a multi-functional device, having capability to perform a number of functions; 'Self-ordering Kiosk' has been designed to not just be a simple data processing machine but it performs a specific function of facilitating sale of products/services and enable customers to make payments via an interactive display interface; it possesses integrated payment terminals, printing function bar-code/QR code scanning function; component/part of 'Self-ordering Kiosk' i.e 'connection box' is its integral part, designed to function solely/principally with it, with a pre-defined bracket, where 'display unit' is placed for the 'Self-ordering Kiosk' to start functioning and carries out various functions in 'Self-ordering Kiosk', inter-alia receipt printer, barcode leader, QR code reader, payment terminals, wi-fi connectivity, NFC connectivity; component/part of self-ordering kiosk' i.e 'display unit' is an integral component/part, designed to function solely/principally with 'self-ordering kiosk' and aids its various functions viz. Touch-enabled display panel, processor, memory interface, storage unit a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay unit, connection box and stand appears to be not classifiable under heading 8470, the said goods are not entitled for exemption specified at serial number 7 of Notification No. 24/2005 - Customs dated 01-03-2005, when imported on standalone basis in different/separate consignments over a period of time. 10.5 While deciding classification in the instant application, it appears that reference to GRI is mandatory and specifically rule 2(a) of GRI keeping in view, that the 'Self-ordering Kiosk' is not an automatic data processing machine but a multi-function machine and in the light of the foregoing, it is felt that reference drawn to Note 6(E) of Chapter 84 is relevant for the purposes of classification as the 'Self-ordering Kiosks' have specific end-use in retail environment and enables a smart solution to browse products/services and provide multiple payment options; therefore, the 'Self-ordering Kiosk' performs a specific function other than data processing; thus, by virtue of Note (E) of Chapter 84, the 'Self-ordering Kiosk' would not be classifiable as an ADP, under the heading 8471. 10.6 In order to arrive at the classification of 'Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled. As the applicant intends to import 'Self-ordering Kiosk' in dis-assembled form wherein either three components, display unit, connection box and stand or two components, display unit and connection box will be imported simultaneously, in a single shipment, I note that the applicant has declared that 'Stand' is an optional accessory. Since the item, 'Stand' is an optional accessory, 'Self-ordering Kiosk' with components, display unit and connection box will have the essential character of complete or finished article i.e. 'Cash Register'. Thereby, components, 'Stand' being an optional accessory will merit classification under the heading appropriate to it. In this regard, I note that 'The Accessories (Condition) Rules, 1963' provides under rule 2, 'Accessories of and spare parts and maintenance or repairing implements for, any article, when imported along with that article shall be chargeable at the same rate of duty as that article, if the proper officer is satisfied that in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the classification of goods under said heading and Sub-heading respectively. 12. As regards classification of components/parts of 'Self-ordering Kiosk' namely (1) Display Unit, (2) Connection Box, (3) Stand, imported on standalone basis in different/separate consignments at different point in time, it has already been discussed that 'Display Unit' is a comprehensive component/part which acts as an interface with the customer and performs several functions on its own; moreover, Connection Box facilitates payments against sale of products; it is an integral part in functioning of 'Self-ordering Kiosk'. Further, both, 'Display Unit' and 'Connection Box' are designed to function solely/principally with the 'Self-ordering Kiosk'. Thus, Display Unit or Connection Box, imported on standalone basis would merit classification under Subheading 84732900 in terms of Note 2(b) of Section XVI read with heading 8470 read with rule 1 of GRI thereby concluding that parts and accessories which are designed for use solely or principally with a machine classifiable under headings 8470 - 8472, would be classifiable under the heading 8473. and 'Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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