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TMI Blog2023 (8) TMI 362X X X X Extracts X X X X X X X X Extracts X X X X ..... examination, the goods were found to be personal computers with accessories like mouse, power adapter and gaming console, and as per the website of the supplier, it was ascertained that the goods were specially designed for gaming purposes. As their principal function was gaming, the goods were re-classified under CTH 9504 5000 by the Revenue. 2.3 During the course of adjudication, the appellant had submitted that the imported goods are not "Electronic Games (Console)", but a personal computer, which is a multi-tasking device including computing capability, internet surfing, multimedia playing and editing, word processing, etc.; personal computer is a general purpose computer whose size, capabilities and original sale price make it useful for individuals and are intended to be operated by an end user with no intervening computer operator whereas an "Electronic Game (Console)" such as PS4, XBOX, etc., one can play games only. It was also put forth that the term "video game console" is used to distinguish a console machine primarily designed for consumers to use for playing video games in contrast to arcade machines or home computers, but includes home video game consoles, handheld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) GTX 1080 graphics - giving it the punch required to run the latest AAA gaming titles at their highest graphics settings. The G20 features ASUS Aura lighting effects, an ESS SABRE HiFi audio headphone DAC and amplifier, and ROG-exclusive gaming software including Aegis III. An advanced heat management design ensures cooling for stable performance during marathon gaming sessions. On top of that, it runs silently at just 22dB at idle. 3.3 The lower appellate authority, considering the above information and details, has concluded that the impugned goods are high-end computers which are specially designed for playing games, observing that although the product satisfied the condition of the Notes for CTH 8471 and do multi-tasking, but as mentioned in the HSN Explanatory Note 2 to Chapter 9504, "video games and machines whose objective, characteristic and principal function are such that they are intended for entertainment purposes (game-playing) remain classified in this heading, whether or not they fulfil the conditions of Note 5(A) to Chapter 84 regarding automatic data processing machines." Thus, he has held that Chapter Heading 9504 includes machines besides video game consoles, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eo game consoles from which the image is reproduced on a television receiver, a monitor or other external screen or surface; or (b) Video game machines having a self-contained video screen, whether or not portable. This subheading does not cover video game consoles or machines operated by coins, banknotes, bank cards, tokens or by any other means of payment (subheading 9504.30)". (v) The above Subheading Note clearly shows that there itself, video game consoles and video game machines are treated as two different categories of products. While Subheading Note 1(b) requires video game machines to have a self-contained video screen, whether or not portable alone, to be covered under 9504, in respect of video game consoles, Note 1(a) provides that an image can be reproduced on a television receiver, a monitor or other external screen or surface. As far as the present import is concerned, there are no inbuilt monitor or screen and these are only desktops with CPU, RAM, Graphic Card, etc. (vi) One has to see whether the product can get covered under Subheading Note 1(a) as video game consoles. Video Game consoles are totally different type of products, though based on automatic d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... game machines used cartridges containing only read only memory (ROM) chips. Video game consoles require a TV or monitor for display" (xii) www.techopedia.com defines video game console as mentioned below: "A video game console is a specialized computer system designed for interactive video game play and display. A video game console functions like a PC and is built with the same essential components, including a central processing unit (CPU), graphics processing unit (GPU) and random access memory (RAM). To offset costs, most video game console manufacturers use older CPU versions." (xiii) electronics.howstuffworks.com defines video game console as mentioned below: "At its core, a video game console is a highly specialized computer. In fact, most systems are based on the same central processing units (CPUs) used in many desktop computers. To keep the cost of the video game system within reasonable limits, most manufacturers use a CPU that has been widely available for long enough to undergo a significant decrease in cost". (xiv) The above websites give various reasons why game consoles are better than a computer, namely: * A video game console is less expensive than a t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... systems have same / similar features to the systems under dispute in this appeal. He has enclosed copies of the relevant Bills-of-Entry and product specification sheets to support his contention that the impugned goods are classifiable under Heading 8471 of the Customs Tariff Act. 4.3.1 He has also contended that as per industry norm and commercial parlance, "video game consoles" have limited application and fall under a different category of goods. In this connection, he referred to an extract from 'ChatGPT' powered by Open Artificial Intelligence, which reads as under: - "Video game consoles are called consoles because they are designed to be used with a television, and are typically placed in a central location in a room. They are typically used for gaming and entertainment, whereas a computer is a general-purpose device that can be used for a wide variety of tasks, including gaming, but also word processing, web browsing, and more. Additionally, consoles are often designed to be simpler and more user-friendly than computers, with fewer options and settings to adjust." 4.3.2 He also referred to the introductory paragraph of an article from Wikipedia on 'Console Game', traci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in turn create opportunities for more games to be created for it. Console developers will lower their profit margins on devices to encourage sales of the games as more profit can be obtained from software royalties than the sale of the consoles themselves. Games are frequently used to market a console and can do so either by exclusivity to a specific console or by using existing popular intellectual properties (IPs) that already have a strong following. Pac-Man for the Atari 2600 was already a well known arcade game and was expected to help the sales of 2600 devices due to its popularity despite it being heavily criticized. ... ... In comparison to PC and mobile games, console game developers must consider the limitations of the hardware their game is being developed for, as it is unlikely to have any major changes between the development phase and release. PC and mobile technology progresses quickly and there are many different configurations of their hardware and software. This is beneficial at the start of a console's life cycle, as the technology will be cutting edge, but as the console ages, developers are forced to work with ageing hardware until the next gener ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey equipment (+). 504.20 - Articles and accessories for billiards of all kinds 9504.30 - Other games, operated by coins, banknotes, bank cards, tokens or by any other means of payment, other than automatic bowling alley equipment. 9504.40 - Playing cards 9504.50 - Video game consoles and machines, other than those of subheading 9504.30 9504.90 - Other This heading includes: (1) ... ... (2) Video game consoles and machines as defined in Subheading Note 1 to this Chapter. Video game consoles and machines whose objective characteristics and principal function are such that they are intended for entertainment purposes (game-playing) remain classified in this heading, whether or not they fulfil the conditions of Note 5(A) to Chapter 84 regarding automatic data processing machines. The heading also includes parts and accessories of video game consoles and machines (for example cases, game cartridges, game controllers, steering wheels), provided they fulfil the conditions of Note 3 to this Chapter." 9. The relevant part of Chapter Heading 8471 of the Customs Tariff is extracted below: - 8471 Automatic data processing machines and units the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the product literature, it is seen that the impugned goods are designed for the purpose of playing games and reportedly, even has gaming software Aegis III pertaining to the ROG series. 13. The Ld. Advocate in his submissions has accepted that the imported goods have features for gaming, but has argued that a 'video game console' is an entirely different product and it cannot be compared to a Computer System Desktop as the latter is capable of carrying out multiple tasks including computing capabilities, internet surfing, multimedia playing, editing, word processing, etc., and it can be put to multiple uses in both business and industry, may be also for entertainment and gaming. 14. On the basis of the submissions made by the Ld. Advocate and also on going through the product literature as well as various records available in this appeal, the differences between 'Gaming Desktop Computer' and 'Video Game Console' are summarized below: - S. No. Criteria/Parameter Gaming Desktop Computer Video Game Console 1. Multi-tasking Automatic data processing machines/ Computers are capable of carrying out multiple tasks including computing capabilities, internet surfing, multimedia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 15.2 The impugned goods are freely programmable whereas video game consoles only operate on fixed programmes. As the impugned goods answer to the requirements of the HSN Explanatory Notes to Heading 84.71 as well as Chapter Note 5 (A) to Chapter 84, they are more appropriately classifiable under CTH 8471 as automatic data processing machines. Though the imported goods, declared as computer desktop systems, are known in the market parlance as gaming computers, they are to be treated as computers / automatic data processing machines though many modifications have been brought out in the form of enhancements like inclusion of higher version of graphics cards, hardware for enhancement of audio and other gaming equipment. 16.1 The lower appellate authority has placed reliance on the HSN Explanatory Note (2) to Heading 95.04 to classify the impugned goods under CTH 9504 as video game consoles, which reads as under: - "(2) Video game consoles and machines as defined in Subheading Note 1 to this Chapter. Video game consoles and machines whose objective characteristics and principal function are such that they are intended for entertainment purposes (game-playing) remain classified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rima facie, classifiable under two or more headings, classification shall be effected as follows: (a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, in so far as this criterion is applicable. (c) When goods cannot be classified by reference to (a) or (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration." 17.3 Applying the above General Rules for the Interpretation of Import Tari ..... X X X X Extracts X X X X X X X X Extracts X X X X
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