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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 ..... onal features for playing games, continues to be a Computer System and can also be used for general purposes other than as an entertainment device. 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. Thus, it is amply clear that such video game consoles and video game machines alone fall under the purview of HSN Explanatory Note (2), whether or not they satisfy the conditions of Note 5(A) to Chapter 84. Thus, primarily, to fall within the ambit of the above Note, the goods necessarily have to be such video game con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,42,765/- 3 9456919 / 26.04.2017 66,798/- 4 9456942 / 26.04.2017 1,42,765/- 2.2 Upon 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 co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icated that ROG G20 is a 9.5-liter gaming PC designed to dominate the small-form-factor gaming desktop segment ; it is powered by latest 7th Generation Intel CoreTM i7 processor and the latest nVidia GeForce 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 headi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority has failed to look into this Subheading Note, as a result of which a patently wrong conclusion was arrived at by him. (iv) Subheading Note 1 to Chapter 95 reads as follows: - 1.-Subheading 9504.50 covers: (a) Video 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... most popular consoles are Sony s PlayStation and Microsoft s Xbox. Nintendo s Wii is also a contender that simulates physical participation in activities such as bowling and playing tennis (See Wii). Game software is available on CDs or DVDs, although earlier 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate has further submitted that same model of computers, including updated model of computers of the same category, have been cleared by various Custom Houses / Air Cargo Complex on the basis of classification under 8471 3010 / 8471 3090 in the subsequent periods and the imported 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g players to easily adapt to new games. . While a PC is multi-functional and will be purchased to perform tasks other than gaming, a dedicated gaming console must have games available for it to be successful. A good library of games will give a consumer reason to purchase the console 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 te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unning on a Windows 10 platform, basically relying on the HSN Explanatory Note (2) to Heading 95.04, which reads as follows: 95.04 - Video game consoles and machines, articles for funfair, table or parlour games, including pintables, billiards, special tab les for casino games and automatic bowling alley 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they must be capable of: (1) Storing the processing programme or programmes and at least the data immediately necessary for the execution of the programme; (2) Being freely programmed in accordance with the requirements of the user; (3) Performing arithmetical computations specified by the user; and (4) Executing, without human intervention, a processing programme which requires them to modify their execution, by logical decision during the processing run; Thus, machines which operate only on fixed programs, i.e., programs which cannot be modified by the user, are excluded even though the user may be able to choose between a number of such fixed programs. (Emphasis supplied) 12. The impugned products are automatic data processing machines, but the objective and characteristics indicate that they are intended for entertainment purposes (game-playing). According to the importer s website and also 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 impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and other accessories can be upgraded as and when required upgrades are extensive. Usually not possible to completely alter hardware components/customize as compared to a personal computer. 7. Input Can be operated using keyboard, mouse, joysticks, controllers, etc. Only supports controllers, which is a handheld device connected to the console generally containing several buttons and directional controls. 8. Visuals/Output Gaming computers are capable of running games at higher graphics settings, and are usually more expensive. Due to hardware limitations, they usually offer a lower graphics output as compared to gaming personal computers. 15.1 An automatic data processing machine or personal computer is said to be capable, in terms of Chapter Note 5(A) to Chapter 84, of storing the processing programmes and is also freely programmable in accordance with the requirements of the user and capable of computing and executing without human intervention. Whereas video game consoles are simply plug and play devices, whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry Note (2), whether or not they satisfy the conditions of Note 5(A) to Chapter 84. Thus, primarily, to fall within the ambit of the above Note, the goods necessarily have to be such video game consoles/machines as defined above. However, as differentiated by us elsewhere in this order, the impugned goods/Computer System Desktop are neither video game consoles nor video game machines , but are an entirely different product which, though have gaming capabilities, are also having a wide array of functionalities such as internet surfing, multimedia playing, etc., and can be put to multiple uses in business and industry. Further, the finding of the lower authority that the term machines in the above Note means machines besides video games which could be data processing machine too appears to be misconstrued, in the light of the explicit definition provided under Subheading Note 1 to Chapter 95. Therefore, the reliance on the HSN Explanatory Note (2) to Heading 95.04 by the lower appellate authority is misplaced. 17.1 The lower appellate authority has resorted to Rule 3 of the General Rules for the Interpretation of Import Tariff, concluding that Rule 3(c) is applicable in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equirements of Chapter Note 5 (A), it shall continue to be an automatic data processing machine . 18.1 We are persuaded more to agree with the contentions of the Ld. Advocate that video game consoles are typically powered by operating systems and CPUs that differ from desktop computers and the consoles are under the control of their respective manufacturers and the software is geared to the machine s capabilities, with the games not being interchangeable with other game consoles or desktop computers. 18.2 We also take note of the fact that Computer Systems with modifications for enhancement of gaming, by inclusion of additional audio/video devices, are being classified under CTH 8471 as ADPs. In support of his contention, the Ld. Advocate has submitted many copies of Bills-of-Entry where similar products by the same manufacturer with the latest configuration in new series of machines have been classified under CTH 8471 in various Custom Houses and Air Cargo Complexes. 18.3 It is also to be noted that these are imported from China and at the time of export, these are classified as computers being classified under Chapter Heading 8471. 19. Considering the differences tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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