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TMI Blog2022 (11) TMI 1421X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Orissa High Court held in State of Orissa v. Gestetnet Duplicators (P.) Ltd. [ 1974 (1) TMI 87 - ORISSA HIGH COURT ] that it is a matter of common experience that the identity of an article is associated with its primary function; it is only logical that it should be so; when a consumer buys an article, he buys it because it performs a specific function for him; there is a mental association in the mind of the consumer between the article and the need it supplies in his life; it is the functional character of the article which identifies it in his mind. The printers proposed to be imported without the formatter boards and firmware possess the essential character of a complete printer though they may not be functional at the time of import. Item, HP 136 and HP 438 are correctly classifiable under Sub-heading 8443 31 00 of the Customs Tariff - Item, HP 108 is rightly classifiable under CTI 8443 32 40 of the Customs Tariff - Item, HP 136 and HP 438 are eligible for exemption under SI. No. 2 of Notification No. 24/2005-Cus. - Shri Samar Nanda, Authority for Advance Rulings, Customs Shri V. Laxmikumaran, Rachit Jain, Adv., Shubham Jaiswal, Advocates, and Ravi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on laser technology for printing and Digital CMOS Image Sensor technology for scanning of documents; it has an inbuilt memory of 512MB and comes with a processor of 600MHz; it comes with a 4-line LCD display and can be connected to a computer through high-speed USB 2.0 port as well as ethernet 10/100 Base TX. 3.2 In respect of the said three models of printers, it is also stated that the applicant intends to import the subject goods without formatter boards; the applicant will import the formatter boards later on and assemble it in the subject goods before selling it to their customers; a formatter board is a PCB which is used for controlling various functions of the printer like receiving and processing print data, developing and coordinating data placement and timing with the DC controller PCA, storing font and customer configuration information, communicating with the host computer, and monitoring control panel functions etc.; furthermore, the subject goods proposed to be imported by the applicant will not have the firmware at the time of import and the same will be downloaded once the subject goods are cleared for home consumption; a firmware is a software that is etched d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scope and ambit of the respective Section and Chapter; these notes have been given statutory backing and have been incorporated at the top of each Chapter; further, as per Rule 2(a) of the GRI, where a complete or finished article is presented unassembled or disassembled or an incomplete/unfinished article is presented which has the essential character of a finished article, the same is to be classified under the tariff heading as that of the finished/complete article; Rule 2(a) of the GRI is extracted below for ready reference: 2. (a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled. ; Rule 2(a) of GRI can be applied in a circumstance wherein the imported goods have the 'essential character' of the finished goods; it is submitted that the exercise for determining the cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the formatter board is to relay data from a computer to the printer's engine; the formatter system communicates with the user via the control panel. It is submitted that the subject goods, in the condition in which they are proposed to be imported by the applicant, have the essential character of complete printers; reliance in this regard is placed to the Harmonized System of Nomenclature ( HSN , in short) Explanatory Notes to section XVI; the relevant portion of the HSN Explanatory Notes states, Throughout the Section any reference to a machine or apparatus covers not only the complete machine, but also an incomplete machine (i.e., an assembly of parts so far advanced that it already has the main essential features of the complete machine). ;thus a machine lacking only a flywheel, a bed plate, calender rolls, tool holders, etc., is classified in the same heading as the machine, and not in any separate heading provided for parts; similarly a machine or apparatus normally incorporating an electric motor (e.g., electro-mechanical hand tools of heading 84.67) is classified in the same heading as the corresponding complete machine even if presented without that motor ; from above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nters are covered under both the entries i.e. CTH 8443 as well as CTH 8471 of the Customs Tariff; however, it is to be noted that the CTH 8471 covers only those kinds of printers which are presented along with the automatic data processing machine and not the printers which are presented separately; reference in this regard is made to Note 6(D) of Chapter 84 which specifically says that the printers, copying machines, facsimile machines etc. when presented separately, then, it cannot be classified under CTH 8471 even if they meet all of the conditions set forth in Note 6(C) of Chapter 84; the relevant Notes to Chapter 84 states, 6(D) Heading 8471 does not cover the following when presented separately, even if they meet all of the conditions set forth in paragraph (C):(i) printers, copying machines, facsimile machines, whether or not combined; (ii) 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); (iii) loudspeakers and microphones; (iv) television cameras, digital cameras and video camera recorders; (v) monitors and projectors, not incorporating te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e covered under Sub-heading 8443 31 00 of the Customs Tariff; here, it is imperative to note that Sub-heading 8443 31 00 of the Customs Tariff covers only those machines which are capable of connecting to an automatic data processing machine or to a network; the applicant is of the view that by virtue of first part of Rule 2(a), once it is concluded that printer without formatter board has the essential character of a complete printer, then it should be deemed to be complete printer with formatter board for classification purposes, including interpretation of the headings/sub-headings/tariff entries; therefore, both these printers will be correctly classifiable under Sub-heading 8443 3100 of the Customs Tariff; similarly, HP 108 will also be deemed to be a complete printer by applying Rule 2(a) of GRI and therefore, the same should be considered as capable of connecting to an automatic data processing machine; however, since HP 108 does not perform the functions of copying or facsimile transmission, therefore, the same cannot be classified under Sub-heading 8443 3100 of the Customs Tariff; therefore, considering the fact that HP 108 is a Laser jet printer, me applicant is of the vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nical device; the essential character of the exact item comes from the formatter board; therefore contention of the applicant does not appear to be correct; thus Laser Jet printer 108a and 136a merit classification under sub-heading 84439940. 6. In accordance with the procedure prescribed under the CAAR Regulations, 2021, personal hearing was scheduled on 3-11-2022. Personal hearing in the matter was attended by Shri Laxmikumaran, advocate wherein he started with explaining that due to acute chip problem, the applicants have to resort to import of printer and formatter board, separately, otherwise, the product under import is completely finished; further, the cost of the formatter board account for only 14% of the total cost of the printer; thus the relevant headings for multifunction and other printers are 844331 and 844332 respectively. Advocate, further referred to rule 2 (a) of General Rule for Interpretation of Import Tariff and mentioned that the incomplete machine, which the applicant intend to import, has the essential character of the finished printer, accordingly, the printers referred in the application merit classification in the headings 844331 or 844332, as the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e applicant, I proceed to examine the question on merits. 9.1 Having gone through the advance ruling application, supporting arguments for classification and applicability of exemption under the said notification, I summarize the contending positions on the questions posed for advance ruling. The applicant has stated that they intend to import Laser Jet Printers without Formatter board and firmware. However, in spite of absence of the formatter board and firmware, the applicant contends that the said goods, which are capable of connecting to an automatic data processing machine, have the essential character of Laser Jet printers. It is further viewed that the term, essential character broadly denotes that the goods imported must have the heart and soul of the complete product. Reliance is placed on a number of case laws including the cases, wherein, even after absence of adaptor and motor respectively in the goods, namely LED strand and Machine, the relied upon judgments have observed that the heart is present. As per Rule 2(a) of the GRI, where a complete or finished article is presented unassembled or disassembled or an incomplete/unfinished article is presented, which has the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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