2023 (6) TMI 657 - AAR - Customs

Classification of goods proposed to be imported - Interactive Display System (View Board) - to be classifiable under Chapter heading 8471 4190 of Customs Tariff Act, 1975 or not. It is alleged by the applicant that the subject goods satisfy all the four essential conditions mentioned in Note 5(A) to Chapter 84 and therefore, qualify to be considered as ADPMs, classifiable under Heading 8471. HELD THAT - The subject goods, Interactive Display System (ViewBoard) has an in-built Central Processing Unit, RAM for execution of programs, pre-installed operating system namely Android 7.0, Open Pluggable Specification Slot to download and install new programmes and operate other operating systems such as Windows, etc. Additional features include, slots for HDMI, VGA, LAN, USB, RS232 and audio ports, high internal storage capacity, UFT (Ultra Fine Touch) Technology to offer more precise writing and faster processing time, air quality sensor, germ resistant screen, two touch pens (stylus), remote control, 70-80% glare free surfaces with a flicker free display, multi-touch interaction, handwriting recognition, freehand touch, go typing and applications such as calculator, stopwatch, buzzer. They are wall mounted, do not incorporating tilt, swivel or height adjustment mechanism and are available in dimensions 55 , 65 , 75 , 86 and 98 . They are used in classrooms for teaching and in companies for presentations, meetings etc. It is pertinent to mention that the principles for classification of goods are governed by the General Rules of Interpretation (GRI) and Harmonized Commodity Description and Coding System (Harmonized System or HSN). According to Rule 1 of the General Rules of Interpretation (GRI), titles of Sections, Chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes. - Chapter 8471 of Customs Tariff Act, 1975 covers, Automatic data processing machines and units thereof; magnetic or optical readers, machines for transcribing data onto data media in coded form and machines for processing such data, not elsewhere specified or included . Whether the features and specifications of the subject goods under consideration meet the criteria as laid down in the relevant chapter note? - HELD THAT - It is understood that Automatic data processing (ADP) machines have storage capability and also stored programs which can be changed as per the performance of tasks. Digital machines process data in coded form. A code consists of a finite set of characters (binary code, standard six-bit ISO code, etc.). The data input is either automatic through the use of data media such as magnetic tapes or manual by means of keyboards, touchscreen etc. The input data are converted by the input units into signals which can be used by the machine and stored in the storage units. The data is then operated by the CPU and operating system to produce output. From para 2, it is evident that these machines have an in-built CPU, Android operating software and high internal storage capability which is directly accessible for the execution of a particular program and which has a capacity sufficient to store those parts of the processing translating programs and the data immediately necessary for the current processing run. Therefore, the goods satisfy the condition specified in Note 6(A)(i). From the product details submitted, it appears that these goods come with a pre-installed operating system, namely, Android, that is the customized operating system for these device. It has an OPS slot, enabling connection of additional hardware and installing other operating software such as Windows, etc. It is capable of downloading and installing new programmes in accordance with the needs of the user and executing any application/program stored on its memory. Therefore, the goods satisfy condition as per 6(A)(ii). Interactive Display System, perform the arithmetical computations specified by the user which satisfy condition 6(A)(iii) of the chapter notes. Note 6(B) to chapter 84 states Automatic data processing machines may be in the form of systems consisting of a variable number of separate units. Note 6(C) to chapter 84 specifies the conditions for a unit to be classified as being part of an automatic data processing system. 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. In a standalone configuration, the devices under consideration process applications compatible with the various Android operating system join wired or wireless networks, access and manipulate folders and files, and perform general computing tasks such as Internet browsing, email, and editing office documents. Therefore, from the working and features of the impugned goods, it appears that these are neither units of ADP machines nor ADP machines presented in the form of systems, but ADP machines themselves. It is found that the subject goods are capable of performing plethora of functions independently on standalone basis and these devices are much more than mere display devices. In fact, display is only one of the features of the goods and cannot be construed to be its only function, much less its principal function. Also, the subject goods satisfy all the conditions laid down under Note 6(A) of Chapter 84, thereby validating the expression automatic data processing machine . Thus, Interactive Display System (ViewBoard) models mentioned in para 1 merit classification under Heading 8471 and more specifically under sub-heading 84714190 of the first schedule to the Customs Tariff Act, 1975.

Summary

Issues Involved:

1. Classification of "Interactive Display System (View Board)" under the Customs Tariff Act, 1975.

Summary:

Issue 1: Classification of Interactive Display System (View Board) under the Customs Tariff Act, 1975:

The applicant, M/s. Brightpoint India Pvt. Ltd., sought an advance ruling on the classification of various models of "Interactive Display System (View Board)" under the Customs Tariff Act, 1975. The applicant argued that the subject goods, which include Liquid Crystal Display panels with LED backlight, in-built CPU and RAM, pre-installed Android 7.0 operating system, and other advanced features, qualify as "Automatic Data Processing Machines" (ADPMs) and should be classified under Chapter heading 8471, specifically sub-heading 84714190.

The applicant emphasized that the subject goods meet all the criteria specified in Note 5(A) to Chapter 84, which defines ADPMs. They argued that the goods are capable of storing and executing programs, being freely programmed, performing arithmetical computations, and executing processing programs without human intervention. They also contended that the goods should not be classified under Chapter 8528, which covers monitors and projectors, as the subject goods have functionalities beyond mere display.

The jurisdictional Commissioner of Customs, Chennai-II (Import), opposed the applicant's classification under Chapter heading 8471, arguing that the primary function of the goods is display and interaction, making them more akin to monitors. They suggested classification under sub-heading 8528 5900, which deals with other monitors. The Commissionerate cited various legal precedents and Chapter Notes to support their stance.

Upon review, the Authority for Advance Rulings (AAR) examined the features and functionalities of the subject goods, noting that they possess an in-built CPU, Android operating system, and high internal storage capacity. The AAR concluded that the subject goods meet all the requirements of Note 5(A) to Chapter 84, qualifying them as ADPMs. The AAR also determined that the goods are not merely display devices but perform a plethora of functions independently, making them more than just monitors.

The AAR ruled that the subject goods, "Interactive Display System (View Board)," merit classification under Heading 8471 and more specifically under sub-heading 84714190 of the first schedule to the Customs Tariff Act, 1975.