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TMI Blog2012 (6) TMI 603X X X X Extracts X X X X X X X X Extracts X X X X ..... 1st March, 2007 are taxable under the residuary head and, therefore, attract value added tax @ 12.5% and do not fall under Entry No. 41A of the third Schedule of the VAT Act and, therefore, are not taxable @ 4%. 2. The substantial question of law, on which we have heard learned counsel for the parties and which requires adjudication, is as under:- "Whether the multi functional printers/machines and their spares and consumables, during the period 1st April, 2005 to 31st March, 2007, are taxable under Entry No. 41A of the third schedule of the Delhi Value Added Tax, 2004 or are taxable under the residuary head @ 12.5%?" 3. The appellant had filed an application under Section 84 of the VAT Act seeking advance ruling in respect of the applicable VAT rate on the multi functional printers/machines and their spares and consumables during the period 1st April, 2005 to 31st March, 2007 (hereinafter referred to as "the relevant period"). We may notice that the application and the question raised in the said application itself stated that the multi functional printers/copiers/scanners fall under the HSN code No.8471.60.29 and the spares and consumables fall under the HSN code No.8473.30.99 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereof. 41A IT products notified by the Ministry of IT as specified below (I to XXII) x x x x x x x x x x x x (XXIII) computer systems and peripherals, Electronic diaries. x x x x x x x x x x x x " 8. Entry Nos. 41 and 41A underwent substantial changes with effect from 30th November, 2005 and thereafter during the relevant period, read:- "41. Computers, telephone and parts thereof, teleprinter and wireless equipment and parts thereof, Mobile phone and all mobile accessories costing upto rupees ten thousand. 41A. Information Technology products as per the description in column (2) below, as covered under the headings, or sub-headings mentioned in column (3), as the case may be, of the Central Excise Tariff Act, 1985 (5 of 1986)." Sl no. Description Central Excise Tariff Heading (1) (2) (3) 1. x x x x x x x x x x x x 2. x x x x x x x x x x x x 3. Automatic data processing machines and units thereof, magnetic or optical readers, machines for transcribing data into data media is coded form and machines for processing such data. Analogue or hybrid automatic data processing machine, Electronic Diaries, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sy, the relevant changes, Section notes and Chapter notes are noticed and reproduced below:- Prior to 1st January, 2007 "8471 Automatic data processing machines and units Thereof; magnetic or optical readers, machines for transcribing data on to data media in coded form and machines for processing such data, not elsewhere specified or included. 8471 10 00 Analogue or hybrid automatic data processing machines. @ 16% 8471 60 Input or output units, whether or not containing storage units in the same housing. @ 16% 8471 60 10 Combined input or output units Printer @ 16% 8471 60 21 Line printer @ 16% 8471 60 22 Dot matrix printer @ 16% 8471 60 23 Letter quality daisy wheel printer @ 16% 8471 60 24 Graphic printer @ 16% 8471 60 25 Plotter @ 16% 8471 60 26 Laser jet printer @ 16% 8471 60 27 Ink jet printer @ 16% 8471 60 29 Other @ 16% Relevant Section Note 3. Unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines designed for the purpose of perf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y Co-ordinate input devices and disc storage units which satisfy the conditions of paragraphs (B)(b) and (B) (c) above, are in all cases to be classified and units of heading 8471. (E) Machines performing a specific function other than data processing and incorporating or working in conjunction with an automatic data processing machine are to be classified in the heading appropriate to their respective functions or, failing that, in residual heading. 6. Heading 8482 applied, inter alia, to polished steel balls, the maximum and minimum diameters of which do not differ from the nominal diameter by more than 1% or by more than 0.05 mm, whichever is less. Other steel balls are to be classified in heading 7326. 7. A machine which is used for more than one purpose is, for the purposes of classification to be treated as if its principal purpose were its sole purpose." 10. Post 1st January, 2007, amendment was made to the tariff item 8443 and 8471 and the relevant changes are as under:- " Tariff Item (HSN Code) Description of goods 8443 Printing Machinery used for printing by means of plates, cylinders and other printing components of heading 8442; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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; SECTION XVI 491 CHAPTER 84 (iv) television cameras, digital cameras and video camera recorders; (v) monitors and projectors, not incorporating television reception apparatus. (E) Machines incorporating or working in conjunction with an automatic data processing machines and performing a specific function other than data processing are to be classified in the heading appropriate to their respective functions, or, failing that, in residual headings. 6. .............. 7. A machine which is used for more than one purpose is, for the purpose of classification, is to be treated as if its principal purpose was its sole purpose..........." 11. We may first notice the decision of the Supreme Court in Xerox India Ltd. v. Commissioner of Customs, 2010 (260) ELT 161 (SC). The Supreme Court in the said case held that the multi functional machines in the said case, which were principally performing the function of a printer, should be classified under the head 8471.60 and the said goods could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... distinguished. (15) In view of the above, we are of the opinion that the correct classification for the imported Multi-Functional Machines involved in this case, namely models Xerox Regal 5799, Xerox Workcentre XD 100 and Xerox Workcentre XD 155df should be under Customs Tariff Chapter heading 84.71.60. Accordingly, the appeal is allowed and the order passed by the Tribunal in Appeal No. C/300/2002-B dated 05.11.2002 is set aside. Parties to bear their own costs." 12. The contention of the appellant is that the aforesaid decision is squarely applicable and has been wrongly ignored and not applied by the tribunal. The contention of the respondent is to the contrary. Reference by both the parties was made to the four notes in the VAT Act applicable to Entry 41, which have been quoted above with reference to application of the Rules of Interpretation of the provisions of Central Excise Tariff Act, 1985 read with the explanatory notes. 13. At first, we deem it appropriate to examine the four notes in the VAT Act. Note (1) stipulates that Rules for Interpretation of the provisions of the Central Excise Tariff Act, 1985 read with the explanatory notes "as updated from time to time" p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lls under the heading or sub-heading "other" in the Central Excise Tariff Act, 1985, then interpretation stipulated in Note (2) would apply. In other words, the goods would be covered by the residuary provision and taxable accordingly. The word "heading" in Note (4) is superfluous as the word "other" never appears in the heading, but can be a sub-heading under the Central Excise Tariff Act, 1985. 14. Thus, Rule (1) is a general rule of interpretation and is not subject to Rules (2) to (4). Rules (2) to (4) require that we should examine the description in column (2) and compare it with the description of the goods mentioned in the relevant entry in the Central Excise Tariff Act, 1985. If the same are identical, then we should apply the same interpretation, as has been given to the entry in Central Excise Tariff Act, 1985. If the entries are not identical or the commodity falls under the heading "other" in the Central Excise Tariff Act, 1985, then we have to look at the second column of the schedule to find out whether the commodities are covered by the said column. In case commodities/goods are not covered by the description given in the column, then commodities/goods will fall un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of the period prior to 30th November, 2005, we answer the aforesaid question of law recording that the multi function machines may or may not be computer peripheral, depending upon the main purpose or function which the machine was designed and manufactured to perform. If the principal and predominant purpose was to act as a computer printer or scanner or as an input or output devise of the computer, the multi functional machine would qualify and fall under entry 41A clause XXIII. However, if the machine was designed and manufactured for some other primary purpose, then it would not be covered by Entry 41A clause XXIII. Mere description or the nomenclature given by the manufacturer or trader is not relevant and the assessee should justify and establish their claim. We have applied the doctrine/test of principal and dominant purpose, as it is the most appropriate and logical test. The said test was applied by the Supreme Court in the case of Xerox India Ltd. (supra) for the purpose of Customs Act. A multi functional printer or machine may be able to perform several functions, but an ancillary or incidental function would not be relevant. The relevant determining factor in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red under tariff entry 8471.60.29 i.e. "others". 20. As noticed above, Note (4) to the notification with reference to Entry 41A specifically states that it would not apply in case the goods fall under the sub-heading "others" in the Central Excise Tariff Act, 1985. In view of the aforesaid, we need not go into and examine the issue of amendment made in Entry No.8471.60 with effect from 1st January, 2007, whereby multi functional machines have been specifically classified under the tariff head 8443 and are no longer classified under the head 8471.60. Whether or not the reference in the notification issued under the VAT Act is "Legislation by Reference" or "Legislation by Incorporation" is not relevant and need not to be decided. We record that the multi functional machines/printers do not find mention in any specific entry or description in 8471.60. They would fall under the head "others" as combined output and input units. Similarly, under column (2) in the heading "description" in Entry 41A of the notification issued under the VAT Act, they can/may fall under the general description as input or output unit. 21. The next aspect, which has to be decided, is whether or not a multi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gly answered. 22. As noted above, the factual aspects with reference to each machine has to be examined. The appellant had applied for advance adjudication/ruling. They should have produced necessary data/particulars to show and establish that principal/dominant object of the machine was to perform functions of an input or output unit of an automatic data processing machine. The onus was on the appellant to show and establish the principal or dominant purpose as they were the manufacturers or traders of the said machines. Thereafter, it was open to the Revenue to contradict or take a contrary stand, on basis of the relevant material and evidence, if required and necessary take help of expert evidence. In the absence of factual details, we cannot give any firm opinion. We are not inclined to remit the matter, as the appellant had made an application for advance ruling and there have been lapses on their part and more importantly the question and issue can be examined at the stage of assessment/appellate proceedings. The question of law is accordingly answered. The appeal is partly allowed and the order of the tribunal to the extent contrary to the observations made above shall be t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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