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M/s Samsung India Electronics Pvt Ltd, Gurgaon Versus Commissioner of Customs, Import NCH, NR IGI Airport, New Delhi

2016 (2) TMI 855 - AUTHORITY FOR ADVANCE RULINGS

Classification of import of mobile phone by the name of Galaxy K Zoom under the Galaxy series - Whether the product is rightly classifiable as a telephone under Custom Tariff Heading (hereinafter referred to as "CTH") 8517 or as a Camera under CTH 8525? - Claim of benefit of exemption under the Notification 25/2005 - Held that:- as per trade parlance and consumer perception test also, the product is mobile phone, classifiable under CTH 8517 12. - The product i.e. Galaxy K Zoom is classifiab .....

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dent : Shri Amresh Jain (AR) RULING M/s Samsung India Electronics Private Ltd. (hereinafter also referred to as applicant) is a private limited company registered in India under Companies Act, 1956. Applicant proposes to launch a new mobile phone by the name of Galaxy K Zoom under the Galaxy series. Applicant proposes to import the said product for reselling to the distributors, retailers and the individual customers. The product is powered by Android Kit-Kat operating system and a quad 1.3GHz p .....

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ts camera. It is equipped with a 20.7MP BSI CMOS having 10x Zoom, w/Flash. Other important feature of the product is its In-Call feature. This allows the user of the product to capture and share an image even when on call, with a simple twist of zoom ring. 2. The questions on which advance ruling is sought by the applicant are as follows:- (c) Whether the product is rightly classifiable as a telephone under Custom Tariff Heading (hereinafter referred to as "CTH") 8517 or as a Camera un .....

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voice, image or data must be the principal function for a product classifiable under CTH 8517. In the instant case, the product performs all these functions. There is transmission and reception of calls, text messages, multimedia messages, mails, images, videos etc. which is performed by the product. As the description provided in the CTH 8517 and the functions performed by the product are similar, the product can fall CTH 8517. Further, Cameras under CTH 8525 are those cameras which convert th .....

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o cover those goods which are only digital cameras and perform the function of capturing image as a principal function. 4. Applicant submits that the classification of goods mentioned in the First Schedule of the Import Tariff is governed by General Rules for the Interpretation. The said rules for interpretation have been adopted from the General Rules for the Interpretation of the Harmonized System. According to Rule 3(b) of the General Rules for the Interpretation of the Harmonized System, in .....

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play music video, music player or radio, record video, can do arithmetic calculations, receive and send mails, can get directions vide navigation, can take photographs and upload them instantly etc. 5. Applicant further submits that they had approached the Customs Valuation and Classification Institute, Korea Customs Service for classifying Galaxy S4 Zoom which is the predecessor of the product. The said Institute on the basis of the structure, functions and price ratio of the product has provid .....

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Customs Tariff item no.8525 80 20, as Digital Camera .Notification No. 25/2005-Cus. exempts certain goods from whole of customs duty leviable thereon under the first schedule. At serial number 13 of the said notification, digital still image cameras are provided. This exemption is subject to the condition that for the purposes of this entry,"digital still image video camera" means a digital camera not capable of recording video with minimum resolution of 800 x 600 pixels, at minimum 23 .....

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as camera, then in that eventuality, it is exempted from Customs duty as per Notification No. 25/2005-Cus (S. No. 13) 7. Revenue submits that the product i.e., Galaxy K Zoom proposed to be imported in the current application has similar features as compared to the Galaxy S4 Zoom. As per the literature submitted by the applicant along with the application for Advance Ruling, the Galaxy K Zoom is stated to be "Real-Zoom in your pocket". Further, in the literature it is mentioned that th .....

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l function of the device as Camera finds support from the fact that the device automatically detects the surrounding and controls various options that can affect the photographer to allow taking best shot of the current environment. This mode is suitable for general users, as the device controls most settings and the catalogue also mentions that it captures the moments a user does not want to miss using various shooting modes. This equipment also has the capabilities to customize the options tha .....

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l zoom not the optical zoom. 8. Revenue further submits that the applicant had imported Galaxy S4 Zoom, which is predecessor model to Galaxy K Zoom proposed to imported; that the Department vide adjudication order classified Galaxy S4 Zoom under CTH 8525 8020, as digital camera. Revenue further submits that the product Galaxy K Zoom proposed to be imported by the applicant is to be classified under CTH 8525 8020 as camera, in view of Note 3 to Section XVI of the Import Tariff, as camera performs .....

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has specifically been designed and marketed by Samsung as a Camera wherein mobile facility and other applications are only additional features. 9. It is observed from the submissions made by the applicant and the Revenue that both have relied upon the principle of principal function for classification of subject product - Galaxy K Zoom; applicant proposes the product to be classified under CTH 8517 as mobile phone, whereas the Revenue suggests it to be classified under CTH 8525 as digital camera .....

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es as also Section Note etc. 10. Relevant extract of CTH 8517 and 8525 is as under; 8517 Telephone sets, including telephones for cellular networks or for other wireless networks; other apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as local or wide area network) other than transmission or reception apparatus of heading 8443, 8525, 8527 or 8528. - Telephone sets, including telephones for cellu .....

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80 - Television cameras, digital cameras and video camera recorders: 8525 80 10 - Television Cameras u 10% - 8525 80 20 - Digital Cameras u 10% - 8525 80 30 - video camera recorders u 10%- 8525 80 90 - Other 11. Relevant part of HSN Explanatory Notes appended to the Tariff Heading 8517 and 8525 are as under; 85.17 (i) TELEPHONESETS, INCLUDING TELEPHONESFOR CELLULAR NETWORKSOR FOR OTHER WIRELESS NETWORKS (B) Telephones for cellular networks or for other wireless networks. This group covers teleph .....

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recording (i.e., television cameras); or (2) Recorded in the camera as a still image or as a motion picture (i.e., digital cameras and video camera recorders) Many of the cameras of this heading may physically resemble the photographic cameras of heading 90.06 or the cinematographic cameras of heading 90.07. The cameras in heading 85.25 and the cameras in Chapter 90 typically include optical lenses to focus the image on a light sensitive medium and adjustments to vary the amount of light enteri .....

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le phone) and the Revenue under CTH 8525 (camera). In this connection, Rule 1 of General Rules for Interpretation (GRI) for the purpose of classification and Note 3 of Section XVI of the Import Tariff is relevant and is reproduced as under; Rule 1 - The 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 and, provided such head .....

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RI, which inter-alia states that in case of classification of composite goods consisting of different components, which gives the essential character to the goods, is the determining factor. 15. In view of above legal position, we are required to ascertain whether the product Galaxy K Zoom has the primary function and essential character of a mobile phone. It is noticed that the mobile phone is essentially a communication device working on the basis of towers and base stations arranged into a ne .....

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te to shift classification of the product from the category of mobile phone to camera, on the basis of said 3 additional features i.e., higher megapixel, optical zoom and click picture and transmit the same while on call. 16. Revenue further submits that as per technical specification provided by the applicant on Google and other websites, the subject product has been specially designed and marketed by Samsung as a camera, wherein mobile facility and other applications are only additional featur .....

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