TMI Blog2019 (4) TMI 915X X X X Extracts X X X X X X X X Extracts X X X X ..... cation of mind. In the entire order he goes on rejecting the contentions raised by the respondents for claiming classification under CTH 8517 but finally decides the classification as claimed by them. He has failed to consider the manner in which the respondents have positioned themselves in the market vis a vis the imported item. In their own literature, they describe the products stating “Tablet with support for GSM voice communication, SMS and MMS”. Thus respondents have entered the market describing the product as Tablet with support for GSM voice Communication. In our view this is enough to hold that voice communication is secondary function to the Tablet functions. When the respondents themselves hold that Tablet function is predominant, any finding rendered by the Commissioner to the contrary cannot survive. The order of Commissioner is set aside and the matter is remanded back to the adjudicating authority for fresh consideration of issue of classification and all the other associated issues - appeal allowed by way of remand. - Appeal No. C/174/2011 - A/85727/2019 - Dated:- 12-4-2019 - Mr. S.K. Mohanty, Member (Judicial) And Mr. Sanjiv Srivastava, Member (Technical) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cm X 1.12 cms (thickness) and has weight of 385 gms. It has got a CPU, Keyboard (touch screen) and display unit as well as size of screen to ensure comfortable reading. 2.6 The advertisements of the product also highlight the computer based functions of the device rather than voice telephony functions. For other applications where visual comfort is important viz reading newspaper, books, HD Video, magazine, stocks etc., a bigger screen is provided which has made it a heavier and bigger instrument. 2.7 Thus device was more appropriately described as Tablet PC rather than mobile telephone and it was brought and sold in trade both in domestic and international market as tablet PC rather than mobile phone. Hence in terms of Rule 4 of general Rules of Interpretation of Customs Tariff the imported device was more appropriately classifiable under heading No 8471 of Customs Tariff. 2.8 Commissioner gave an oral show cause notice to the importers asking them to show cause as to why- (i) The 400 pcs of Samsung Galaxy Tab valued at ₹ 74,94,604/- should not be held liable for confiscation in terms of Section 111(m) of the Customs Act, 1962. (ii) Why the device should not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r handset / telephone has the essential characteristic of transmission and reception apparatus, such as aerial, display screen, keypad and that the same should be of small size so that it can be handheld and is of lightweight for use as telephone instrument. The other functions such as radio receivers, music players, e-mail, net browsers, calculators, stopwatch, alarm, computing on software platform are subsidiary to the main function of transceiver. The main point underscored in this para is that the Mobile Phone is a light weight device for easy handling and devices such as PDA are bulky devices suitable for the functions of a Personal Computer. The imported item is bulky device and not sleek or light weight as a Mobile Phone ought to be. The device cannot be held against the ear for attending the call as there is no provision for earpiece in the device. The Board Circular referred to by the Commissioner is in relation to smart phones which have advance features of a Personal Computer, GPS device etc. Imported devices are not smart phones and it falls under the generic category of tablet computers primarily designed for media consumption. Thus reliance placed by the Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and brought/ sold in market as PC Tablet and not as mobile phone. iv. The issue with regards to classification of imported devices under consideration has been dealt in CBEC Circular No 20/2013-Cus. The said Circular makes the distinction between the tablet computers a smart phones, and clarifies that tablet computers will be classified under heading 847130. v. WCO HSC decisions on the subject also hold that these devices will merit classification under heading 847130. 4.3 Arguing for the respondents learned counsel submitted i. Issue estoppel. The same very issue has been considered by the Commissioner Customs (Appeal) Delhi and he has vide his order in appeal dated 31.10.2011 adjudged the classification of the very same product as has been claimed by them. Revenue has not filed any appeal against the said order and the proceedings in respect of the case in Delhi have acquired finality. Since the issue has not been challenged in the case in Delhi, the revenue is barred to take contrary stand. {Surcoat Paints (P) Ltd [2000 (232) ELT 4 (SC)], Priyanka Refineries Ltd. [2010 (249) ELT 70 (T-Bang)], Ligare Aviation Ltd [Final Order No A/62117/2017-CU(DB) dated 3.12.2017] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the length, width and thickness of the same along with its weight. Just comparing the length and width with that of A4 size paper having standard dimension [27.94 cms X 21.59 cms] will give the idea of the size. On an A4 paper after leaving standard margins of 2.54 cms on each side normally the space available is about [22.86 cms X 16.51 cms]. Thus on the length the size is about 83% and on width about 75% of the working area of the A4 sized paper. The above comparison has been done to understand the size of the device under importation. Above comparison also shows that the size of the items is convenient for the purpose of reading as it compare quite well with normal reading paper size of A4. In fact most of the novels would be smaller in length and width then the size of imported item. 5.3 The comparison made above shows that the item imported, is more suited for the purpose of working/ reading rather than for the purpose of telephony, specifically as a mobile device. I am unable to make out how convenient it would be to use the device while holding the same against ear as a mobile telephone. Further the imported item admittedly is without an earpiece, which would make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that Android software is used primarily in mobile telephony is found to be incorrect. 20. One main objection raised by the importer against classification under CTH 8471 is that it is not a freely programmable device as envisaged in Chapter note 5A(ii) of Chapter 84. I am not able to accept this argument. This device is not freely programmable in the sense that a new code cannot be written by the user and executed on it. However already Operating System which is a program is loaded on the device. Now using this Operating System the user can input his requirements from the various choices provided by the operating system and get the results that he desires. Android is an Open Source Program, that is to say the codes constituting the software is open to all to be modified, though such modification cannot be done by a user who does not have knowledge of Linux codes. With the advent of more and more GUI based applications, computers are used with programs loaded on it for varying purposes not by executing codes on a command line. For example a computer may be used for editing of photos or simulating a surgery. For the functions for which the machine is prepared by the operating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mobile/ cellular phones from the point of trade parlance. 5.7 Commissioner has in para 26 and 27 of his order after examination of the size of the imported item and the product literature recorded as follows: 26 I note that though the size of the device is bigger than that of common mobile phones, the device is suitable for being held in one palm and operated upon by the other hand. The size is not critical enough to decide the classification of the product. 27. It is seen that the product literature or advertisements for the product do not describe the product as a mobile phone. Neither do these documents describe it as personal computer. They use the term Tab . They call the use of device as Tabbing . The term Tab is nearer to Tablet Personal Computer, commonly referred as Tab , already known in the market than to mobile phone. At the same time their advertisement talks of their partnership with Aircel, Docomo, Reliance Mobile and Vodafone in the matter of giving promotional offers. The tribunal in its decisions Blue Star Ltd vs UOI 1980 (6) ELT 280 and Hindustan Lever Ltd Vs CCE 2001 (121) ELT 451 (T) has observed that a way product is advertized should no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articular product was the material factor in arriving at the classification. The same view was held by the Supreme Court in their judgment in the case of Chemical and Fibres of India Ltd v. UOI [1997 (89) E.L.T. 633 (S.C.)]. 24. The word soap as is commercially understood or is appreciated by an individual means a product which lathers, in the process cleansing the body of a person (or a fabric in the case of laundry cloth) of grime and dirt. This was the appreciation of the people used as samples in the test conducted referred to above. In a departmental store like Apna Bazaar, Dove is found nestling on the same shelf with other soaps. 5.10 Thus in our view the findings recorded by the Commissioner for ignoring the size of the item imported and trade parlance/ understanding of the same cannot be sustained. The applicability of the circular relied upon by the Commissioner has to be determined after taking into account the size/ dimensions of the imported item and also the trade/ parlance understanding of the same. 5.11 Interestingly Commissioner has in para 22 reproduced the para 7 of the Circular and has in para 23 observed, 23 The impugned device satisfies all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary cannot survive. 5.13. It is also well known that the Tablet is sold in the market for its capability to perform functions which are normally performed on Automatic Data Processing machine classifiable under heading 8471. Before we proceed further it is necessary to reproduce the description of two headings in dispute: 8471 Automatic Data Processing Machines and Units Thereof; Magnetic or Optical Reader, Machines for transcribing Data on to Data Media in Coded Form and Machines for processing such data, not elsewhere specified or included. 8517 Telephone Sets, Including telephones for Cellular Networks or for other Wireless Network other Apparatus for the Transmission or Reception of Voice, Images or Other Data, Including Apparatus for Communication in Wired Or Wireless Network (such as local or wide area network), other than transmission or reception apparatus of heading 8443, 8525, 8527 or 8528. Chapter Note 5 to Chapter 84, reads as follows: 5. (A) For the purposes of heading 8471, the expression automatic data processing machine means machine capable of : (i) storing the processing programme or programmes and at least the data immediately nec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stems didn't offer the right balance of portability and usability to suit its needs. But just look at it now... It was the Apple iPad that made the first splash and many other tablets are on their way on following its steps. We guess Samsung s had an easier job than Apple bringing it to market. They already had the Samsung Galaxy S in the works and just had to make it bigger. Plus, they didn t need to go to great lengths explaining what a tablet is and what it does. If nothing else, the Galaxy Tab makes the S in Galaxy S meaningful. But the Tab itself is not size XL. In a nutshell, the new Samsung tablet is a Galaxy S with 3 inches added to the screen and 2 megapixels taken away from the camera. The Tab is equipped with the same 1GHz Hummingbird processor and Power VR SGX540 graphics accelerator, 512MB RAM, a complete connectivity set and 16GB internal storage. The whole thing s running on Android s latest v2.2 Froyo. Telephony is all there And here we come to one of the more interesting aspects of the Samsung Galaxy Tab. With the handset supporting voice and video-calling, it could in theory replace your phone all together. Now we don t know how pra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... larified as under: 7. Certain cellular/ mobile phones called as 'smart phones' may also have other additional features such as accessing the Internet, sending and receiving E-mails, video recording/camera, word processing, radio or audio capabilities with color screens, QWERTY keyboard, touch screen. It may also run application software and synchronize with PCs, function as Global Positioning System (GPS) receiver. These devices work on operating systems (software) like Symbian OS, Microsoft Windows Mobile OS, Linux OS, which are similar to the software used in desktop PC / laptop. All these functionalities grouped as PDA or pocket PC or camera or GPS receiver, contained in cellular/ mobile phones, though represent as composite machine, for the purpose of classification, it will be governed by the Customs Tariff Act and the General Rules for Interpretation (GRI) as explained in para 4 above. Accordingly, in terms of Section Note 3 to Section Note XVI when the goods satisfy the following conditions these would be characterized as transmission apparatus in cellular / wireless network rather than as an Automatic Data Processing (ADP) machine or camera or GPS receiver. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned they represent merely their understanding of the statutory provisions. They are not binding upon the court. It is for the Court to declare what the particular provision of statute says and it is not for the Executive. Looked at from another angle, a circular which is contrary to the statutory provisions has really no existence in law. Thus any interpretation of circular which is contrary to the law as declared by the Supreme Court/ High Court or statutory provisions has really no existence in law. In our view the interpretation made by the Commissioner ignoring the trade parlance etc., and by relying only on para 7 of circular cannot be sustained, as it is contrary to the law stated by the Apex Court, in various decisions referred in para 5.8. 5.16 Respondents have during the course of arguments relied upon the decision of the Commissioner Customs (Appeal) Delhi, [Order in Appeal No CC (A) Cus/I G/213/2011 dated 31.10.2011, and stated that in their own case Commissioner (Appeal), Delhi has held that the item imported by them is correctly classifiable under CTH 8517. He stressed that in view of the fact that the said order of Commissioner (Appeal) has not be appealed aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order cannot sustain. As pointed out, the facts in the present case are not identical to the extent that Commissioner Air Cargo Mumbai has not passed order relying on the decision of the Commissioner (Appeal) which has not been appealed against. On the contrary Commissioner (Appeal) has referred to the impugned order which has been appealed against. The appeal against impugned order has been filed when the Commissioner (Appeal) order was not there. Hence we do not find any merits in this submission of the Counsel. 5.17 Hon ble Apex Court has constantly held that there is no estoppel in the matters of revenue. In case of J K Laxmi Cements {2018 (14) GSTL 497 (SC)] it has been held- 25. The understanding by the assessee and the Revenue, in the obtaining factual matrix, has its own limitation. It is because the principle of res judicata would have no application in spite of the understanding by the assessee and the Revenue, for the circular dated 15-4- 1994, is not to the specific effect as suggested and, further notification dated 7-3-1994 was valid between 1st April, 1994 up to 31st March, 1997 (upto 31st March, 1997 vide notification dated 12-3-1997) and not thereafter. The ..... 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