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TMI Blog2019 (4) TMI 915X X X X Extracts X X X X X X X X Extracts X X X X ..... ) had filed B/E No 838746 dated 29/11/2010 for clearance of the goods declared as "Samsung GSM Mobile Phone GT-P1000, Chic White IRSP ITMNU GT-P1000 CWA INU." 2.2 In the i. B/E in column relating to retail sale price details the description given is "Single Sim SAMSUNG GSM Mobile Phone" with retail sale price of Rs. 38,000/- per piece. ii. Commercial Invoice No 9002186815 dated 25/11/2010 description is given as "Mobile-GTP1000, Chic White, INU GT-P1000 CWA INU." Quantity declare is 400 pieces with unit price of Rs. 18,551/- per piece. iii. Airway Bill No KCT0640623 dated 26/11/2010 declares goods as "400 pcs of GT-P1000 CWA INU Mobile, GT-P1000, CHIC White, INU). Declared value of 400 pcs is Rs. 74,20,400/- 2.3 The goods were examined on 2nd Check basis and on examination "the goods appeared to be personal computers rather than mobile phones. The product has a 7" display screen. It can be used for communication, via email, voice and video etc. and can also be used for watching films, viewing pictures, e-reading, video conferencing, video telephony over 3G Tech etc. It appeared to function as personal computer as well as mobile phone." 2.4 The goods were liable for classifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lculations using Excel Worksheet, Editing of Power Point Presentations etc., which are the functions normally executed on a personal Computer. Having so observed the Commissioner should have held the classified the device under heading no 8471 as the device fell within ambit of Chapter Note 5A(1) to Chapter 84. ii. The device was not freely programmable as a new code could not be written by the user and executed on it. However it was noted by the adjudicating authority that using the operating system which was loaded on the device user could input his requirement from the various choices provided by the operating system. The tablet PC refers to any tablet size personal computer regardless of Operating System. Hence the device was freely programmable device as envisaged in Chapter Note 5A(ii) and hence merited classification under CTH 8471. iii. The principal function of the imported device was not telephony. The item is designed and marketed and understood in trade as a Tablet Personal Computer only. It has CPU, Keyboard (Touch Screen) and Display Unit. The device has features for media consumption. The advertisement, websites and reviews by experts all describe the imported item ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be said to be mobile phone. viii. Thus correct classification of the imported devices should be under heading 84713090 and not under 85171290 as held by the Commissioner. 4.1 We have heard Ms P Vinitha Sekhar Joint Commissioner Authorized Representative for the revenue (appellant) and Shri Tushar Jarwal, Advocate for the respondent. 4.2 Arguing for the revenue learned Authorized Representative reiterated the submissions made in the appeal memo, She also produced a cut out made of cardboard to emphasise on the size of the device imported and to demonstrate that the said device could not be held in hand conveniently for purpose of placing and receiving telephone calls. She submitted that i. The classification of any goods under the customs Tariff as per Rules of Interpretation of Tariff, need to be determined as per the terms of heading, relevant section and chapter notes. ii. Relying on the Note 3 to Section XVI and Chapter Note 5(A) to Chapter 84, the imported item should be classified under CTH 84713090 as the devices satisfies all the four conditions laid down by the said chapter note. iii. The main/ primary function of the device is the determinant of the classification. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The argument advanced by the counsel for respondent that issue is now settled by the decision of Commissioner (Appeal) Delhi (OIA dated 4.11.2011) in their favour, and now revenue is estopped from taking challenging the said view in the present appeal as no appeal has been filed against the said order is not correct in view of various decisions holding that there is no estoppel in tax matter. {A B Mauri India Pvt Ltd [2010 (260) ELT424 (T-Mad)] upheld by Apex Court at [2011 (271) ELT A35 (SC)], Swaraj Mazda :td. {1995 (77) ELT 505 (SC)]. ii. Commissioner (Appeal) was wrong in placing reliance on this order while passing his order as this order has not been accepted and is under challenge. iii. Reliance placed by the counsel on circular No 17/2007-Cus is not correct. iv. Counsel has argues and admitted that they are now classifying the Samsung Galaxy Tab under 8471. v. In case of Nakamichi relied by the counsel the main issue was on limitation and not classification. vi. The facts of case of Hewlett Packard India relied upon by the Counsel are clearly distinguishable from the facts in this case and said decisions is not applicable. 5.1 We have considered the submissions made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice does not have USB ports though it can take matter recorded in appropriate software on SD Micro cards. 18. The main reasons for suggesting classification of this product as an Automatic Data Processing Machine are the following: (a) It does all functions of a Tablet Personal Computer (b) It has a size of 19cm x 12.5cm and this is bigger than that of ordinary mobile telephone so far being used. (c) The manufacturer is not advertising the product as a mobile phone but as a "Tab". The product literature nowhere mentions it to be a mobile phone. 19. The Wikipedia gives the following write up on Android software which is the Operating System for this device. "Android is a mobile operating system initially developed by Android Inc. Android was purchased by Google in 2015. Android is based upon a modified version of the Linux Kernel. Google and other members of the Open Handset Alliance collaborated to develop and release Android to the world. The Android Open Source Project (AOSP) is tasked with the maintenance and further development of Android. Unit sales for Android OS smartphones ranked first among all smartphone OS handsets sold in the U.S. in the second and third qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al characteristic of transmission and reception apparatus, such as aerial, display screen, keyboard and that they should be of small size so that it can be hand held and light weight for use as telephone instrument. The other functions such as radio receivers, music players, e-mail, net browsers, calculators, stop watch, alarm computing on software are subsidiary to the main function of transceiver." 5.6 Para 9 of the Circular reads as follows: "9 In trade parlance too it is noticed that the goods are sold as cellular or mobile phones with various additional facilities the use of which is dependent on the cellular services provided. Further consumers purchase such cellular phones mainly because of their ability to transmit data in all situation and locations and at all times, not just in specified place that offer Wireless Wi-Fi access. In short, it is found that the goods are marketed and consumers purchase a smart phone or other similar cellular/ mobile phone because of the phone function with additional facilities and not for their PDA or GSM capabilities alone, as such these additional facilities will not become operational without subscribing to a cellular phone service pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... telephony. 5.9 The findings recorded in para 27 are contradictory to para 9 of the said Circular. Further the findings recorded are also not in consonance with the decisions relied upon by the him to state that the trade parlance should not be basis for determination of classification. In the case of Hindustan Lever, Member Technical has in his consenting order considered the scope of advertisement/ trade parlance meaning etc and recorded as follows: "23. The Supreme Court in laying down the law as to classification of goods under the Tariff has consistently held that the commercial nomenclature or trade understanding should the basis of classification except when the statutory content, in the Tariff Entries requires a departure. In paragraph 53 of the judgment in the case of Akbar Badruddin Jiwani v. CC [1990 (47) E.L.T. 161 (S.C.)] the Court held "it is well settled that in Taxing Statute the words used are to be understood in the common parlance or commercial parlance ......... where the word in the Tariff Entry has not been used in a scientific or technical sense....." In their judgment in the case of Metagraphs Pvt. Ltd. [1996 (88) E.L.T. 630 (S.C.)] the Supreme Court held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can provide using the radio signals it receives. With the advent of 3G services in the country the range of such services is bound to increase, it is this new market need for such services based on 3G transmission that this device is designed to serve. So I conclude that the principal function of this device I that of mobile telephony." 5.12 In our view the order of Commissioner has been passed without application 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 Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the respondents cannot be sustained because from plain reading of the aid Chapter Note, it is quite evident that it is in respect of machine which are capable of performing a specific function needs to be classified in the heading appropriate to their respective function. If the item under importation was capable only for permitting the specific function of "mobile telephony", then in that case the same would have been classified under heading 8528. But here the case even as per Commissioner is not of specific function but of predominant function. Telephony itself requires that instrument should have earpiece and mouthpiece for voice communication. The item imported do not have any mouth piece or earpiece. From the reviews of the product available on the net [https://www.gsmarena.com/ samsung_p1000_galaxy_tab-review-527p4.php] with respect to use of this item for telephony, reproduced below, we do not agree with the finding of the Commissioner that pre-dominant function of the item imported is mobile telephony. "Introduction Not so long ago the tablet was a futureless species, stuck in an evolutionary dead-end. The technology and the operating systems didn't offer the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he big guy was rather quiet ending with a Below Average score. Missed calls are likely in noisier environments with this one. What is more worrying is that you'll probably have hard time using it for consuming multimedia content. Speakerphone test Voice, dB Pink noise /Music, dB Ringing phone, dB Overall score Samsung I9000 Galaxy S 66.6 65.9 66.6 Below average Samsung P1000 Galaxy Tab 66.7 64.6 68.6 Below average Google Nexus One 69.9 66.6 79.1 Good Apple iPad 66.5 65.8 69.7 Average HTC Legend 78.0 74.3 79.7 Excellent 5.14 CBEC has vide its circular No 17/2007-Cus, para 7 clarified 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 de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in case of Ratan Melting & Wire Industries [2008 (231) ELT 22 (SC)] has stated "6. Circulars and instructions issued by the Board are no doubt binding in law on the authorities under the respective statutes, but when the Supreme Court or the High Court declares the law on the question arising for consideration, it would not be appropriate for the Court to direct that the circular should be given effect to and not the view expressed in a decision of this Court or the High Court. So far as the clarifications/circulars issued by the Central Government and of the State Government are concerned 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he present appeal deserves to be dismissed on this ground alone and accordingly we dismiss this appeal. No costs." From the above it is quite evident that in the case before the Apex Court, tribunal has while setting aside the order relied upon its own order passed on the same issue in case of some other assessee. Since the said order was not challenged by the revenue in appeal, Hon'ble Apex Court stated that the said order passed in earlier case was a binding precedent and the appeal filed by revenue subsequent order without challenging the earlier 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 Cem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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