TMI Blog2019 (10) TMI 274X X X X Extracts X X X X X X X X Extracts X X X X ..... e Automatic Data Processor machine with Input/ Output Units are listed under CTH 8471 while monitors capable of directly connecting to and designed for use with ADP is specified under CTH 8528. Section Note 4 to Section XVI indicates that where a machine consists of individual components, intended to contribute together to a clearly defined function covered by one of the headings in Chapter 84 or Chapter 85, then the whole falls to be classified in the heading appropriate to that function. In the instant case in the tax invoice submitted by the applicant the product description is given as Desktop Computer which in common parlance and technical sense known as a system unit which is otherwise known as a central processing unit along with its connected peripheral units of input output devices. In this case the processing unit gives essential character to the product in question. Hence, the desktop consisting of CPU, monitor, Keyboard and mouse supplied by the applicant is a single supply classified under CTH 8471. The applicable rate of tax for CTH 8471 is 9%-CGST under SI.No. 360 of Schedule-Ill of Notification No. 01/2017-C.T. (Rate) dated 28.06.2017 9% -SGST under SI.No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under CTH 8471 50. Under GST these goods are liable to be taxed at 9% under SI.no.360 of Schedule III to Notification 1/2017-Central Tax (rate) dated 28.06.2017. 2.2 The applicant s interpretation of law in respect of the question raised above is as follows:- The company is involved in supply of desktops or personal computers consisting of CPU, Monitor, Keyboard and mouse or a combination of input/output units. The said supply is nothing but a single supply of desktop classifiable under HSN 8471 and the rate of GST applicable is 18%. Notification 1/2017- Central Tax (Rate) dated June 28, 2017 provides that supply of desktops or personal computers consisting of CPU, monitor, keyboard and mouse or a combination of input/output units are liable to be taxed at 9%. GST rate notification schedule refers to the HSN description of goods and services at the 4 digit level. Thus for classification at the 8 digit level it is relevant to understand classification of the product under the Customs Tariff read with the General Rules of interpretation under Customs The description of the product under the GST notification is verbatim of the customs tariff heading. Schedule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computers . Further, they have relied on the decision in the cases of Dell India Private Limited vs Commissioner of Customs, Bangalore = 2008 (3) TMI 146 - CESTAT, BANGALORE and Dell India Private Limited vs Commissioner of Customs, New Delhi = 2008 (10) TMI 217 - CESTAT, NEW DELHI wherein the tribunal has held that import of CPU along with monitor is eligible for the benefit of exemption Notification No 06/2006-CE dated March 1, 2006 and the Supreme Court s decision in case of Commissioner of Customs Vs Acer India Private limited = 2007 (10) TMI 8 - SUPREME COURT , wherein the Apex court has observed that A desktop computer is a combination of a CPU with monitor, mouse and key board imported together as a set. What is, thus, covered by the above is a set of items brought together and capable of being put together to make a computer. This landmark decision of the Hon ble Apex Court reaffirms the trade parlance/ commercial parlance test with respect to desktops. 2.4 The Applicant has further stated that under the erstwhile Excise Tariff Act also, the desktops were classified and cleared under tariff entry 8471, which covers processing units with or with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er with defined configuration consisting of CPU along with monitor, keyboard and mouse. Hence, from the perspective of intention of Applicant as well as customer perception, it can be deduced that the supply does not constitute two supplies but is in fact a single supply for a consolidated consideration. In view of this fact, the supply made by them is a single supply of a desktop with defined configurations. Further, another aspect to note is that the shipment to the customer is in a single packaging constituting all the components of the desktop. d) Manner in which the product is advertised/marketed: The product is advertised as a single product, which serves as additional evidence to confirm that the supply indeed is a single supply. Hence, in view of the above, a desktop is widely understood and accepted as a combination of the CPU with keyboard, monitor, mouse, etc or with any combination of input/ output units and accordingly liable to GST at 18% as applicable for HSN 8471. 2.6 The applicant has also stated that notwithstanding their earlier arguments and the primary argument that the supply qualifies as a single supply, they submit that even if the supply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the matter on 10.04.2019. The applicant requested for adjournment. Another opportunity was extended on 22.05.2019. The authorized representatives of the applicant appeared and furnished a written submission regarding the product in question. They sated that CPU alone will be classifiable under CTH 8471 and CPU with various input/output units will be classified under CTH 847150. They submitted that their argument is supported by the Supreme Court order given in their application. They stated that the question only pertain to hardware and do not include software (OS/ Office) or warranty. They also stated that their product is sold as desktop in their marketing brochures where CPU with monitor, keyboard, mouse are all sold together. 3.2 The applicant in their written submission dated 22.05.2019 has explained the terms both in common parlance and technical sense Computer as the central processing unit; Desktop Computer as consisting of CPU or system unit, peripheral unit such as keyboard, mouse, monitor etc., The functions of CPU, motherboard, memory, input devices, such as keyboard, mouse, output devices such as monitor, sound card, video card, are all part of the desktop com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 2(30) of the CGST /TNGST Act 2017, the Principal supply being the CPU classifiable under CTH 8471 and the applicable rate of GST on such supply. 4.3 In terms of explanation (iii) and (iv) contained in the notification no. 1/2017-C.T.(Rate), dated 28.06.2017, Tariff item , sub-heading , heading and Chapter shall mean respectively a tariff item, sub-heading and Chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification. We find that the Automatic Data Processor machine with Input/ Output Units are listed under CTH 8471 while monitors capable of directly connecting to and designed for use with ADP is specified under CTH 8528. Accordingly, to arrive at the classification, the relevant Section notes to Section XVI (consisting of Chapter 84 and chapter 85), Chapter notes of Chapter 84 of the Customs Tariff and the entries related to CTH8471 and CTH 8528 are examined as under: Chapter heading 8471 of Customs Tariff is given below: 8471 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8528 52 00 -- Capable of directly connecting to and designed for use with an automatic data processing machine of heading 8471 8528 59 00 -- Other - Projectors: 8528 62 00 -- Capable of directly connecting to and designed for use with an automatic data processing machine of heading 8471 8528 69 00 -- Other Chapter Note 5A to Chapter 84 reads as follows (relevant to the case at hand): 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 necessary for the execution of the programme; (ii) being freely programmed in accordance with the requirements of the user; (iii) performing arithmetical computations specified by the user; and (iv) executing, without human intervention, a processing programme which requires them to modify their execution, by logical decision during the processing run. (B) Automatic data pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, apparatus or appliance cited in the headings of Chapter 84 or 85. 4.4 From the above, it is evident that CTH 8471 covers Automatic Data Processing Machines consisting of atleast a CPU, Keyboard and Visual Display, in the same housing or otherwise. Desktops supplied by the applicant have Central Processing Unit, motherboard memory all of which together storing the processing programme data necessary for the execution of the programme, is can be freely programmed in accordance with the requirements of the user, can perform arithmetical computations specified by the user; and executing, without human intervention, a processing programme which requires them to modify their execution, by logical decision during the processing run. As per Note 5A to Chapter 84, desktops supplied by the applicant are automatic data processing machines. The Desktops can consist of variable number of units such as keyboard, mouse monitor etc. as per Chapter Note 5B. Keyboards, mouse and monitors all qualify to be called as a unit of the automatic data processing machine as they satisfy the conditions of Chapter Note 5(C) in that they are of a kind solely or principally used in an automatic data pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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