TMI Blog2022 (2) TMI 308X X X X Extracts X X X X X X X X Extracts X X X X ..... inches and 75 inches) is only a feature/specification of the product and this cannot be construed to be its function, much less its principal function. The Deputy Commissioner and the Commissioner (Appeals), therefore, committed an error in holding that the large size of display would mean that the goods are meant for display purpose to a large gathering and, therefore, in terms of Note 5(E) of Chapter Note 84, the goods would merit classification as per the specific use - Commissioner (Appeals) committed an error in rejecting the contention of the appellant that the goods were ADPM by taking recourse to trade parlance, namely, that buyers intending to purchase a computer will not select the goods because of the large size display and, therefore, the goods should be specified according to the use. The Commissioner (Appeals) also committed an error in holding that even if the goods are capable of being used as ADPM considering their features, they would still merit classification under CTH 8528 in view of the provisions of GRI (3)(c). The goods in dispute, on the other hand, are much more than mere display devices and, therefore, cannot be classified under CTH 8528 as monitors. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the goods namely (i) (ViewBoard) ViewSonic IFP6550-2/65 Interactive Display System; and (ii) (ViewBoard)-ViewSonic-IFP7550-2/75 Interactive Display System. The appellant claims that the classification would be under Customs Tariff Item [CTI] 8471 41 90, though, earlier at the time of self-assessment, the appellant had claimed it to be under CTI 8471 90 00. The Department claims that it should be under CTI 8528 52 00. The Deputy Commissioner rejected the self-assessment done by the appellant under CTI 8471 90 00 and ordered for re-assessment of the goods under CTI 8528 52 00. The case set up by the appellant at the time of assessment was that the goods were Automatic Data Processing Machines [ADPM ] and not Monitors and, therefore, classifiable under CTI 8471 90 00 and not under CTI 8528 52 00. At the appellate stage, the appellant contended, on a re-consideration of the matter, that the goods were more specifically and correctly classifiable under CTI 8471 41 90. 4. In order to appreciate the issue involved in this appeal, it would be necessary to examine the technical nature of the product. The appellant has stated that the goods are Interactive Flat Panel Display [IF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... --- Personal computer u Free - 8471 30 90 --- Other - Other automatic data processing machines : u Free - 8471 41 - Comprising in the same housing at least a central processing unit and an input and output unit, whether or not combined : 8471 41 10 --- Micro computer u Free - 8471 41 20 --- Large or main frame computer u Free - 8471 41 90 --- Other u Free - 8471 49 00 -- Presented in the form of systems u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 8471 70 30 --- Removable or exchangeable disc drives u Free - 8471 70 40 --- Magnetic tape drives u Free - 8471 70 50 --- Cartridge tape drive u Free - 8471 70 60 --- CD-ROM drive u Free - 8471 70 70 --- Digital video disc drive u Free - 8471 70 90 --- Other u Free - 8471 80 00 - Other units of automatic data processing machines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s product has connectivity ports such as HDMI port, VGA ports etc. which clearly indicate that this product can act as standalone display monitor and can be used in conjunction with any other ADP machine. It remains undisputed that this product can act as standalone monitor also. Given large size of the display, it appears that product is suitable for viewing of the screen by a large number of persons which indicate that this product is primarily meant for display purposes. 5.3 As per information available in the website and catalogue of the product, the merchandise under consideration are designed to be used in classroom or business setting as an interactive whiteboard either in a standalone configuration or in conjunction with the consumer‟s existing automatic data processing (ADP) machine. The interactive display panels come in varying LED screen sizes. These machines are equipped with a capacitive touch overlay that allow users to manipulate display data, type and input/manipulate data as well as control the functions of the installed applications to manipulate display data, type, and input/manipulate data as well as control the functions of the installed applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... number of audiences. Thus the goods are primarily used for Display purposes and are intended for use with ADP machines of heading 8471. Further the technical specifications of the goods indicate that the products are equipped with following ports for making connections: ********* Presence of ports such as VGA, HDMI, USB, RS 232 etc. make these goods capable of directly connecting to and designed for use with an automatic data processing machine of heading 8471. Therefore, it appears that goods are correctly classifiable as monitors for use solely or principally with ADP machines of heading 8471. ********* In the instant case, one may argue that due to presence of processor, the principal function of the product is the function of automatic data processing. However, it may also be argued that owing to large size of the display, the principle function of the machine appears to be to cater to Display requirement to a large gathering . This fact is further buttressed by the description of the product given on the website of the importer which states: Featuring 4K Ultra HD resolution and an immersive 20-point touch screen, the ViewSonic VicewBoard ) IFP7550/IFP6550 de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Authority has discussed the same in impugned A.O. Further, it is widely known that the technological advancement is leading to Convergence - whereby different features and functions are being clubbed in newer devices. However, that does not dilute the concept of legally enshrined concept of Principal use . I note that the Assessing Authority has acknowledged the fact of impugned goods capable of being used as APDP- considering its features. However, he has correctly made recourse to GIR 3I and out of heading 8471 (ADP machines) and 8528 (Display monitors), as heading 8528 occurs last in numerical order, the heading 85285200 was correctly applicable. Thus, burden of proof has been sufficiently discharged by the department in the instant case and due reasoning has been afforded for changing the classification of impugned goods. 5.6 Thus, I note that the impugned goods are not ADPM per se but capable of being connected to ADPM falling under 8471 and used accordingly. Thus they merit classification under CTH 85285200. (emphasis supplied) 10. Shri Amit Jain learned counsel for the appellant made the following submissions: (i) The goods are appropriately classif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merely used for display of the information or presentation but are also capable of complex operations and can function independently on standalone basis. The goods are, therefore, much more than mere display devices and would not merit classification under CTH 8528 as monitors ; (vii) The size of the goods, namely, 65 inches and 75 inches and capability of being operated by means of a remote control are also features not usually found in monitors, as per HSN Explanatory Notes to Chapter 85; (viii) When the classification of the goods is determined by application of Chapter Notes and GRI 1, there is no occasion for invocation of GRI 3(c). In this connection reliance has been placed on the judgment of the Supreme Court in Commissioner of Central Excise, Nagpur vs. Simplex Mills Co. Ltd. [2005 (181) E.L.T. 345 (S.C.)]; (ix) Trade parlance meaning should not be relied upon when the goods are defined statutorily. In this connection reliance has been placed on the judgment of the Supreme in Akbar Badruddin Jiwani vs. Collector of Customs [1990 (47) E.L.T. 161 (S.C.) ] ; (x) Similar goods imported by the appellant have been permitted clearance by the Customs at Air Cargo Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce upon HSN Explanatory Notes by the appellant to suggest that since the size of goods do not exceed 30 inches and are usually not operated by remote control they would not be monitors, is misconceived as these are not mandatory conditions. In this connection reliance has been placed on the decision of the Tribunal in Commissioner of Cus. (Port-Import), Chennai-I vs. Omni Agate Systems [ 2018 (363) E.L.T. 252 (Tri. Chennai) ]; (v) The appellant is not correct in asserting that since the Deputy Commissioner had classified the goods under CTI 8471 50 00 by application of GRI 1, he should have refrained from applying GRI 3; (vi) Rule 1 of GRI envisages that if a Heading does not require the exclusion of the other rules, the other rules must also be applied for determining the classification of an article. Therefore, all the relevant rules of interpretation in the Import Tariff come into play in the process of classification. Concluding sentence of HSN Explanatory Notes to Rule 1 as well as the decision of the Supreme Court in Khandelwal Metal Engineering Works [1985 (20) E.L.T. 222 (S.C.)] support this contention; (vii) The assessment order of other Custom Houses do not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded for use with ADPM of Heading 8471. In coming to this conclusion, the Deputy Commissioner also noted that the presence of ports enable the goods to directly connect to ADPM of CTH 8471. 15. The Commissioner (Appeals) accepted the view taken by the Deputy Commissioner that because of the large size goods are meant for display purpose to cater to a large gathering and, therefore, as per Note 5(E) to Chapter Note 84, the goods would merit classification as per the specific use. What also prevailed with the Commissioner (Appeals) is the fact that the buyers intending to purchase a computer will not select the goods in issue as it is not known in the market as such. The Commissioner (Appeals) also noted that the goods were capable of being used as ADPM, but agreed with the Deputy Commissioner that in such a situation GRI 3(c) should be resorted, as a result of which the goods would merit classification under CTH 8528 since this entry is after CTH 8471. 16. As references have been made to the General Rules for the Interpretation of Import Tariff and Notes to Chapter 84 as also the HSN Explanatory Notes to Chapter Heading 8471, it is necessary to reproduce the relevant portions: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cter, in so far as this criterion is applicable. (c) When goods cannot be classified by reference to (a) or (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration. 4. Goods which cannot be classified in accordance with the above rules shall be classified under the heading appropriate to the goods to which they are most akin. 5. In addition to the foregoing provisions, the following rules shall apply in respect of the goods referred to therein: (a) Camera cases, musical instrument cases, gun cases, drawing instrument cases, necklace cases and similar containers, specially shaped or fitted to contain a specific article or set of articles, suitable for long-term use and presented with the articles for which they are intended, shall be classified with such articles when of a kind normally sold therewith. This rule does not, however, apply to containers which give the whole its essential character; (b) Subject to the provisions of (a) above, packing materials and packing containers presented with the goods therein shall be classified with the goods if they are of a kind normally used for packing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e user, arc excluded even though the user may be able to choose between a number of such fixed programs. These machines have storage capability and also stored programs which can be changed from job to job. Automatic data processing machines process data in coded form. A code consists of a finite set of characters (binary code, standard six bit ISO code, etc.). The data input is usually automatic, by the use of data media such as magnetic tapes, or by direct reading of original documents, etc. There may also be arrangements for manual input by means of keyboards or the input may be furnished directly by certain instruments (e.g. measuring instruments). The input data are converted by the input units into signals which can be used by the machine, and stored in the storage units. Part of the data and program or programs may be temporarily stored in auxiliary storage units such as those using magnetic discs, magnetic tapes, etc. But these automatic data processing machines must have a main storage capability which is directly accessible for the execution of a particular program and which has a capacity at least sufficient to store those parts of the processing and tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocessing machine and performing a specific function (Note 5 (E) to this Chapter)). HSN Explanatory Notes 85.28 (A) Monitors capable of directly connecting to and designed for use with an Automatic Data Processing Machine of Heading 84.71 This group includes monitors which are capable of accepting a signal from the central processing unit of an automatic data processing machine und provide a graphical presentation of the data processed. These monitors are distinguishable from other types of monitors (see (B) below) and from television receivers. The monitors of this group may be characterised by the following features: (i) They usually display signals of graphics adaptors (monochrome or colour) which are integrated in the central processing unit of the automatic data processing machine; (ii) They do not incorporate a channel selector or video tuner; (iii) They are fitted will connectors characteristic of data processing systems (e.g., RS-232C interface, DIN, D-SUB, VGA, DVI, HDMI or DP (display port) connectors); (iv) The viewable image size of these monitors does not generally exceed 76 cm (30 inches); (v) They have a display pitch size (usually ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chapter 84. 20. The goods are capable of performing arithmetical computations depending on the input provided by the user. The goods are equipped with a calculator to perform arithmetical computations. It has also been admitted by the Deputy Commissioner in paragraph 5.3 of the Assessment Order that these machines perform general computing tasks. Thus, the goods meet the requirements of condition (iii) of Chapter Note 5(A) to Chapter 84. 21. A user can give a command to the goods and the same would be executed without any further intervention of the user. The CPU along with the operating system executes the command so given by the user by taking logical decisions during the processing run. Thus, condition no. (iv) is also satisfied. 22. As all the four essential conditions contained in Note 5(A) to Chapter Note 84 are satisfied, the goods qualify as ADPM classifiable under CTH 8471. 23. The goods also have an in-built processing unit, an input unit and an output or may have separate processing, input and output unit interconnected with each other and so the requirements set out in the HSN Explanatory Notes to CTH 8471 also stand satisfied. 24. The goods are capable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... served that though the goods may appear to have some characteristics of monitors but it was abundantly clear that they do contain a central processing unit and operate on software and function on their own. Therefore, the goods cannot be said to be merely projectors or monitors and recourse could not be taken to CTH 8528 for classification of the goods since they would be classifiable under CTI 8471 41 90, as claimed by the assessee. The relevant portions of the decision are reproduced below: ********** The dispute in this appeal of M/s Cloudwalker Streaming Technologies Pvt Ltd is on the appropriate classification of interactive intelligent panel (automatic data processing machine) model cloudtouch‟ imported by the appellant from M/s Shenzhen Konika E-Display Co Ltd, China. Bill of entry no. 3843844/ 06.05.2021, for 90 nos of this item comprising varying configurations with value of ₹76,24,692/-, and bill of entry no. 3846255/06.05.2021, for 6 nos of the item in knocked down (SKD) condition with declared value ₹ 6,13,482/-, were claimed for assessment at the rate of duty corresponding to tariff item 8471 4190 of First Schedule to Customs Tariff Act, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by a remote control. The goods, in the present case, are of 65 inches and 75 inches and do have a remote control. The goods, therefore, would not merit classification under CTH 8528. 29. What also needs to be noted is that classification of a product is determined according to the terms of the Headings and any relative section or Chapter Note. GRI (1) also provides that titles of Sections, Chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification is determined according to the terms of the Headings and any relative Section or Chapter Notes. It is only when such Headings or Notes do not otherwise require that the provisions (2),(3),(4),(5) and (6) of GRI would apply. The subsequent rules can be resorted to only when no clear picture emerges by application of rule (1). This is what was observed by the Supreme Court in Simplex Mills Co. Ltd. and the relevant portion is reproduced below: 11. The rules for the interpretation of the Schedule to the Central Excise Tariff Act, 1985 have been framed pursuant to the powers under Section 2 of that Act. According to Rule 1 titles of Sections and Chapters in the Schedule are provided for ease ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paper board is treatable as `aluminium foil‟ classifiable under Heading 76.06 in terms of the definition in Note 1(viii) of Chapter 76 and will be excluded from the purview of Chapter 48 of the Central Excise Tariff since the classification of the product in question is determinable as provided in Rule 1 of the Rules of Interpretation of the Central Excise Tariff in terms of the relevant headings of the tariff and the relevant Section or Chapter Notes, the other Rules of Interpretation cannot come into play. 31. It is also important to note that Rules of Interpretation as contained in Chapter Notes prevail over the General Rules of Interpretation as was observed by the Supreme Court in Commissioner of Central Excise, Pondicherry vs. Acer India Ltd. [2004 (172) E.L.T. 289 (S.C.)] : 60. Rule 1 of the Rules for the Interpretation of the First Schedule states that the titles of Sections and Chapters are provided for ease of reference only which having regard to Chapter 84 providing for nuclear reactors, boilers, machinery and mechanical appliances; parts thereof are required to be referred to for reference only. However, for legal purposes, the classification is to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
