TMI Blog2023 (1) TMI 700X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be classified under Tariff Item 8471 30 10 , cannot be agreed upon. Whether mere factum of weighing less than 10 kilograms would be sufficient to classify the Concerned Goods as portable or not? - HELD THAT:- The word portable should have been defined in reference to the ADPs instead of relying on dictionary meaning which contains all kinds of hues of associated meanings as held by this Court in COLLECTOR OF CENTRAL EXCISE, KANPUR VERSUS KRISHNA CARBON PAPER CO. [ 1988 (9) TMI 50 - SUPREME COURT] . The cited decision also explains the correct approach to be taken in case when a word is to be defined in context of any entry under the First Schedule. On a conjoint reading of the relevant material and inputs, it is explicitly clear that weight cannot be the sole factor to determine the factum of portability. Instead, the essential ingredients to logically establish whether an ADP is portable are twofold. The first ingredient is their ability to be carried around easily which includes all aspects such as weight and their dimensions. We must hasten to add that in appropriate cases, this assessment would also take into consideration the necessary accessories which are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her affirmed by the Customs, Excise and Service Tax Appellate Tribunal (hereinafter, CESTAT ), West Zonal Bench, Mumbai vide the impugned judgments dated 19.12.2018 and 24.06.2019. 3. While the rate of duty is same under both the Tariff Items, the method of computing them is different. Goods under Tariff Item 8471 30 10 attract the application of Section 4A of Central Excise Act, 1944, which valued the excisable goods on the basis of percentage of retail sale price. In contrast, a classification under Tariff Item 8471 50 00 invites valuation based on price mechanism under Section 4 of Central Excise Act, 1944 which would have effectively reduced the overall liability to pay the requisite duty. This difference in liability is the precise reason behind the present dispute regarding classification under the correct Tariff Item which calls for adjudication. 4. Before delving into the reasoning of the revenue authorities and CESTAT, which is more or less identical, it would be appropriate to reproduce the following relevant parts of the First Schedule :- Heading/ Sub-Heading/ Tariff Item Additional Notes to The Customs Tariff Act 1975, sch 1 states th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 8471 41 20 Large or main frame computer 8471 41 90 Other 8471 49 00 Other, presented in the form of systems 8471 50 00 Processing units other than those of subheading 8471 41 or 8471 49, whether or not containing in the same housing one or two of the following types of unit: storage units, input units, output units (Emphasis Applied) 5. Since, the reasoning confirming the classification under Tariff Item 8471 30 10 by the adjudicating authorities including CESTAT is identical, hence, it would be sufficient to discuss the key findings of the impugned decisions in brevity. These observations are : a) The Concerned Goods weighed less than 10 kilogram and were easily carried from one place to another. In this respect the CESTAT relied on dictionary meaning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttress the aforementioned arguments, he highlighted that the Concerned Goods are not considered as portable by the European Commission s classification and are also not covered by the Tariff Item 8471 30 10 as per the World Customs Organization s Harmonized System Explanatory Notes (hereinafter, HSN ). We must also bring to the fore and appreciate the efforts of learned counsel for the Appellants who physically demonstrated by setting up one of the sample units of the Concerned Goods to showcase the aspects of portability involved in present matter. 8. On the contrary, Mr. Arjit Prasad, learned senior counsel for the Respondent while supporting the observations in the impugned decisions, put forth two counter arguments. Firstly, that since the word portable is nowhere defined in the statute, it should be interpreted on the principle of general parlance. In other words, he submitted that the dictionary meaning of the word portable is sufficient to resolve the dispute regarding its interpretation. Secondly, he maintained that the legislature s intention was crystal clear in qualifying the term portable by providing the condition in the description that any ADP less than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that the applicable subheading HSN indicated this. The relevant part of the same reads as follows Subheading 8471.30 This subheading covers portable automatic data processing machines weighing not more than 10 kg. These machines, which are equipped with a flat screen, may be capable of operating without an external source of electric power and often have a modem or other means for establishing a link with a network. (Emphasis Applied) 12. While it appears well settled that the HSN is to be normally taken as a safe guide for classifying goods under the First Schedule because it is based on an internationally recognized harmonized nomenclature Collector of Central Excise, Shillong v Wood Craft Products Limited (1995) 3 SCC 454 , a bare reading of the explanatory note applicable to the subheading clearly lays out the fact that there is no mandatory condition for being operable without any external source of power. We are thus unable to agree with the Appellants that only ADPs with a built-in power source is necessarily required to be classified under Tariff Item 8471 30 10 . In other words, no element of functionality is contemplated for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... associated meanings as held by this Court in CCE v Krishna Carbon Paper Co. CCE v Krishna Carbon Paper Co. (1989) 1 SCC 150, para 6 . The cited decision also explains the correct approach to be taken in case when a word is to be defined in context of any entry under the First Schedule. It thus holds that : 10. The trade meaning is one which is prevalent in that particular trade where the goods is known or traded. If special type of goods is subject-matter of a fiscal entry then that entry must be understood in the context of that particular trade, bearing in mind that particular word. Where, however, there is no evidence either way then the definition given and the meaning following (sic flowing) from particular statute at particular time would be the decisive test. ibid, para 10 (Emphasis Applied) 17. In our considered opinion, the word portable should have been interpreted in the context of ADPs. In this regard, relevant technical and commercial literature has been perused by us. On a minute analysis thereof, we deem it appropriate to extract the following relevant material: The Institute of Electrical and Electronics Engineers defines portable comput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to determine the factum of portability. Instead, the essential ingredients to logically establish whether an ADP is portable are twofold. The first ingredient is their ability to be carried around easily which includes all aspects such as weight and their dimensions. We must hasten to add that in appropriate cases, this assessment would also take into consideration the necessary accessories which are required for safe and efficient usage such as mounted stands or any power adapters. The second ingredient is that the ADP must be suitable for daily transit of a consumer and would include aspects such as durability to withstand frequent commute and damage protection. An example of the same would be the availability of protection cases which allows users to carry the ADPs in hand or possibility of carrying the same in normal briefcases or shoulder bags. 19. On applying these core ingredients to the characteristics of Concerned Goods, there is no room to doubt that they are not portable . Firstly, the dimensions of the Concerned Goods make it illogical and unviable for daily transit. While it is true that classification of the goods must not be usually made on the advertisement ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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