TMI Blog2021 (4) TMI 1362X X X X Extracts X X X X X X X X Extracts X X X X ..... in this case. From the note, it is clear that a composite machine performing various functions is to be classified according to the principal function performed by such a device - In the instant case, these devices combine computing and scanning functions for monitoring deliveries, tracking assets, and managing inventory. 18 out of 36 devices also have communication capabilities. However, for the products under consideration, automatic data processing appears to be the main function, while other functionalities of said machines are not different from auxiliary functions that could be seen on any computer, such as desktop or laptop computers. In circular no. 20/2013- Cus, dated 14.05.2013, clarification has been given by the Central Board of Excise and Customs (CBEC) regarding the classification of tablet computers under heading 8471 - as per the said circular, tablet computers are classifiable under heading 8471 and not under heading 8517 despite the fact that the product is having cellular connection functionality, considering its principal function as automatic data processing. Similarly, in this case, the principal function of the impugned devices is barcode scanning and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Device Category Mobile Computer Models Wireless Connectivity Options Does Product have Cellular calling function 1 Barcode Mobile Computers Newland NLS-MT37H Device with SIM Card Wi-Fi YES Wi-Fi Only Device No 2 Newland NLS-N7 Device with SIM Card Wi-Fi YES Wi-Fi Only Device No 3 Newland NLS-N7L Device with SIM Card Wi-Fi YES Wi-Fi Only Device No 4 Newland NLS-MT65 Device with SIM Card Wi-Fi YES Wi-Fi Only Device No 5 Newland NLS-MT67 Device with SIM Card Wi-Fi YES Wi-Fi Only Device No 6 Newland NLS-MT90 Device with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicant a private limited company, is engaged in the business of IT solutions with a prime focus in the field of IT support services. They intend to import Portable Computers from the Supplier, viz., Newland Taiwan Inc. to be sold further to their distributors/ consumers. It is submitted that the Portable Computers are handheld/wearable/ vehicle mountable computers. They are essentially used for scanning barcode and for processing data in real time to increase efficiency of functions such as inventory management, last mile delivery, invoicing, etc. They are a combination of Personal Computer and scanner, largely utilised by field service personnel. The product carries a processing ability of a laptop and functionality of a scanner in a single wireless device. These Portable Computers essentially perform 1D and 2D barcode scanning and additionally have features like Wi-Fi/Bluetooth connectivity, data transfer etc. The key features/functions performed by the subject goods, as listed in the application, are as follow: Product Name Key features/functions performed Barcode Mobile Computers (have bar code scan engine) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y function since the same has been provided as an additional mode of connectivity apart from Bluetooth, Wi-Fi and GPS. 2.1 The applicant has submitted that the portable computers proposed to be imported by them are classifiable under heading 8471 as automatic data processing (ADP) machines, for the following reasons: a. These devices satisfy the criteria set out in heading 8471 to be classified as ADP machines; b. The principal function performed by these devices is that of processing data, and thus, they merit classification as suggested. c. The proposed imports are commercially known as Barcode Mobile Computers, RFID Mobile Computer and Tablet Mobile Computer , and not as phone/communication devices/mobile phones. 2.2 As per the applicant, to qualify as an ADP machine, goods have to satisfy all the conditions mentioned in Note 6(A) to Chapter 84 and should not be covered by Note 6(D) and 6(E) ibid. The applicant has submitted that the portable computers in question comply with the above requirements, and therefore, are classifiable as ADP machines under CTH 8471 as tabulated below: Condition to be fulfilled by an ADP machine, as mentioned in No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be imported are capable of performing more than one function, i.e., capable of functioning other than as an ADP machine, the function of the ADP machine is the principle function and therefore, shall be treated as an ADP machine in terms of Note 3 to Section XVI. The proposed imports are marketed to businesses for ease of logistics and not as a substitute for a communication device. That the portable computer is used to transmit other data, apart from the inventory-related data, the function is only an incidental function and the classification is to be based as if the principal function were the sole purpose. Commercially too, the products are known as computers and not as phone/communication devices . As per the trade parlance, the proposed imports are known in the market as Barcode Mobile Computers, RFID Mobile Computer, Tablet Mobile Computer and not as smartphones or telephones. 2.4 The applicant has contended that the product is an automatic data processing machine that cannot be classified under the heading 8517. The proposed imports are not primarily meant for communication purposes. Communication abilities like that of a traditional telephone/mobile telephone a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 20/2013 dated 14.05.13 wherein the Board analysed the functions of a Tablet Computer and held that it principal function is that of a Computer, and communication (even using SIM) is merely incidental. It was further held that the difference between a smartphone and a tablet computer , is not based on whether the product has a voice calling function or not, but on the principal features that a producer has intended for the device when designing and developing it. Accordingly, the tablet computers are more appropriately classifiable in heading 8471, subheading 847130, by application of General Rules for Interpretation (GRI) of Import Tariff, 1 [Note 3 to Section XVI and Note 5(A) to Chapter 84] and 6. The Circular also reaffirms the ruling of the World Customs Organisation, regarding tablet computers. The applicant also relied upon the case of Commissioner of Customs (ACC Import) v. Samsung India Electronics P. Ltd. reported in 2019 (4) TMI 915 - CESTAT MUMBAI, where it was held that the tablets imported were more suited for the purpose of working/reading rather than for the purpose of telephony, specifically as a mobile device, and thus were classifiable under heading 847 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner of Customs(imports), Nhava Sheva-V, Jawaharlal Nehru Custom I-louse, Nhava Sheva, Tal Uran, District Raigad, Maharashtra-400707 b) The Commissioner of Customs Chennai-Il (Import) Custom House, 60, Rajaji Salai, Chennai- 600001. c) The Commissioner of Customs, Inland Container Depot, 'ICD' Patparganj, New Delhi 110096. d) The Commissioner of Customs, Custom House, Air Cargo Complex (Import), New Custom House, Near IGI Airport, New Delhi-110037 Their applications, therefore, were forwarded to the jurisdictional commissioners of Customs for their response/comments. However, no reply has been received. In their CAAR-1application form the applicant has stated that the questions raised are not pending in their case before any officer of Customs, appellate tribunal or any court of law. 4. A personal hearing in this matter was held on 17.02.2023 at 01:15 pm. S/Shri. Vishwanathan T., Sushant Acharya, Riya Sinha and Dhananjay Sethuraj appeared on behalf of the applicant. No one appeared on behalf of the jurisdictional commissionerates. The applicant displayed samples of the impugned goods and explained the products one by one. Applicant wishes to import 18 m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, GRIs 2 through 6 may be applied in order. In view of the provisions of GRI 1 it is clear that in order to merit classification under heading 8471 these devices need to satisfy the requirements of chapter note 6(A) to chapter 84, the said chapter note is reproduced below: - 6 (A) For the purposes of heading 8471, the expression automatic data processing machines, 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. Therefore, there is a need to examine whether the features and specifications of the devices under consideration meet the criterion as laid down in the relevant chap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed or wireless network (such as a local or wide area network), other than transmission or reception apparatus of heading 84.43, 85.25, 85.27 or 85.28 . As the devices also have communication capabilities, including cellular connectivity in 18 out of 36 devices, the classification under heading 8517 needs to be examined. Note 3 to section XVI of the tariff stipulates that, Unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines designed for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function . From the note, it is clear that a composite machine performing various functions is to be classified according to the principal function performed by such a device. In the instant case, these devices combine computing and scanning functions for monitoring deliveries, tracking assets, and managing inventory. 18 out of 36 devices also have communication capabilities. However, for the products under consideration, automatic data processing appears to be the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned to perform the functions of ADP machines. However, the devices under consideration are principally not telephones for cellular networks. In fact, 18 out of 36 models do not have the functionality of cellular connectivity, which shows that the SIM is not an integral part of these devices, as these devices are able to perform their primary function with or without the SIM card. These devices do not appear to be convenient for the purpose of telephony as a principal function. As per circular no. 20/2013- Cus., dated 14.05.2013, the difference between a smartphone and tablet computer , is not based on whether the product has a voice calling function or not, but on the principal features that a producer has intended for the device when designing and developing it . These devices are essentially ADP machines with additional connectivity capabilities, including cellular connectivity for 18 models, as discussed in para. 5.2. Further, the difference between a smartphone and the devices under consideration, as explained by the applicant, is already reproduced in tabulated form para 2.4. The impugned devices have many features such as higher scanning capacity, ruggedness and enterpris ..... X X X X Extracts X X X X X X X X Extracts X X X X
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