Case Law Details
In re Supertron Electronics Pvt. Ltd. (CAAR Delhi)
CAAR held that it is evident that the proposed items of import namely, ‘ViewSonic Interactive Flat Panels (IFP) (Model – ViewBoard IFP6532-2, 7532-2, 8632-2, IFP6552-IA/IFP6552-IB, IFP7552-IA/IFP7552-IB, IFP8652-IA/IFP8652-IB, ViewBoard 6550-5, 7550-5, 8650- 5)’ merit classification under Subheading 84714190 of the First Schedule to the Customs Tariff Act, 1975.
FULL TEXT OF THE ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, DELHI
M/s Supertron Electronics Pvt. Ltd., Supertron House, No. 2, Cooper Lane, Kolkata-700001 (IEC— 0295000473) hereinafter referred to as the applicant” filed an application (CAAR-1) dated 03.10.2023 for Advance Ruling before the Customs Authority for Advance Ruling, (CAAR in short), New Delhi. The said application was received in the secretariat of CAAR New Delhi on 18.10.2023 along with its enclosures in terms of Section 28H (1) of Customs act, 1962 (hereinafter referred to as the “Act” also). The company is a registered Private Limited company, involved in the business of trading of Interactive Flat Panel (All-in-one computer system) and intended to import the said goods having Model Name “View Board IFP6532-2, IFP8652-IA, etc. under the port jurisdiction of the Commissioner of Customs (Import), Seaport Custom House, 60, Rajaji Salai, Chennai — 600001. The present Application relates to proposed classification of the above said goods Interactive Flat Panel (All-in-one computer system) under HSN code 84714190 of Customs Tariff Act, 1975.
2.1. The applicant is a registered private limited company involved in the business of trading. The applicant is also registered under the GST bearing Registration No.-19AADCS5971LIZP. The applicant is intending to import Interactive Flat Panels (Model Names – View Board IFP6532-2, 7532-2, 8632-2, IFP6552-IA/ IFP6552-IB, IFP75.52-IA/WP7552-IB. IFP8632-IA/11:11632.111, View Board 6550-5, 7550-5, 8650-5 (herein after referred as subject goods) from China The subject goods are an All-in-one (AU)) Computer System, function like a large sin tablet computer. and has an inbuilt Mother Bum& ARM Quad Core Cortex Processor, Micro Processor (CPU). Graphics Card, 4GB/8GB RAM, and 32 (3B/64611 ROM. It also has an Embedded Android system pre-loaded with Android 9 Operating System (OS). ‘the applicant is of the view that the subject goods arc classifiable under CTH84714190.
2.2. The applicant is of the bonafide belief that the subject goods arc rightly classifiable under CTH8471 4190. Therefore, the present application is being filed to ascertain the correct classification for the subject goods, under CTH84714190.
Grounds of application
2.2.1 Grounds: –
A. The classification of “ViewSonic Interactive Flat Panels (IFP) (Model – ViewBoard IFP6532-2, 7532-2, 8632-2, IFP6552-IA/ IFP6552-IB, IFP7552- IA/IFP7552-IB, IFP8652-IA/IFP8652-IB, ViewBoard 6550-5, 7550-5, 8650- 5)” falls under chapter 8471. Chapter 8471 contains the following entries:
“8471 AUTOMATIC DATA PROCESSING MACHINES AND UNITS THEREOF; MAGNETIC OR OPTICAL READERS, MACHINES FOR TRANSCRIBING DATA ON TO DATA MEDIA IN CODED FORM AND MACHINES FOR PROCESSING SUCH DATA, NOT ELSEWHERE SPECIFIED OR INCLUDED
– Other automatic data processing machine
8471.41– Comprising in the same housing at least a central processing unit and an input and output unit, whether or not combine&
8471.41.90 — Other
The subject goods arc an All-in-one (AIO) Computer System, which functions like a large size tablet computer, and has an integrated system with Central Processing Unit, Mother Board, Graphic Card. Memory (RAM + Storage), Touch Screen as Virtual Key Board as an input device and Video Display Unit as an output device. The subject goods are not mere display units, rather they are computer systems with extensive connectivity, which offers versatile plug and play compatibility with Windows, Mac and Chrome OS. Facilities like built- in Marketplace, Cloud Drive, and file manager provide easy access to popular apps and cloud storage. The Screen recording capabilities of this IFP enable easy saving of meetings, lessons or motes for later viewing or sharing.
B. The applicant further submitted that the Panel has an “Embedded Android system” pre- loaded with
Android 9 Operating System (OS), which delivers incredible software functionality, including an Ultra High Definition-optimized user interface. Apart from Android OS, this panel is capable of functioning on Microsoft Windows 10/11, Linux, Mac OS X, Android, Chrome OS.
C. As per Webopedia, the term definition of an “All-in-one Computer System” has been defined as follows,
“An All In One (AIO) Computer system is a type of computer which has all the parts of a computer like CPU, memory (RAM storage) motherboard, graphic processing using or graphic card, all in one placed inside the monitor’s body”.
The subject goods also consist of all the parts of a computer like CPU, memory (RAM+ storage), motherboard, graphic processing using or graphic card, all in one place, inside the display’s body. Like a Tablet computer system, the subject goods also typically come with a mobile operating system and touch screen display processing circuitry, and has two classes of Operating Systems, i.e., Mobile Operating System like Android 9.0 (Oreo), and Desktop Operating Systems Microsoft Windows, like Apple Mac and Chronic OS. In other words, the subject goods are All in One (AIO) Computer System, and functions like a large size tablet computer.
D. Chapter 8471 of the Customs Tariff I leading deals with the classification of automatic data processing machines and units thereof. The Chapter Note 5 of 8471 is as follows:
5(A) For the purposes of heading 8471, the expression “automatic data-processing machines” means machines, capable of
(1) storing the processing program or programs and at least the data immediately necessary for the execution of the program;
(2) being freely programmed in accordance with the requirements of the user,
(3) performing arithmetical computations specified by the user; and
(4) executing, without human intervention, a processing program which requires them to modify their execution, by logical decision during the processing run.
The subject goods have the necessary Hardware Memory (RAM+ Storage-SSD), in which the Operating System as well other Software programs are stored to execute the data processing process, and thereby satisfies the condition 5 (A) (1) of the Chapter notes. The software loaded in the IFP being freely programmed in accordance with the requirements of the user, fulfilling the condition given in 5(A)(2) of the chapter notes. ViewSonic Interactive Flat Panel, perform the arithmetical computations specified by the user which satisfy the condition 5(A)(3) of the chapter notes. It is submitted that subject goods have a processing program, which makes it capable of modifying their execution by logical decision during the processing run, so satisfies the condition 5(A)(4) of the chapter notes. In other words, the subject goods fulfill all the conditions of 5(A) of the chapter notes, and thereby qualifies to be covered by the definition of Automatic Data Processing (ADP)
E. Further, the subject goods house, in addition to a Central Processing Unit (CPU), a LED Screen, which serves as the output source, and a touch-sensitive surface, which acts as the source of input. In a similar matter involving the classification of flat panel display, reported in NY N2800009 dated 31.10.2016, the National Commodity Specialist Division, United States, has held that the flat panel display, which is freely programmable and houses a CPU, and an input unit and/or an output unit shall be classified under 8471.41.0150 of the Harmonized Tariff Schedule of the United States. The corresponding tariff heading in the Schedule-I of the Customs Tariff heading would be as follows:
8471– AUTOMATIC DATA PROCESSING MACHINES AND UNITS THEREOF; MAGNETIC OR OPTICAL READERS, MACHINES FOR TRANSCRIBING DATA ON TO DATA MEDIA IN CODED FORM AND MACHINES FOR PROCESSING SUCH DATA, NOT ELSEWHERE SPECIFIED OR INCLUDED
8471.41– Comprising in the same housing at least a central and output unit, combined; processing unit and an input whether or not
8471.41.90— Other
The subject goods are having all the essential features required for it to be classified under the CTH 8471 4190 as an “Automatic Data Processing Unit comprising in the same housing at least a central processing unit and an input and output unit, whether or not combined, other than a microcomputer and a Large or main frame computer”.
F. The identical products namely Creative touch 5-series Interactive Flat Panel (IFP), the Hon’ble Authority, Mumbai, vide Ruling No. CAAR / Mum / ARC / 15 /2022 dated 03.06.2022 and vide Ruling No. CAAR / Mum / ARC /04/2022 dated 02,02.2022 had held that the product is classifiable under CTH 8471 4190. The said ruling is applicable to the present case also, as the ViewSonic Interactive Flat Panels are similar to the product that was under consideration before the Hon’ble Authority in the above- mentioned Rulings and requested to hold the subject goods classifiable under CTH84714190.
Comments of the filed formation
3. The comments in the matter were sought from the concerned Customs Commissionerate. Mr. A.V. Narasimham, Assistant Commissioner, Chennai-II, Chennai vide letter No. CUS/APPL/188/2023-GR.5 dated 08.11.2023 forwarded the requisite comments in the matter.
3.1. The requisite comments in the matter are as follows:
3.1.1 It is observed from the application that the applicant are of the opinion that the goods under consideration, “ViewSonic Interactive Flat Panels (IFP) (Models ViewBoard IFP6532-2, 7532-2, 8632-2, IFP6552-IA/ IFP6552-IB, IFP7552-IA/ IFP7552-IB, IFP8652-IA/ IFP8652- IB, ViewBoard IFP6550-5, 7550-5, 8650-5, meets the requirements of Auto Data Processing Machine as defined in Note 6 (A) to Chapter 84 of the Customs Tariff Act, 1975, the same is falling under CTH 8471. Further regarding classification at sub-heading and 8-digit item level under CTH 8471, the applicant opined that as the CPU, memory, input and output device are inbuilt in the same housing it seems classifiable under CTSH 847141 and as it is not a micro-computer and large or main frame computer, the same appears to be classifiable under CTH 84714190, However, the contentions of the applicant appear incorrect in view of the followings:
3.1.2. The main heading of CTH 8471 covers “Automatic Data Processing Machines and Units thereof: Magnetic or Optical Readers, Machines for Transcribing Data onto Data Media In Coded Form and Machines For Processing Such Data, Not Elsewhere Specified Or Included”. The Sub-heading 84714190 covers, inter alia, “Other automatic data processing machines” Comprising in the same housing at least a central processing unit and an input and output unit, whether or not combined,
3.1.3. As per Chapter Note 6 to the Chapter 84:
(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: performing arithmetical computations specified by the user; and
iii) executing, without human intervention, a processing programme which requires them to modify their execution, by logical decision during the processing run.
B)Automatic data processing machines may be in the form of systems consisting of a variable number of separate units.
C) Subject to paragraphs (D) and (E), a unit is to be regarded as being part of an automatic data processing system if it meets all of the Following conditions:
(i) it is of a kind solely or principally used in an automatic data processing system;
(ii) it is connectable to the central processing unit either directly or through one or more other units: and
(iii) it is able to accept or deliver data in a form (codes or signals) which can be used by the system.
Separately presented units of an automatic data processing machine arc to be classified in heading 8471. However, keyboards, X-Y co-ordinate input devices and disk Storage units which satisfy the conditions of (ii) and (iii) above, are in all cases to be classified as units of heading 8471.
(D) Heading 8471 does not cover the following when presented separately, even if they meet all of the conditions set forth in paragraph C):
(i) printers, copying machines, facsimile machines, whether or not combined;
(ii) apparatus for the transmission or reception of voice. images or other data. including apparatus for communication in a wired or wireless network (such as a local or wide area network),
(iii) loudspeakers and microphones,
(iv) television cameras, digital cameras and video camera recorders,
(v) monitors and projectors, not incorporating television reception apparatus.
(E) Machines incorporating or working in conjunction with an automatic data processing machine and performing a specific function other than data processing are to be classified in the headings appropriate to their respective functions or, failing that, in residual headings,
3.1.4. The impugned goods Interactive Flat Panels (IFPs)” are different from ADP machine covered under CTH 8471 on following technical specifications as well-
a. It was stated by the applicant the goods have an embedded android system pre-loaded with Android 9 Operating System (OS). Apart from Android OS, this panel is capable of functioning on Microsoft Windows 10/11 Linux, Mac OS X, Android, Chrome OS. It is observed that the Android is a fixed Operating System (OS) and it cannot be re-programmed by the user of the device. Only application which are supported by Android OS can be used / run by the user. The user can choose any application available on Android App Store.
Application and Program are two different things. Program, as name suggest, are simply set of instructions that are developed to work in single platform and usually written by computer programmer in programming languages such as C ++, Java, Python, etc. Application, as name suggests, are simply apps that are designed for end user to perform specific task and achieve their purpose as well as can manipulate text, numbers, graphics, audio, and combination of these elements, etc. Programs are designed to support or help computer execute or perform particular task for benefit of user, whereas Applications are designed to help user to perform activity. Programs are developed to run on single platform or specific platform for which it is designed, whereas Applications are developed to run on more than single platform such as Mobile Device, PC, other electronic device such as Smart LED TV etc.
As per the catalogue of the imported goods, there is nowhere mentioned that it can be re-programmed. Therefore, the goods under import are not freely programmable, only application which runs on Operating System/Software can be installed by the user. As per Explanatory Notes to Chapter 84, the machines which operate only on fixed programs, i.e., programs which cannot be modified by the user, are excluded even though the user may be able to choose between a number of such Fixed Programs.
b. The goods under import does not support to be re-programmed, therefore, user would not be able to run logical program on the device (for example, the device does not support run of a simple sum of two numbers’ program written in C, C++, Java or any other programming language). An automatic data processing machine (ADPM) process data in coded form, A code consists of a finite set of characters (binary code, standard six-bit ISO code etc.)
c. Chapter note 6(A)(iv) provides that “executing, without human intervention, a processing program which requires them to modify their execution, by logical decision during processing run” and as per the catalogue and function mentioned of the goods, it is evident that these goods cannot execute the logical functions without human intervention.
A theorem-prover refers to a computer program that has been designed to solve mathematical statements known as theorems. In logical programming, the theorem-prover works together with the statements created by the computer programmer to reach conclusions. For example, if the code states that A is equal to B and B is equal to C, the theorem-prover will make the logical conclusion that A must be equal to C. This process is different than the programmer simply telling the computer in the code that A is equal to C because the computer program must draw this conclusion using the theorem-prover and the programmer’s original statements in the code. As per the functions mentioned in the goods, it is evident that these goods cannot execute the logical functions without human intervention.
3.1.5. It is observed that an Interactive Flat Panel (IFP) is a large-format touchscreen display ideal for meeting rooms and collaborative spaces. It is a replacement for clunky or outdated projector technology with a higher-quality display. enhanced connectivity, and built-in software solutions. These solutions are perfect for business opportunities, educational pursuits, and even at home leisure. In a nutshell on IFP-short for Interactive Flat Panel Display-is a type of interactive whiteboard (IWB). An IWB is a large electronic display that has a touchscreen and is able to access, manipulate, and interact with electronic files. They easily handle the highly collaborative needs of today’s office space with 20 points of touch and wide viewing angles with options for ultra-fine 4K resolution and the ability to present a surprisingly natural handwriting experience. IFPs support communication and collaboration in ways never before possible in the meeting room. Most IFPs have a number of built-in software integrations, like Cast, Chrome etc. which come pre-installed on all displays. An interactive flat panel does not require a projector because all hardware is contained in a flat panel display,
3.1.6. It is further observed that there are various types of Interactive Devices and known by various names in the industry i.e., Interactive Whiteboard/ Smartboard, Interactive Flat Panel Display, Interactive Intelligent Panels etc. is an advanced technology used in classroom teachings, conferences etc. The Interactive Display Systems can be used to present documents, information and videos to different groups, educational purposes i.e., e-learning for example to a group of students in a classroom or during a meeting in a business environment.
3.1.7. It is also observed as per Note 6(D) to Chapter 84, Heading 8471 does not cover the monitors and projectors not incorporating television reception apparatus when presented separately even if they meet all the conditions mentioned in Para(C) of the said Note. Further, para (E) states that machines, instrument or apparatus incorporating or working in conjunction with an automatic data processing machine and performing a specific function other than data processing are to be classified in the headings appropriate to their respective functions or, failing that, in, residual headings.
3.1.8. The subject goods are not merely an ADPM and in fact it has many other additional inbuilt features with the main purpose to interact through display as per the intended use i.e., training, conferences, educational purposes, teaching via e-learning etc. The goods are mainly Display devices incorporating and working in conjunction with an automatic data processing machine i.e., inbuilt CPU. Therefore, the primary function of the goods is to display the given input data/ images/pictures/videos etc.
3.1.9. ADP machines performing specific functions other than Data processing are required to be classified as per their respective functions. Even though the functions of an ADP machines are inbuilt, the subject goods viz.. Interactive Flat Panels being primarily used as Display System cannot be considered as a simple input or output device and is to be identified with its primary function of display by applying Note 6 (E) of Chapter 84 Note as mentioned above.
3.1.10. As per Rule 1 of the General Rules for the interpretation of the Harmonized System, the titles of Sections, Chapters and sub-chapters are provided for ease of reference only, for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the provision stipulated therein.
3.1.11. Further, Rule 3(a) states that the heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings arc to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.
3.1.12. The appropriate heading for classification of the impugned goods therefore shall be 8528 which covers –
“Monitors and projectors, not incorporating television reception apparatus: reception apparatus for television, whether or not incorporating radio broadcast receivers or sound or video recording or reproducing apparatus:
Cathode-ray tube monitors:
8528 42–Capable of directly connecting to and designed for use with an automatic data processing machine of heading 84.71
8528.52–Other
Other monitors:
8528.52–Capable of directly connecting to and designed for use with an automatic data processing machine of heading 84.71
8528.59–Other
3.1.13. Since, the description mentioned in the application is “Interactive Flat Panel”, the main function of subject goods is interaction through display. Essentially, it acts as a display monitor, meaning that you can select to view documents. videos and even web links on a larger scale.
3.1.14. Further, Chapter Note 3 to Section XVI states that “Unless the context otherwise requires, composite machines consisting of two or more machines filled to form a whole and other machine 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”. I find that the primary function of the subject goods is display and are also marketed as products with efficient display qualities, touch screen, write or draw on screen etc.
3.1.15. The Hon’ble Supreme Court in the case of Commissioner of Customs, Bangalore Vs. N.L. Systems (India) P. Ltd.-2010 (256) ELT 173(SC) held that PXI Controller which was a computer based instrumentation product and capable of being controlled by a Personal Computer/Laptop but is not a PC/laptop-principal function of controllers is executing, control, algorithms for real-time monitoring and control of devices controller performs functions in addition to data processing what is imported is a system containing on ADPM and if the contention of the importer herein is accepted, it would mean that every machine that contains an element of ADP would be classifiable as an ADP machine under Chapter 84 which would completely obliterate the specific function test and the concept of functional unit. Hon’ble Court upheld the classification of the department and held that goods were rightly classified under Chapter 90. The same principle applies to this case.
3.1.16. Hon’ble Supreme Court in the case of Deena Jee Sansthan vs Commissioner of Central Excise, Meerut-2019 (365) ELT 353 (SC) held that the classification of product should be by applying common parlance test that the said product i.e. “Shampoo” is used as cosmetics only and not as ayurvedic medicament even though the product has all the ingredients mentioned in books on ayurveda listed in Drugs and Cosmetics Act.
3.1.17. In view of the above, the subject goods cannot be considered as an Automatic Data Processing machine under CTH 8471. It is pertinent to mention here that even Cellular Android Phones do incorporate all the functions of an ADP Machine and also works on Android OS, yet the same is classified under cellular phones as the primary function is communication. Applying the same analogy, the principle function of the item under import is to interact through display and hence the impugned goods arc classifiable under sub-heading 8528 5900 which deals with other monitors.
3.1.18. In case of Commissioner of Customs (Import & General), New Delhi Vs Integral Computer Lid 2016 (337) EL.1 580 (Tri-Del) dated 07.04.2016 the Hon’ble Tribunal has held that “Interactive Electronic White Board” is a teaching device mainly used for class room teaching or in conferences and meetings and work and gets the display function by combined action with a computer and projector cannot be considered as a simple input or output device and is to be identified with its primary function of display and has classified the goods under sub- heading 8528 5900 i.e.. other monitors (now CTI 85285900)”. The issue is squarely covered in the present case.
Additional submissions made in response to the comments of field formation
4. The above comments received from the concerned Commissionerate were forwarded to the applicant. The applicant vide letter dated 16.11.2023 submitted their point wise reply with reference to the instant application for Advance Ruling and Departmental comments dated 08.11.2023, which are as follows:
4.1. Chapter Note 5 (A) and the HSN Explanatory Notes to CTH 84.71 provides, what should constitute an
Automatic Data Processing Machines (ADPM). According to the aforesaid Chapter Note 5(A), ADPM would be a machine which is capable of storing a processing program; is freely programmable; performs arithmetical computations; and can execute a processing program by logical decision during the processing without human intervention. The subject goods are IFP having an in-built CPU (ARM quad-core Processor), a 4GB RAM and Android 9 / View Board Operating software. In addition, they also have an internal storage capacity of 32GB. Thus, goods are machines which are capable of storing data or programmes for the execution of programmes and satisfy condition no. (i) of Chapter Note 5(A) to Chapter 84. The goods come with a pre-installed operating system, namely, Android 9Niew Board Operating Software. The said Android version/View Board is a customized operating system for these IFP. Further, the goods also have an OPS slot. With the use of the OPS Slot, additional hardware can be connected to the goods and the OPS Slot can also be used for installing other operating software such as Windows, etc. on the goods. Thus, the goods are machines on which the user is able to load and execute a program. In other words, the goods are capable of executing any application/ program which is stored on its memory. A user can, with the use of either Android or other operating systems, download and install new programmes in accordance with their needs and usage. Thus, goods are machines which can be freely programmed in accordance with the need of the user and hence, satisfy condition (ii) of Chapter Note 5(A) to Chapter 84.
4.2. 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. Thus, the goods meet the requirements of condition (iii) of Chapter Note 5(A) to Chapter 84.
4.3. 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.
4.4. 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. 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.
4.5. The Assistant Commissioner has also admitted that the goods have built-in software integrations. If a machine has built-in software application, then it requires a CPU to process the said software and therefore, it is conceded by the Department that the product in question is an ADP. The goods do not perform any function other than data processing. The large size display is only a feature/specification of the goods and this cannot be construed to be its function, much less its principal function. The Department, therefore, is incorrect in contending 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.
4.6: In terms of tariff items contained in Chapter 85 and the HSN Explanatory Notes to CTH 8528, it is more than apparent that CTH 8528 would cover monitors which are capable of receiving and displaying the signals when attached to any of the devices like ADPM, video camera or recorder. Such monitors do not have the capability of functioning independently or through two-way communication. They arc also not capable of processing any data on their own, nor are they capable of storing any data.
4.7. Identical goods have also been classified under CTH8471by the Principal Bench of the Hon’ble CESTAT in the case of Ingram Micro India Pvt. Ltd. Vs. Principal Commissioner of Customs (Import), ICD, Tughlakabad [Final Order No. 50076-50077/2022 dated 02.02.2022) and also by the US Customs Cross Ruling and WCO Classification Ruling.
4.8. It is submitted that for an identical product, the Authority for Advance Ruling, Telangana in the case of In Re: Next Education India Pvt. Ltd. reported in 2022 (60) GSTL 483 (A.A.R. -GST- Telangana) has held that Interactive Flat Panel with android is classifiable under CTH8471.
4.9. The goods would not merit classification under CTH 8528 since this Heading covers monitors which are capable of receiving and displaying the signals when attached to any of the devices like ADPM, video camera or recorder and these monitors do not have capability of functioning independently or through two-way communication. They are also not capable of processing any data on their own, nor are they capable of storing any data. The goods, on the other hand, have an in- built CPU, 4GB RAM for executing program, 32 GB storage capacity and are also loaded with Android 9/ View Board operating software. Thus, the goods can perform a plethora of functions beyond being used as a traditional whiteboard in the classrooms. The goods are not 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”. The size of the goods 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.
4.10. When the classification of the goods is determined by the application of the Chapter Notes and GRI 1, there is no occasion for invocation of GRI 3(c). In this connection reliance is being placed on the judgement of the Supreme Court in Commissioner of central excise, Nagpur Vs Simplex Mills Co. Ltd., reported in 2005 (181) E.L.T. 345 (S.C.).
4.11. It is submitted that the Department has placed reliance on the decision of the Hon’ble Tribunal in the case of Commissioner of Customs (Import & General), New Delhi Vs. Integral Computer Ltd. reported in 2016 (337) ELT 580 (Tri-Del.). However, the said case is completely distinguishable on facts. In paragraph 3 of the said order, the Hon’ble Tribunal had specifically noted that the “… The product is described as a PC based Input Equipment which when connected with projector and PC can be used for functions such as writing, noting, drawing, geometric graphics, editing, printing and storing. Some of the key features of the white board are that it creates an interactive environment for teaching and demonstration, if connected with PC and projector under the support of dedicated software. The electronic pen supplied with the white board can operate the PC instead of mouse…” Therefore, the product in question was required to be connected to a PC or projector, whereas the product under consideration in the present case has an in-built CPU and is not required to be connected to a PC or projector to be used. It has independent functionality.
4.12. Therefore, for the reasons mentioned in the application for advance ruling and for the reasons mentioned above, it is prayed that the product under consideration, namely, “ViewSonic Interactive Flat Panel (IFP) (Model IA/IFP6552-IB, ViewBoard IFP7552-2, 7532-2,8632-2, IFP6552- IFP7552-IA/IFP7552/IB, IFP8652-IA/IFP8652-IB, ViewBoard IFP 6550-5, 7550-5, 8650-5))” is classifiable under CTH 84714190.
Records of Personal Hearing
5. A personal hearing in the matter was held on 17.11.2023. The advocate / authorized representative started by introduction of the applicant company, in brief. He submitted that the subject goods are an All-in-one (AIO) computer system, functions like a large size table computer and has an inbuilt Mother Board, ARM Quad core Cortex Processor, Micro Processor (CPU) Graphics Card. 4GB /8GB RAM and 32 GB/64 GB ROM and having an Embedded Android systems Pre-loaded with android 9 Operating systems (0.S.). He further added that the subject goods i.e. Interactive Flat Panels ViewSonic Interactive Flat Panels (HT) (Model – ViewBoard IFP6532-2, 7532-2, 8632-2, IFP6552-IA/ IFP6552- IB. IFP7552- IA/11:P7552-IB. IFP8652-IA/IFP8652-IB, ViewBoard 6550-5, 7550- in 5, 8650-5 works as Automatic Data Processing Machine, so, on merit, it falls under MI 84714190. He further, w reiterated the submissions already made in the application for Advance Rulings. The Assistant Commissioner of Customs, Seaport Custom House, 60. Rajaji Salai, (hernial — 600001 appeared on the behalf of the Department in the personal hearing and opposed the claim of the application for classification of the subject goods under CTH84714190. and reiterated the comments shared earlier that the subject goods cannot he considered as Automatic Data Processing Machine.
Operative part of the Order
6. After finding that the application is valid in terms of the provisions of the Customs Act, 1962 and the CAAR Regulations, 2021, having gone through the submissions of the applicant, comments of the concerned Commissioner, haying heard the applicant, and recognizing the importance of timely pronouncement of rulings, I proceed to examine the question on merits.
6.1 Chapter 8471 of the Customs Tariff Heading deals with the classification of automatic data processing machines and units thereof. The Chapter Note 6 of 8471 is as follows:
6(A) For the purposes of heading 8471, the expression “automatic data-processing. machines” means machines, capable of-
(i) storing the processing program or programs and at least the data immediately necessary for the execution of the program;
(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 program which requires them to modify their execution, by logical decision during the processing run.
6.2 The subject good has the necessary Hardware Memory (RAM+Storage-SSD), in which the Operating System as well other Software programs are stored to execute the data processing process, and thereby satisfies the condition 6 (A) (i) of the Chapter notes. The software loaded in the IFP being freely programmed in accordance with the requirements of the user, fulfilling the condition given in 6(A)(ii) of the chapter notes. ViewSonic Interactive Flat Panel, perform the arithmetical computations specified by the user which satisfy the condition 6(A)(iii) of the chapter notes. It is submitted that the subject good has a processing program, which makes it capable of modifying their execution by logical decision during the processing run, so satisfies the condition 6(A)(iv) of the chapter notes. In other words, the subject good fulfills all the conditions of 6(A) of the chapter notes, and thereby qualifies to be covered by the definition of Automatic Data Processing (ADP) machine.
6.3 Further, the subject goods house, in addition to a Central Processing Unit (CPU), a LED Screen, which serves as the output source. and a touch-sensitive surface, which acts as the source of input. In a similar matter involving the classification of flat panel display, reported in NY N2800009 dated 31.10.2016, the National Commodity Specialist Division, United States, has held that the flat panel display, which is freely programmable and houses a CPU, and an input unit and/or an output unit shall be classified under 8471.41.0150 of the Harmonized Tariff Schedule of the United States. The corresponding tariff heading in the Schedule-I of the Customs Tariff heading would be as follows:
8471 AUTOMATIC DATA PROCESSING MACHINES AND UNITS THEREOF; MAGNETIC OR OPTICAL READERS, MACHINES FOR TRANSCRIBING DATA ON TO DATA MEDIA IN CODED FORM AND MACHINES FOR PROCESSING SUCH DATA, NOT ELSEWHERE SPECIFIED OR INCLUDED
8471.41– Comprising in the same housing at least a central and output unit, combined; processing unit and an input Whether or not
8471.41.90— Other
The subject goods arc having all the essential features required for it to be classified under the CTII 8471 4190 as an “Automatic Data Processing Unit comprising in the same housing at least a central processing unit and an input and output unit, whether or not combined, other than a microcomputer and a Large or main frame computer”,
6.4. I take note of the fact that the applicant has repeatedly referred to Chapter Note 5 of Chapter 84 however Chapter Notes of Chapter 84 have undergone a change, in the past and reference to Chapter Note 5 is to be treated as reference to Chapter Note 6 of Chapter 84. The applicant has also inter-alia stated that, the subject goods are an All-in-One (AIO) computer system which function like a large size tablet computer; the subject goods are not mere display units. rather they arc computer systems with extensive connectivity, which offers versatile plug and play compatibility with Windows, Mac and Chrome OS; apart from Android OS, this panel is capable of functioning on Microsoft Windows 10 OS, if an optional OPS SLOT-IN PC MODULE is added in the system; the subject goods also typically come with a mobile operating system and touch screen display processing circuitry, and has two classes of Operating Systems, i.e. Mobile Operating System like Android 11.0, and Desktop Operating Systems Microsoft Windows, like Apple Mac and Chrome OS; the software loaded in the IFP being freely programmed in accordance with the requirements of the user. Further, I note that the extant Note 6(A) of Chapter 84 lays down, “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.
6.5 Based on the comments of the concerned Commissioner of Customs, Chennai, on the application for advance ruling, it is observed that classification under heading 8528 instead of claimed classification under heading 8471, has been preferred mainly for the reasons that, Interactive Flat-Panel Display (IFPD) is a large-format touchscreen display ideal for meeting rooms and collaborative spaces; in a nutshell, an IFP-short for Interactive Flat Panel Display-is a type of interactive whiteboard (IWB); as per Note 6(D) to Chapter 84, heading 8471 does not cover the monitors and projectors not incorporating television reception apparatus when presented separately even if they meet all the conditions mentioned in Para(C) of the said Note, further, para (E) states that machines, instruments or apparatus incorporating or working in conjunction with an automatic data processing machine and performing a specific function other than data processing are to be classified in the headings appropriate to their respective functions or, failing that, in residual headings.
6.6 Further, on perusal of the comments of the concerned Commissionerate on the application for advance ruling, it is observed that the word, ‘Display’ in the description of item, ‘Interactive Flat Panel Display; has caught their attention and same has been made basis to arrive at essential/principle function of the subject goods however, it appears that importance of the word, ‘Interactive’ in the description of the subject goods, has not been discussed much. The word, ‘Interactive’, in the description of the subject goods immediately brings to the front various capabilities of the subject goods and on closer examination, the capabilities of the subject goods meet the requirement under Chapter Note 6(A) of Chapter 84 for a machine to mean as ‘automatic data processing machine’. Moreover, once an item has inbuilt input unit, output unit along with processing unit then it is obvious that the item can perform multiple functions. For such an item similar to the subject goods, the issue is to ascertain essential function and terms of the heading read with Section/Chapter Notes for determination of classification of such goods. In light of the foregoing, the issue of classification, in the instant application gets settled in terms of Rule 1 and Rule 6 of General Rules for Interpretation of Import Tariff (GRI) without inviting reference to Rule 3 of GRI.
6.7 Since the question under the application for advance ruling relates to classification of goods proposed to be imported, guidance of the World Customs Organization, to which India is a signatory, would be useful. It is noted that the Harmonized System Committee (60th Session) of WCO has examined a similar product, i.e an electronic interactive whiteboard (“Smart Board”), size 78 inches, consisting of a touch-sensitive, dry-erase surface with multi-touch functionality, which accepts touch input from a pen or a finger and features integrated speakers generally delivered complete with two pens, device driver software & a user guide which can serve as a surface to display the screen of an ADP machine, projected by the video projector and it is able to accept or deliver data in a form which can be used by the ADP machine. The HS Committee of WCO decided the classification of this product under Subheading 8471.60, adopting the classification rationale under General Rules for Interpretation vide Rule I read with Note 5 (C) to Chapter 84 and Rule 6 of GRI.
6.8 As regards the products namely Creative touch 5-series Interactive Flat Panel (IFP), the Hon’ble Authority Mumbai, vide Ruling No. CAAR / Muni / ARC / 15 / 2022 dated 03.06.2022 and vide Ruling No. CAAR / Mum / ARC /04/2022 dated 02.02.2022 had held that the product is classifiable under CTH 8471 4190. The said ruling is applicable to the present case also, as the ViewSonic Interactive Flat Panels are similar to the product that was under consideration before the Hon’ble Authority in the above-mentioned Rulings.
6.9 I also note that a number of rulings and judgements have been quoted by the concerned Commissioner to justify classification under heading 8528. However, it is felt that judgement of CESTAT, New Delhi in the case of Ingram Micro India Private Limited is the most appropriate, giving detailed explanation for classification of goods similar to the subject goods under heading 8471. Hon’ble CESTAT, New Delhi in Customs Appeal No. 50708 and 50709 of 2021in the matter of M/s Ingram Micro India P. Ltd. vs Principal Commissioner of Customs (Import), ICD, Tughlakabad, New Delhi, in both the appeals related with the issues of classification of ViewBoard 65 View Sonic IFP6550-2/65″ and ViewBoard View Sonic IFP7550-2/75″, both were Interactive Display System”, hold that “there is no matter of doubt that the goods would merit classification under CTI 84714190 as claimed by the appellant and not under CTI 85285200 as claimed by the Department. It is also noted that Customs Authority for Advance Rulings, Mumbai examined the question of classification of similar goods and ruled for classification of such goods similar to the subject goods in Sub-heading 84714190, while referring to the Final Order of Hon’ble CESTAT, New Delhi in an appeal filed by M/s Ingram Micro India Pvt. Ltd.
7. Keeping in view the foregoing, it is evident that the proposed items of import namely, “ViewSonic Interactive Flat Panels (IFP) (Model – ViewBoard IFP6532-2, 7532-2, 8632-2, IFP6552-IA/IFP6552-IB, IFP7552-IA/IFP7552-IB, IFP8652-IA/IFP8652-IB, ViewBoard 6550-5, 7550-5, 8650- 5)” merit classification under Subheading 84714190 of the First Schedule to the Customs Tariff Act, 1975.
8. I rule accordingly.
