In re Delmon Solutions Private Limited (CAAR Mumbai)
Introduction: The Customs Authority for Advance Rulings, Mumbai (CAAR), recently issued a comprehensive ruling on the classification of Handheld Mobile Computers, pertaining to an application filed by M/s. Delmon Solutions Private Limited. The ruling, dated 25th September 2023, addresses the classification under the Customs Act, 1962, and provides insights into the intricacies of importing ten specific models of Handheld Mobile Computers through the Air Cargo Complex, Mumbai.
Detailed Analysis: The applicant, engaged in industrial TOT solutions and importing Handheld Mobile Computers since 2018, sought an advance ruling on the classification of specific models. The devices, collectively referred to as “handheld mobile computers,” are designed for tasks such as barcode scanning and data processing, enhancing efficiency in functions like inventory management.
The Handheld Mobile Computers share common features, including Qualcomm Snapdragon processors, Android 10 operating systems, front and rear cameras, Gorilla Glass, and various connectivity options. The applicant emphasized the industrial nature of these devices, showcasing rugged design, water and dust resistance, and functionality in harsh environments.
The applicant argued for the classification of these devices under Heading 84.71 of the Customs Tariff Act, specifically under sub-Heading 8471.30. The devices were presented as Automatic Data Processing (ADP) Machines, meeting the conditions specified in Note 6(A) to Chapter 84. The analysis highlighted the devices’ ability to store and process data, being freely programmable, performing arithmetical computations, and executing processing programs without human intervention.
The applicant also addressed the definition of smartphones under Heading 85.17, emphasizing that the Handheld Mobile Computers are primarily ADP Machines with additional features, not intended as substitutes for smartphones. The analysis invoked Circular No. 20/2013, where tablet computers were classified as ADP Machines, drawing parallels with the nature and functions of the Handheld Mobile Computers.
Conclusion: The CAAR Mumbai ruling on Delmon Solutions brings clarity to the classification of Handheld Mobile Computers, affirming their categorization as Automatic Data Processing Machines under Heading 84.71. The decision underscores the industrial utility of these devices, distinguishing them from conventional smartphones. Importers and businesses dealing with similar technologies should take note of this ruling, ensuring compliance with the specified customs classification and associated regulations. The comprehensive analysis provided by the CAAR sheds light on the nuanced interpretation of tariff classifications in the context of evolving technological products.
FULL TEXT OF THE ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, MUMBAI
M/s. Delmon Solutions Private Limited (having IEC No. 3116915334 and hereinafter referred to as ‘the applicant’, in short) filed an application (CAAR-1) for advance ruling before the Customs Authority for Advance Rulings, Mumbai (CAAR in short). The said application was received in the secretariat of the CAAR, Mumbai on 25.09.2023 along with its enclosures in terms of Section 28H (1) of the Customs Act, 1962 (hereinafter referred to as the ‘Act’ also). The applicant is seeking advance ruling on the classification of Handheld Mobile Computers of the following ten (10) models for imports through the Air Cargo Complex, Mumbai:
a. Mobile Computer RK95 (without SIM);
b. Mobile Computer RS35;
c. Mobile Computer RS35 (without SIM);
d. Mobile Computer RS51;
e. Mobile Computer RS51 HSWO (without SIM);
f. Mobile Computer RS36;
g. Mobile Computer RS36 (without SIM);
h. Mobile Computer RS26;
i. Mobile Computer RS26 (without SIM); and
j. RK 25 (without SIM).
2. Applicant has stated following facts in support of the questions framed:
That the applicant is engaged in providing industrial TOT solutions, IOT cloud data platform, RFID/ Barcode/ Mobility /AIDC solutions etc. and importing Handheld mobile computers since 2018 and is now proposing to import new models of Handheld mobile computers along with the models already being imported by them. The aforesaid devices of ten (10) models mentioned above are collectively referred to as “handheld mobile computers” which are computers used for scanning barcode and processing data in order to increase efficiency of functions such as inventory management etc. The products in question are to be sold further to the Applicant’s distributors/consumers.
The applicant has submitted following Details/ common features of the products in question
-Hard Keys: Volume up/down key, left/right scan, power, reset.
-Soft Keys: Three touch keys (Back, Home, Menu)
-Qualcomm Snapdragon processor
-Operating System – Android 10
-Front and Rear Cameras
-Gorilla Glass
-Multi touch capacitive
-Equipped with battery
-Sim card enabled
-Micro USB 2.0 (communicates to PC, supports adaptor/USB charging.
-Motion Sensor
-GPS enabled -Bluetooth enabled
-Wireless Radio
The applicant has stated as follows with regard to the Functions of a Handheld mobile computer in general:
A mobile computer is a combination of Personal Computer and scanner, largely utilized by field service personnel. The product carries a processing ability of a laptop and functionality of a scanner in a single wireless device. They essentially perform ID and 2D barcode scanning and additionally have features like Wi-Fi/Bluetooth connectivity, data transfer etc. The predominant use of these devices is in warehousing/logistics/inventory operations for data capturing/storage and its transmission for allied functions. Many models of Handheld mobile computers do not have feature of connecting to a cellular network and they operate on wireless LAN connectivity to fulfil their functions. However, some models may have such cellular network connectivity feature in addition to wireless LAN connectivity. Some models covered under this Application have feature to connect to cellular network whereas some of them do not possess such a feature. The Handheld mobile computers function on wireless LAN connectivity. Most functions are done on wireless connectivity. Only when the wireless LAN is not available, the devices which have the functionality of a cellular connection use this function. Thus, cellular network is used rarely in cases such as during last mite delivery, when wi-fi is not readily available etc. In fact, calling function provided in Products with SIM. is purely a supplementary function since the same has been provided as an additional mode of connectivity apart from Bluetooth, Win and GPS.
The applicant has stated that following design aspects of physical features of these Handheld mobile computers are relevant:
-Rugged design
-Fall proof
-Water Resistant
-Dust Resistant
-Working environment (harsh usage and temperature range of -20°C to 50°C)
-Screen can be read even in sunlight
-Extended Battery Life
-Bar Code Scanner for reading Ill and 2D bar codes, apart from reading QR codes. The advantage is the reduction in scanning time. This scanner can scan 500 to 1000 codes per hour.
-The laser can read short, mid and long range scanning capability;
-No separate audio-jack; for voice communication, it is generally advised to have earphone.
-It is primarily designed for scanning application and processing of scanned data and not for voice communication.
-Specialized applications are developed to run on the mobile computers, which are not/ cannot run on android based mobile phones;
-The physical key-hoard is akin to what is found on a conventional computer;
-Extra keys provided for scanning and for performing other data processing function;
-User not free to update the android system, unless otherwise confirmed by Cipherlab;
3. Statement containing the applicant’s interpretation of law and/or facts, as the case may be, in respect of the aforesaid question(s) (i.e., applicants view point and submissions on issues on which the advance ruling is sought):
The Applicant submits that the Handheld mobile computers in question in the present application are classifiable under Heading 84.71 of the Tariff as Automatic Data Processing (ADP) Machine, for the following reasons:
Heading 84.71 of the First Schedule to the Customs Tariff Act, 1975 covers “Automatic data machines and units thereof magnetic or optical readers, machines for transcribing data on to data media in coded dorm and machines for processing such data, not elsewhere specified or included”. The HSN Explanatory Notes released by the WCO aid in the interpretation of the Headings of the Tariff and may be used as a safe guide for the same. It has been held so by the Hon’ble Supreme Court in the case of CC Vs. Business Forms – 2002 (142) ELT 18 (SC). As per Rule 1 of the GRI, classification of the products 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 remaining Rules of the GRI.
The Heading 8471 also includes portable ADP machines that do not require an external electrical output for functioning. The relevant entries of Heading 84.71 of are extracted below:
