Classification of Projectors in Case of Ingram Micro India Private Limited

In re Ingram Micro India Private Limited (CAAR Mumbai)

Introduction: In a recent ruling by the Customs Authority of Advance Ruling, Mumbai, concerning M/s. Ingram Micro India Private Limited, the classification of projectors under the Customs Tariff Act, 1975 was deliberated upon. The applicant sought an advance ruling on the classification of various projector models and the applicability of Sr. No. 17 of Notification No. 24/2005-Customs, dated 01.03.2005, as amended.

Background: M/s. Ingram Micro India Private Limited, a registered private limited company engaged in the distribution of Information Technology and Telecommunication products, filed an application seeking clarification on the classification of ‘Projectors’ they intended to import from Viewsonic International Corporation, based in Taiwan. The models in question were detailed, and the applicant emphasized the distinction between business/data projectors and video/home theatre projectors.

Applicant’s Position: The applicant argued that the subject goods, identified as projectors, were optical devices designed primarily for use with an automatic data processing system. They presented comparisons with home theatre projectors, highlighting differences in features such as contrast ratio, resolution, and brightness. The applicant supported their position with relevant case laws.

Legal Framework and Deliberation: The Customs Authority considered the legal framework governed by the Customs Tariff Act, 1975, specifically Chapter 84 & 85, along with corresponding Chapter notes, supplementary notes, and relevant HSN explanatory notes. It was noted that projectors working in conjunction with devices under heading 8471 would be classified under heading 8528.

Classification Criteria: The ruling emphasized the key criterion for classifying projectors: their compatibility with input devices, such as computers, DVD players, etc., and their ability to accurately project these inputs onto a screen. Two main types of projectors were identified: business/data projectors and video/home theatre projectors. The former, characterized by lower contrast ratio and resolution matching computer screens, were designed for well-lit places like conference rooms. The latter, optimized for film and TV, had higher contrast ratios and resolution.

Decision on Classification: The Customs Authority ruled that the projectors under consideration, based on their functions and features, were principally meant for use with automatic data processing machines. The presence of additional features did not disqualify them from classification under sub-heading 8528 62 00, emphasizing the specific description provided by the heading.

Conclusion: In conclusion, the Customs Authority ruled that the Data Projectors from M/s. Ingram Micro India Private Limited were classifiable under CTI 8528 62 00 of the Customs Tariff Act, 1975. Additionally, they were deemed eligible to avail the benefit of Sr. No. 17 of Notification No. 24/2005-Customs, dated 01.03.2005, as amended. This ruling provides clarity on the classification of projectors and their eligibility for duty exemptions, offering valuable guidance to importers and the industry at large.

FULL TEXT OF THE ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, MUMBAI

M/s. Ingram Micro India Private Limited (IEC-0300013833) (hereinafter referred to as `the applicant’, in short) filed an application 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 23.03.2023, along with its enclosures in terms of Section 28H (I) of the Customs Act, 1962 (hereinafter referred to as the ‘Act’). The applicant is seeking advance ruling on the classification of ‘Projectors’ (hereinafter referred to as ‘subject goods’) and applicability of Sr. No. 17 of Notification No. 24/2005-Customs, dated 01.03.2005, as amended. The models proposed to be imported are as follows:

The applicant is a registered private limited company engaged in distribution of information Technology and Telecommunication product. They intend to import data projectors mentioned in para 1 from their supplier Viewsonic International Corporation, based t Taiwan. As per the applicant, the subject goods are optical device that accepts a video/ image s input, processes it with the assistance of its inbuilt optical projection system consisting of a lens and optical source and projects the enhanced output on the projection screen. They are capable of projecting the image/video normally reproduced on the screen of a television receiver or a monitor onto an external surface like a projection screen, thus enabling display of he image to a large number of people. Therefore, the compatibility of a projector with input devices, such as a computer, a DVD player, etc., feeding images/ videos to it and its ability to project these inputs accurately on the screen forms the most important attribute for the classification of a projector. Projectors may have different input sources, such as VGA ports r HDMI ports. As elaborated by the applicant, a business/data projector is generally brighter and equipped to deal with a variety of media options. They generally have a low contrast ratio and possess resolution to match computer or laptop screens. Business/data projectors are principally meant for use with an automatic data processing system and are ideal for use in ell-lit places like conference rooms, business meetings, financial institutions etc., with a connection to a computer or a laptop. The subject goods support various computer display standards like WUXGA, UXGA, and SXGA, among others, as is mentioned in the specification table attached. The products have brightness specifications in the range of 3000 to 4000 ANSI lumens. The subject goods have the requisite ports, which enable them to directly connect with a 1 ADP machine and project information from ADP machine, they support connections such HDMI, USB-A. RS-232 and audio out.

2.1 The applicant has compared the subject goods with home theatre projectors or video projectors. It has been stated that unlike business/data projectors, video / home theatre projectors are designed with emphasis on projecting moving images / videos. ‘they generally have a high or very high contrast ratio to support movies. They are characterised by high resolution along with connectors supporting audio and video equipment, and they are optimised for film and TV. Therefore, there are significant variations between the features of a data projector and a video projector. It is stated that the subject devices a ^–e not home theatre projectors. According to the applicant, subject goods are projectors, which a ^.e designed primarily to be used with an automatic data processing system. In support of the above, the applicant has submitted the following case laws: –

i. Sony India Pvt. Ltd. V. Commissioner of Customs and Central Excise, New Delhi, (370) ELT 1774 (Tri-Del).

ii. Aveco Technologies Pvt. Ld. v Commissioner [2018(362)ELT624(Tri-Hyd)] maintained in 2018(362) ELT A164(Supreme Court)

iii. Commissioner of Customs v. Vardha man Technology Pvt. Ltd, (301) ELT 427;

iv. Epson India Pvt. Ltd. v. Commissioner, (366) ELT 847 (Tri-Chennai);

v. Affirmed in Commissioner of Customs vs. M/s. Epson India Pvt. Lid., ELT A173 (SC);

vi.  Acer India Pvt. Ltd. v Commissioner [2009 (11) 7 A41 931-CESTAT Ahmedabad]

2.2 It is informed by the applicant in CAAR-1 form, that none of the models under consideration in the instant application is pending in the applicant’s case before any officer of Customs, Appellate Tribunal or any Court of Law. They have further clarified in respect of Model Nos. PA500S, PS500X (which are not part of the 23 models for which ruling has been presently sought), that at the time of import they wrongly classified the products under tariff heading 85286900, instead of 85286200, and thus missed on availing benefit of Notification No. 24/2005-Cus (Sr. No. 17). On realising their error, they ^–filed an appeal before the Commissioner (Appeals). However, it was rejected without going into the merits of the appeals, en grounds of not maintainable, as the appeal was filed beyond the period of limitation prescribed under the provisions of Customs Act. Against the said Order of Commissioner (Appeals), the Applicant has filed an appeal before the Tribunal, Mumbai and same is pending I^–earing. The applicant is of belief that aforesaid proceedings should not impact their present application, as the features of models in said case are substantially different from those for which ruling has been sought. Further there was neither any Speaking order (Order —in-original) nor any Appellate order in the concern case. The applicant has emphasized that the Projector models under consideration for ruling in the present application are not involved in any dispute/case and have requested for the application to be allowed.

3. The applicant has contended that the subject goods which are capable of projecting image/video reproduced on the screen of a television receiver or a monitor onto an external surface like a projection screen, is classifiable under Chapter heading 8528 of Customs Tariff Act, 1975, and ought to he classified under CTI 8528 62 00. Accordingly, they have r produced the relevant portion of the Customs Tariff and HSN explanatory notes to heading 828 as follows:

HSN explanatory notes of heading 8528 has been reproduced as submitted:

“This heading includes:

(1) Monitors and projectors, not incorporating television reception apparatus.

(2) Television reception apparatus, whether or not incorporating radio-broadcast receivers or sound or video recording or reproducing apparatus, for the display of signals (television sets).

(3) Apparatus for the reception of television signals, without display capabilities (e.g., receivers of satellite television broadcasts).

Monitors, projectors and television sets utilize different technologies, such as CRT (cathode-tube tube), LCD (liquid crystal display), DMD (digital micro mirror device), OLED (organic light-emitting diodes) and plasma, to display images. Monitors and projectors may be capable of receiving a variety of signals from different sources. However, if they incorporate a television tuner they are considered to be reception apparatus for television.”

Further, the applicant has reiterated the term ‘projector’ as explained in the HSN planatory notes,

“(C)Projectors

Projectors enable the image normally reproduced on the screen of a television receiver or of a monitor to be projected on an external surface. They may be based on CRT or flat panel technology.”

3.1  In relation to the above-mentioned device, the questions on which advance rulings have been sought are as follows: –

a. Whether Projectors being imported by the Applicant arc classifiable under the Tariff Item 8528 62 00 of the Customs Tariff of India?

b. If the answers to the above question is in the negative, then what would be the correct classification of the Projectors under the Customs Tariff of India?

c. Whether the duty exemption under exemption Si. No. 17 of Notification 24/2005-Cus be applicable on the import of Projectors?

3.2 The applicant further stated that they are eligible to claim a nil rate of duty on subject goods as per Sr. No. 17 of Notification No. 24/2005-Customs, dated 01.03.2005, as amended.

4. In their CAAR – I form, the applicant has declared that they would import through the jurisdiction of Commissioner of Customs, Mumbai, Zone III, Air Cargo Complex, Mumbai. The application was forwarded to the jurisdictional Commissioner of Customs for comments vide letter dated 20.04.2023. Reminder letters dated 10.11.2023, 21.11.2023 & 11.12.2023 were also forwarded to the Jurisdictional Commissionerate however, no reply has been received.

5. The application was listed for hearing on 21.12.2023. The applicant was represented by Akhilesh Kangsia, Advocate, Apoorva Parihar, Advocate, Chandrashekhar Thakur & Sonali Mote representatives of M/s. Ingrain Micro India Pvt. Ltd. No one appeared either physically or virtually on behalf of the jurisdictional Commissioner. Akhilesh Kangsia, Advocate referred to CAAR-I application and explained how their product/ subject goods arc different from the Video Projector. They explained how their goods merit classification under CTI 8528 6200. They also relied upon the various judgments and CAAR rulings already submitted through their application. In the support of their contention they submitted case law 2022 (9) TMI 690-CESTAT New Delhi and requested that their CAAR application may be considered and ruling may be issued as the ruling is sought of altogether different models, for/against which no dispute is pending.

6. I have considered all the materials placed before me for the subject products. I have gone through the case presentation, written submissions and submissions made by the applicant during the personal hearing, reliance placed on the case laws. The present case needs to be deliberated upon in light of legal framework governed by the Customs Tariff Act, 1975, specifically Chapter 84 & 85, its corresponding Chapter notes, supplementary notes and relevant HSN explanatory notes. No reply has been received from the jurisdictional Commissioner. In the absence of any such comments on the subject matter, I proceed to render advance rulings on the basis of available information, records and judicial proceedings. The issue at hand is to decide the classification of the ‘Projectors’ bearing model numbers as specified in para 1 and the applicability of Sr. No. 17 of Notification No. 24/2005-Customs, dated 01.03.2005, as amended. I find that a projector is an optical device that projects an image/video onto a surface, commonly a projection screen. The idea of a projector is to convert a small image into a much larger one so that a greater number of people can see it. A projector accepts a video/image as an input, processes it with the assistance of its inbuilt optical projection system consisting of a lens and optical source and projects the enhanced output on t e projection screen. Therefore, the compatibility of a projector with input devices, such as a computer, a DVD player, etc. feeding images/videos to it and its ability to project these inputs accurately on the screen forms the most important attribute for the classification of a projector. Based on its application, a projector can be classified as a business/data projector or as a video/home theatre projector. A business projector is generally brighter and equipped to deal with a variety of media options. They generally have a low contrast ratio. They possess resolution to match computer or laptop screens. The video/home projectors are different from business projectors since they are used to project in a small room and small audience with a dark ambience and low/medium lamp brightness. They generally have a high or very high contrast ratio to support movies and gaming projection. They are characterised by high r solution along with connectors supporting audio and video equipment and gaming solutions. They are optimized for film and TV. The critical differences between the two types of projectors can be summarised as below: –

Table 1: Comparison between data projectors under consideration and video projectors

6.1 Rule 1 of the GI Rules lays down that 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. The relevant CTH are reproduced below:

CTH 8528 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.

The third l-dash sub-heading falling under CTH 85286200 covers, “Projectors; capable of directly connecting to and designed for use with an automatic data processing machine of he ding 8471.

CTH 85286900 is a residual entry.

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 recessing such data, not elsewhere specified or included.

Chapter Note 6 (E) to Chapter 84 states that, “Machines incorporating or working in coq’unction with an automatic data processing machine and performing a specific function oth r than data processing are to be classified in the headings appropriate to their respective fun lions.

Therefore, projectors working in conjunction with devices under 8471 will be classified and r heading 8528. The specification for subject goods lists HDTV compatibility standards oft e products, as 480i, 480p, 576i, 576p, 720p, 1080i, 1080p whereas the resolution support is V A (640 x 480) to Full HD (1920 x 1080). Further, the VGA port facilitates connection between the said projectors and laptop/ computer. Therefore, it is evident that the projector in question is designed for use with an automatic data processing machine. In the case of Epson Indi Pvt. Ltd. V. Commissioner reported in 2019 (366) ELT 847 (Tri- Chennai), the Hon’ble Tribunal, Chennai held that the projectors which are principally used for data projection by being connected to either a laptop or a desktop computer shall be eligible to be classified under CTI 85286100 (erstwhile tariff heading for projectors capable of directly connecting to and designed for use with an automatic data processing system of heading 8471).

6.2 The projectors under consideration have got certain additional ports such as HIM, Audi Out, USB-A, RS-232, etc., which make them capable of being a video projector and consequently classifiable under CFI 85286900 also. GI Rule 3 states that “the heading which provides  the most specific description shall be preferred to headings providing a more general description”. From the technical specifications provided by applicant, it is clear that the subject goods are principally meant for use with an automatic data processing system. They arc designed to project in places like conference rooms, business meetings, schools and conferences, financial institutions etc. with connectors matching that of a laptop/ computer. They possess both indoor and outdoor projection capability. The differentiating features of data projectors compared to that of video projectors are discussed in Table 1, which substantiates that the principal use of subject goods, based on functions and features, is with automatic data processing machines. The presence of additional features cannot dis-entitle the goods from classification under sub-heading 85286200. Reliance is placed upon Commissioner of Customs Vs Vardhman Technology Pvt. Ltd., (301) ELT 427, where it was held that the projectors merely having additional function cannot be denied classification under CHI 85286100 (erstwhile tariff heading for projectors capable of directly connecting to and designed for use with an automatic data processing system of heading 8471). Therefore, the goods under consideration are classifiable under sub-heading 85286200.

6.3 As informed by the applicant in CAAR-I form, they had filed an appeal with the Hon’ble Tribunal, Mumbai against Order-in-Appeal no. 114(Gr. VB)/2021(SNCH)/Appeals dated 15.02.2021, in respect of Model Nos. PA500S, PS500X (which arc not part of the 23 models for which ruling has been presently sought). Subsequently, they have communicated that a miscellaneous application seeking withdrawal of the appeal had been filed before the Tribunal. The Hon’ble Tribunal, Mumbai considered the application and accordingly dismissed the appeal as withdrawn, vide CESTAT final order no. A/86066/2023 dated 28. 6.2023.

7. Further, Sr. No. 17 of Notification No.24/2005-Customs, dated 01.03.2005, as amended, exempts all goods of a kind solely or principally used in an automatic data processing system of 8471 and falling under sub-heading 852862. As the subject goods arc held as classifiable under CTI 85286200 and arc principally used in/with automatic data processing system they are entitled to the exemption.

8. In view of the foregoing discussions, I rule that the Data Projector as tabulated in Table-I are classifiable under CTI 85286200 of the first schedule to the Customs Tariff Act, 1975 and would be eligible to avail benefit of Sr. No. 17 of Notification No. 24/2005-Customs, dated 01.0 .2005, as amended.