Case Law Details
In re Samsung India Electronics Private Limited (CAAR Delhi)
(A) ‘Self-ordering Kiosks’ imported in disassembled form into India, where Display Unit, Connection Box & Stand would be imported simultaneously, in a single shipment, then `Self-ordering Kiosk’ with components, display unit and connection box will have the essential character of complete or finished article i.e. ‘Cash Register’ and merit classification under Sub-heading 84705010 thereby eligible for exemption vide serial number 7 of Notification No. 24/2005 — Customs, dated 01-03-2005 and ‘Stand’ being an optional accessory, not compulsorily supplied along with other components forming Self-ordering Kiosk’ will merit classification under heading 9403 thereby not eligible for exemption vide serial number 7 of Notification No. 24/2005 — Customs, dated 01-03-2005.
(B) ‘Self-ordering Kiosks’ imported in disassembled form into India, where Display Unit & Connection Box would be imported simultaneously, in a single shipment, then the ‘Self-ordering Kiosk’ with components, display unit and connection box will have the essential character of complete or finished article i.e. ‘Cash Register’ and merit classification under Sub-heading 84705010, thereby eligible for exemption vide serial number 7 of Notification No. 24/2005 — Customs, dated 01-03-2005.
(C) In case, components/parts of ‘Self-ordering Kiosk’ namely (1) Display Unit, (2) Connection Box, (3) Stand, imported on standalone basis in different/separate consignments at different point in time, then display unit or connection box would merit classification under Sub-heading 84732900 thereby eligible for exemption vide serial number 9 of Notification No. 24/2005 — Customs, dated 01-03-2005 and ‘Stand’ will merit classification under heading 9403 thereby not eligible for exemption vide serial number 9 of Notification No. 24/2005 — Customs, dated 01-03-2005.
FULL TEXT OF THE ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, DELHI
M/s. Samsung India Electronics Private Limited, 6th Floor, DLF Centre, Sansad Marg, New Delhi-110001, having IEC No. 0595032818 and PAN- AAACS5123K (applicant, in short) has filed an application dated 10.04.2023, received in this office on 17.04.2203, seeking advance ruling under section 28-H of the Customs Act, 1962 before the Customs Authority for Advance Rulings, New Delhi (CAAR, New Delhi in short). The application was accordingly registered under Serial No. 09/2023 dated 17.04.2023.
2. The applicant vide the aforesaid application has sought ruling on the following questions:-
Question 1: Whether the ‘Self-ordering Kiosks’ imported in disassembled form into India, where Display Unit, Connection Box & Stand would be imported simultaneously, in a single shipment would merit classification under HSN: 8470 5010, as Electronically Operated Cash Register or as an Automatic Data Processing Machine housing a Central Processing Unit, Input Unit & Output Unit in same housing, under HSN: 8471 4190?
Question 2: Whether the ‘Self-ordering Kiosks’ imported in disassembled form into India, where Display Unit, Connection Box & Stand would be imported simultaneously, in a single shipment would be entitled to exemption, specified at serial number 7 of Notification No. 24/2005 — Customs, dated 01-03-2005?
Question 3: Whether the ‘Self-ordering Kiosks’ imported in disassembled form into India, where Display Unit & Connection Box would be imported simultaneously, in a single shipment would merit classification under HSN: 8470 5010, as Electronically Operated Cash Register or as an Automatic Data Processing Machine housing a Central Processing Unit, Input Unit & Output Unit in same housing, under HSN: 8471 4190?
Question 4: Whether the ‘Self-ordering Kiosks’ imported in disassembled form into India, where Display Unit & Connection Box would be imported simultaneously, in a single shipment would be entitled to exemption, specified at serial number 7 of Notification No. 24/2005 — Customs, dated 01-03-2005?
Question 5: Whether components/parts of ‘Self-ordering Kiosk’ namely (1) Display Unit, (2) Connection Box, (3) Stand, imported on standalone basis in different/separate consignments at different point in time, would merit classification under HSN: 8473 2900, as parts of an ‘Electronically Operated Cash Register’?
Question 6: Whether components/parts of ‘Self-ordering Kiosk’ namely (1) Display Unit, (2) Connection Box, (3) Stand, imported on standalone basis in different/separate consignments over a period of time, would be entitled to exemption, specified at serial number 9 of Notification No. 24/2005 — Customs, dated 01-03-2005?
3.1 In this regard, the applicant has stated that, they intend to import ‘Self-ordering Kiosks’ in India for further sale; for such purposes, the ‘Self-ordering Kiosks’ would be imported in disassembled form into India, where Display Unit, Connection Box & Stand would be imported simultaneously, in a single shipment; no processing whatsoever would be carried out on the imported goods, post importation into India.
3.2 Further the applicant has stated that, ‘Self-ordering Kiosks’ are customer-facing products and are increasingly becoming a part of everyday consumer life, from self-checkout to in-store ordering and ticket purchases; ‘Self-ordering Kiosks’ are a quick and efficient way for customers to engage with brands in a personalised way; ‘Self-ordering Kiosks’ provide an innovative way for businesses to renovate their environment and customer experience and to reallocate their resources more efficiently and effectively, allowing staff to focus on other core competencies; the ‘Self-ordering Kiosks’ are primarily designed to facilitate sale of products/services and enable customers to make payments; it allows the end customers to select preferred products or services from a pool of options available; it enables the customers to make payment for sale of products/services at the ‘Self-ordering Kiosk’ itself, without the need of human intervention; ‘Self-ordering Kiosks’ have specific end-use in retail environment; it enables a smart solution to browse products/services and provide multiple payment options for the interest audience of the customer; in addition to sale, the ‘Self-ordering Kiosk’ also maintains a record of sale transactions; further, the display-interface of `Self-ordering Kiosk’ is capable of being customised/freely programmed (in case of Self-ordering Kiosk’s comprising of windows operating system), based on specific needs of the customer; ‘Self-ordering Kiosk’ is capable and suitable for a range of environments such as super-markets, retail stores, cafes, restaurants, health care, theatres etc.
3.3 The applicant has also stated that, the ‘Self-ordering Kiosk’ as a whole, comprises of the following features: (1) QR code/bar code scanner (2) built-in printer (3) near field communication (NFC) (4) touch screen display (5) processor (6) storage unit (7) operating system (8) built-in memory interface (9) capability of being remotely managed; for ease of reference, the image of ‘Self-ordering Kiosk’ is as below-
the ‘Self-ordering Kiosk’ conies with pre-installed operating system and is touch enabled; there are currently 7 models of ‘Self-ordering Kiosk’ proposed to be imported by the them; the display interface of Tizen-operating system is not capable of being freely programmed as per the requirements of the user/customer however, the display interface of Windows-operating system is capable of being freely programmed, per the needs of customer/user; ‘Self-ordering Kiosk’ comprises of 3 main components, namely: (1) Display unit, (2) Connection Box and (3) Stand; the Connection Box comes with a pre-defined bracket, where Display Unit is placed for the Self-ordering Kiosk to start functioning; the use of Stand is optional. depending on the needs of customer.
4.1 The applicant has then stated that the present case satisfies all the conditions stipulated by Rule 2(a) of the General Rules for Interpretation of Import Tariff (GRI, in short); thus, import of ‘Self-ordering Kiosk’ in disassembled form into India, where Display Unit, Connection Box & Stand would be imported simultaneously, in a single shipment would be classified as ‘Self-ordering Kiosk’ in its finished goods state, upon import into India; also Note 6(A) to Chapter 84, defines Automatic Data Processing Machine (ADP) and ‘Self-ordering Kiosk’ may get classified as Automatic Data Processing Machine under Sub-heading 84714190; if machine prima .facie satisfies the criteria stipulated under Note 6(A) to Chapter 84, then it would be treated as an ADP machine; however, Note 6(E) to Chapter 84, provides an exception to the coverage of an ADP machine; the scope of Note 6(E) to Chapter 84, has been extensively discussed in Prasad Corporation v. Commissioner of Customs [2018 (360) ELT 376 (CESTAT)]; on the basis of the judgement in the said matter, it can be concluded that if a machine has elements of an ADP but has been purposefully designed to perform a specific function other than data processing, in such cases Note 6(E) to Chapter 84 would be applicable and the machine would be classified on the basis of the function, which it is designed to perform; the aforesaid position was also reiterated by AAR-Customs, in Sharp Business Systems (India) Limited [2022 (381) ELT 565 (AAR-Cus)]; in the present case, the ‘Self-ordering Kiosk’ has an inbuilt data processing unit; input unit for receipt of data & output unit for conversion of data into dissemination form; however, the ‘Self-ordering Kiosk’ has been designed to not just be a simple ‘data processing machine’; the “Self-ordering Kiosks” perform a specific function of facilitating sale of products/services and enable customers to make payments; it allows the end customers to select preferred products or services from a pool of options available; and it enables the customers to make payment for sale of products/services at the ‘Self-ordering Kiosk’ itself, without the need of human intervention; the ‘Self-ordering Kiosks’ have specific end-use in retail environment and enables a smart solution to browse products/services and provide multiple payment options; therefore, the ‘Self-ordering Kiosk’ performs a specific function other than data processing; Further, the ‘Self-ordering Kiosk’ has been designed to facilitate sale of products/provision of service and enable customers to make payments, without human interface, via an interactive display interface, integrated payment terminals, printing function & Bar-Code/QR Code scanning function; thus, by virtue of Note 6(E) of Chapter 84, the ‘Self-ordering Kiosk’ would not be classifiable as an ADP, under the HSN – 84714190.
4.2 As regards classification of ‘Self-ordering Kiosk’ as Electronic Cash Register under heading 84705010, the applicant has submitted that, as per Explanatory Notes to heading 8470, such heading excludes Data Processing Machines, classifiable under heading 8471; thus, in the context of data processing machines, the heading 8470 & heading 8471 are mutually exclusive; by virtue of Note 6(E) of Chapter 84, the ‘Self-ordering Kiosk’ would not be classified as Data Processing Machine under heading 8471. The applicant has then stated that, the issue of classification of Kiosk came into consideration before American Customs Ruling, in the case of Daniel Vaugeois, Case No. N305909, ruling dated 18-09-2019; the American Authority, after considering all the functions of the aforesaid machine, held that ‘Self-service check-out Kiosk’ would be classified as ‘Cash Register’ under the Sub-heading 8470.50; in the present case, it is reiterated that the ‘Self-ordering Kiosk’ is customer-facing product, it is primarily designed to facilitate sale of products/services and enable customers to make payments; it allows the end customers to select preferred products or services from a pool of options available; it enables the customers to make payment for sale of products /services at the ‘Self-ordering Kiosk’ itself, without the need of human intervention; the `Self-ordering Kiosks’ have specific end-use in retail environment; it enables a smart solution to browse products/services and provide multiple payment options for the interest audience of the customers; therefore. on the basis of specific function performed by ‘Self Ordering Kiosks”, Explanatory Notes to heading 8470 & American Authority’s judgement in Daniel Vaugeois (supra), the ‘Self-ordering Kiosk’ would be classifiable under the Sub-heading 84705010.
4.3 As regards applicability of exemption Notification No. 24/2005 — Customs, dated 01-03-2005, the applicant has stated that, all goods which are classified under the heading 8470, would be entitled to claim exemption from payment of Basic Custom duty; in addition, no other condition has been prescribed for allowing exemption; therefore, import of ‘Self-ordering Kiosk’ in disassembled form into India, where display unit, connection box & stand would be imported simultaneously, in a single shipment, would be classifiable as ‘Electronically Operated Cash Register’ under Subheading 84705010 and would be entitled to exemption stipulated under serial number 7 of Notification No. 24/2005 — Customs, dated 01-03-2005.
5. Comments in the subject application have been received from the concerned Commisionerate wherein it is inter-alia stated that, when the ‘Self-ordering Kiosks’ is imported in disassembled form into India, where Display Unit, Connection Box & Stand would be imported simultaneously, in a single shipment, it appears that the display unit and connection box would merit classification under Sub-heading 84798999, whereas the stand would merit classification under Sub-heading 94032010/94032090; the subject goods do not appear to be classifiable under heading 8470, thus, the goods are not entitled for exemption specified at serial number 7 of Notification No. 24/2005 — Customs, dated 01-03-2005; when the ‘Self-ordering Kiosks’ is imported in disassembled form into India, where display unit and connection box would be imported simultaneously, in a single shipment, it appears that the display unit and connection box would merit classification under Sub-heading 84798999; as the subject goods appears not classifiable under heading 8470, the goods are not entitled for exemption specified at serial number 7 of the Notification No. 24/2005 — Customs, dated 01-03-2005; the components/parts of ‘Self-ordering Kiosk’ namely display unit, connection box and stand, imported on standalone basis in different/separate consignments at different point of time, the part, display unit merit classifiable under Sub-heading 85285900 and the connection box is classifiable under Sub-heading 84798999, in terms of Note 2 (a) to Section XVI of the Customs Tariff Act, 1975, whereas, the stand, being not a part of the `Self-ordering Kiosk’, but is in the nature of optional accessory, would merit classifiable under Sub-heading 94032010/94032090, as the case may be; the components/parts of `Self-ordering Kiosk’ namely display unit, connection box and stand appears to be not classifiable under heading 8470, the said goods are not entitled for exemption specified at serial number 7 of Notification No. 24/2005 — Customs, dated 01-03-2005, when imported on standalone basis in different/separate consignments over a period of time.
6. In response to the comments of the concerned Commissionerate, the applicant vide their letter dated 12.06.2023 has furnished additional submissions, as below on the basis of various features of goods in question vis-a-vis comments of the concerned Commissionerate:
6.1 As regards the opinion of the concerned Commissionerate that main function of `Self-ordering Kiosk’ is to act as “Smart Menu/Smart Signage” and recording of transactions is an ancillary function of the ‘Self-ordering Kiosk’, the applicant has stated that in order to arrive at classification for ‘Self-ordering Kiosk’, the department has relied on Note 6(E), Chapter 84 which states, “(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”. Further, the concerned Commissionerate has stated that a machine whose principal function is ‘Display Function’, is not classifiable under any specific heading, thus, the ‘Self-ordering Kiosk’ would be classifiable under the residual heading of Chapter 84 i.e. 8479 8999 however, the applicant has denied that the principal function of ‘Self-ordering Kiosk’ is ‘display’ function. The applicant further denies that, ‘Self-ordering Kiosk’ can be classified under residual heading of Chapter 84 i.e. 84798999 and ‘stand’ cannot be classified as the `Self-ordering Kiosk’, itself. However, the applicant reiterates that the entire ‘Self-ordering Kiosk’ when imported in disassembled form would be classified as `Electronically operated Cash-register’ under Sub-heading 8470 5010 on the following ground:
(a) ‘Self-ordering Kiosk’ performs twin functions of facilitating sale transactions through an interactive display (enabling the browsing and selection of preferred products) & provision of multiple payment options and maintaining a record of such sale transactions, as and when they occur. In the comments dated 18-05-2023, the concerned Commissionerate has expressed their opinion that the principal function of `Self-ordering Kiosk’ is to display meant as Smart Menu. However, the applicant has stated that, department’s understanding is ill-informed and based on incorrect appreciation of facts, accordingly, it is denied, as the ‘Self-ordering Kiosk’ fulfils twin functions and it contains in-built memory unit, processor, input-output ports which facilitates interface with the customer who is able to select products/services, it intends to buy through the touchscreen and places its order, in the form of inputs through the touchscreen; the customer’s order is processed through an in-built processor; the customer makes payment through these terminals for facilitating payment such as QR Code reader/Credit card reader /Debit card reader and later the details of payment are visually displayed, and a printed receipt is also issued to the customer through an inbuilt printer; during the process of effectuating a sale/supply, a record is simultaneously created and maintained within the memory of ‘Self-ordering Kiosk’ which is stored on the memory of ‘Self-ordering Kiosk’ and is created simultaneously with the sale/supply transaction; accordingly, the principal function of a ‘Self-Ordering-Kiosk’ is to enable/facilitate sale and maintain a record of sale, as and when it occurs, thus, it is eligible to be classified as cash register under Sub-heading 84705010 on the basis of functions performed; on basis of the above, it can be concluded that machines performing a specific function are to be classified in the heading appropriate to the respective function, however, only in cases, where there is no appropriate heading, the machine can be classified under residuary heading. The applicant has placed reliance on the Hon’ble Supreme Court’s judgement in Thermax v. Commissioner of Central Excise [2022 (382) ELT 442 (SC)] and stated that on the basis of judgement in Thermax case, it can be concluded that the additional purpose cannot alter the primary functionality of the product.
6.2 The applicant has contended that the specific function of a ‘Self-ordering Kiosk’ is that of a cash register which is classified under Sub-heading 84705010; in support of such contention referred to the Explanatory Note to heading 8470, which states as under:
“(C) CASH REGISTER
This group comprises cash registers whether or not incorporating a calculating device. These machines are used in shops, offices, etc., to provide a record for all transactions (sales. services rendered, etc.) as they occur, of the amounts involved, the total of the amounts recorded and, in some cases, the code number of the article sold, quantity sold, time of transaction, etc. Data may be introduced either manually by means of a keyboard and a stop, lever or handle, or automatically, e.g., by means of a bar-code reader. Like calculating and accounting machines, some cash registers also have ancillary facilities for the automatic input of recurrent or pre-set data (e.g., card or tape readers). Usually, the result is visually displayed and printed, at the same lime, on a ticket for the customer and on a tally-roll which is periodically removed from the machine for checking purposes. These machines are often combined with a till or drawer in which the cash is kept. They may also incorporate or work in conjunction with devices such as multipliers for increasing their calculating capacity, calculators of change due, automatic change dispensers, trading stamp dispensers, credit card readers, check digit verifiers, or appliances for transcribing all or part of the data on transactions onto data media in coded form. If presented separately, these devices are classified in their respective headings. This heading also covers cash registers working in conjunction, on-line or off-line, with an automatic data processing machine and cash registers which use, for example, the memory and microprocessor of another cash register (to which they are linked by cable) to perform the same functions. This group also includes terminals for electronic payment by credit or debit card. These terminals use the telephone network to connect to the financial institution .for authorisation and completion of the transaction, and to record and issue receipts indicating the amounts debited and credited. “.
The applicant has further stated that on the basis of the explanatory notes, it can be concluded that ‘Self-ordering Kiosk’ satisfies each criteria prescribed therein to be eligible for classification as “Cash Register”. It is reiterated that the terminology ‘record of transactions as they occur’ includes a machine capable of facilitating sale/supply of goods/services and recording of such sale/supply transactions simultaneously. Moreover, functions of ‘Self-ordering Kiosk’ are facilitated through an interactive touch-screen. Therefore, the Self-ordering Kiosk is capable of being classified as Cash Register under Sub-heading 8470 5010.
6.3 As regards classification of ‘Self-ordering Kiosk’ under residual heading, the applicant has stated that in the process of classifying the ‘Self-ordering Kiosk’, the applicant as well as the department have relied on Note 6(E). Chapter 84.– the applicant has also referred to judgement in the case of Commissioner of Customs v. N.I. Systems (India) Private Limited [2010 (256) ELT 173 (SC)] and stated that on the basis of Note 6(E) of Chapter 84 and Supreme Court’s judgement in NI Systems (supra), it can be concluded that a machine must be classified based on the specific ‘function* performed by it. Further, if such specific function is covered by any “appropriate heading” in the HSN, then the machine should be classified in the respective heading. However, if the specific function is not covered by any “appropriate heading.‘ in the HSN, only then it will become eligible to be classified under the residual heading. The applicant has further stated that the Hon’ble Supreme Court in the case of Hindustan Poles Corporation v. Commissioner of Excise [2006 (196) ELT 400 (SC)], has also held that when one particular item is covered by one specified entry, then the Revenue is not permitted to travel to residuary entry and the residuary entry is meant only. .for those categories of goods which clearly. fall outside the ambit of specified entries: given that there is an ‘appropriate heading’ in the form of Cash Register under HSN 8470.50, ‘Self-ordering Kiosk’ cannot be classified under the residual heading, thus, there is no merit in the contention of department that ‘Self-ordering Kiosk’ would be classified under the residual heading 8479.
6.4 As regards exemption vide serial number 7 of Notification No. 24/2005 — Customs, dated 01-03-2005, the applicant has stated that when it has been conclusively established that ‘Self-ordering Kiosk’ is classifiable under Sub-heading 84705010 and all goods which are classified under the heading 8470, would be entitled to claim exemption from payment of Basic Custom duty; therefore, ‘Self-ordering Kiosk’ in disassembled form, where display unit, connection box and stand be imported simultaneously, in a single shipment. would be classifiable as Electronically Operated Cash Register under Subheading 84705010 and would be entitled to exemption stipulated under serial number 7 of Notification No. 24/2005-Customs, dated 01-03-2005.
6.5.1 As regards classification of components/parts of ‘Self-ordering Kiosk’ namely (1) Display Unit, (2) Connection Box, (3) Stand, imported in different consignments at different point of time, under Sub-heading 84732900, as parts of an Electronically Operated Cash Register, the applicant has stated that the concerned Commissionerate has alleged that when ‘Display Unit’ is imported on standalone basis, it would be classified as ‘Monitor’ under Sub-heading 85285900 however they deny such an assertion at the very outset. It is further stated that, the ‘Display-Unit’ of ‘Self-ordering Kiosk’ is capable of being customised/freely programmed based on specific needs of the customer and it hosts the following attributes in a ‘Self-ordering Kiosk’, inter alia: touch-enabled display panel, processor, memory interface, storage unit and operating system, therefore, ‘Display Unit’ of ‘Self-ordering Kiosk’ cannot be classified as a mere monitor under heading 8528 since it is a comprehensive machine which acts as an interface with the customer and performs several functions on its own such as receiving input signals, processing of data, storage of data, hosting the operating system; it is a settled proposition of law that classification must be based on principal function performed by a product, the ancillary function cannot form the basis of such classification; the ‘Display Unit’ is a comprehensive machine which acts as an interface with the customer; it performs several functions on its own such as receiving input signals, processing of data, storage of data, hosting the Operating System; the ‘Display Unit’ collects input-signals and processes data, on its own based on an in-built processer; display of information constitutes merely an intermediate function of the `Display-Unit’ of ‘Self -ordering Kiosks’ and cannot be treated as its main function and therefore, cannot be classified as a mere monitor under heading 8528; similarly, CAAR has upheld the contention in the case of Compuage Infocomm Ltd. [2023 (383) ELT 343 (CAAR)]. The applicant has further stated that rule I of GR1 provides basis for classification of an imported good; the classification shall be determined according to the terms of headings and any relative Section or Chapter Notes; Note 2 of Section XVI, provides principles for classification of parts, when they are imported on standalone basis and it provides, “2. Subject to Note I to this Section. Note 1 to Chapter 84 and to Note I to Chapter 85, parts of machines (not being parts of the articles of heading 8484, 8544, 8545, 8546 or 8547) are to be classified according to the following rules:
(a) parts which are goods included in any of the headings of Chapter 84 or 85 (other than headings 8409. 8431. 8448, 8466, 8473, 8487, 8503 8522, 8529, 8538 and 8548) are in all cases to be classified in their respective headings;
(b) other parts. if suitable, fir use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 8479 or 8543) are to be classified with the machines of that kind or in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate. However, parts which are equally suitable for use principally with the goods of headings 8517 and 8525 to 8528 are to be classified in heading 8517. and parts which are suitable for use solely or principally with the goods of heading 8524 are to be classified in heading 8529;
(c) all other parts are to be classified in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522. 8529 or 8538 as appropriate or, failing that, in heading 8487 or 8548.
The applicant has drawn reference to the heading 8473, the text of which reads as under:
8473 PARTS AND ACCESSORIES (OTHER THAN COVERS, CARRYING CASES AND THE LIKE) SUITABLE FOR USE SOLELY OR PRINCIPALLY WITH MACHINES OF HEADINGS 8470 TO 8472
Thus, upon plain reading of text of heading 8473, parts and accessories which are designed for use solely or principally with machine classifiable under headings 8470 —8472, would always be classifiable under the heading 8473; therefore, in terms of Note 2(b) of Section XVI read with heading 8470 read with rule 1 of GRI, it can be concluded that parts and accessories which are designed for use solely or principally with a machine classifiable under headings 8470 to 8472, would always be classifiable under the heading 8473; as they have proved that ‘Self-ordering Kiosk’ would merit classification as Electronically Operated Cash Register classifiable under the Subheading 84705010; the Display unit being an integral component/part of the ‘Self-ordering Kiosk’, designed to function solely/principally with the ‘Self-ordering Kiosk’; therefore, Display Unit when imported on standalone basis, would be classified as part of machine (classifiable under heading 8470) under the Sub-heading 84732900.
6.5.2 The applicant has stated that while furnishing comments on the application for advance ruling, the concerned Commissionerate has admitted that ‘connection box has been designed solely/principally for use in ‘Self-ordering Kiosk’; further, the concerned Commissionerate has also admitted that classification of ‘connection box’ would be made as per Note 2(a) of Section XVI; however, the concerned Commissioner has stated that ‘connection box’ when imported on standalone basis, would be classified under heading 84798999, which is denied by them, at the very outset; in light of the discussion in foregoing paras, a part which is designed to be specifically used solely/principally with a machine classified under heading 8470 would be classified in the heading 8473, specifically Sub-heading 84732900.
6.5.3 The applicant has also stated that, the concerned Commissionerate has classified `stand’ under Sub-heading 94032010 when imported on standalone basis however they deny such suggestion at the very outset; the ‘stand’ is an accessory of ‘Self-ordering Kiosk’; it is required to be used at commercials places/establishments where ‘Self-ordering Kiosk’ is required to be installed in standing form; it is designed to be used solely/principally with the ‘Self-ordering Kiosk,’; on the basis of Note 2(b) of Section XVI read with heading 8473 read with rule 1 of GRI, the parts & accessories which are designed for use solely or principally with machine classifiable under headings 8470 to 8472, would always be classifiable under the heading 8473; in the present case, as a matter of fact, the ‘stand’ has been designed to be used solely with ‘Self-ordering Kiosk’, where the ‘Self-ordering Kiosk’ needs to be installed in standing form; therefore, ‘stand’ when imported on standalone basis, would be classified as part of machine (classifiable under heading 8470), under Sub-heading 84732900, in terms of the Explanatory notes of heading 8473.
6.6 With regard to question related to applicability of exemption vide serial number 9 of Notification No. 24/2005 — Customs, dated 01-03-2005 on parts of ‘Self-ordering Kiosk’ namely (1) Display Unit; (2) Connection Box, imported on standalone basis, the applicant has stated that, as per the concerned Commissionerate they are not entitled to exemption vide serial number 9 of Notification No. 24/2005 — Customs, dated 01-03-2005, however such assertion is denied; it has been clearly articulated that if either (1) Display unit; (2) Connection Box; (3) Stand, when imported on standalone basis, would merit classification under Subheading 84732900, the exemption stipulated under Notification No. 24/2005 — Customs, dated 01-03-2005, would be applicable.
7. Personal hearing in the subject matter was held on 13.06.2023, wherein the Authorized Representative (AR) of the applicant briefly explained the subject goods which they propose to import; she explained how self-ordering kiosk is an alternative to the human cash register and work as ‘Digital Cash Register’, wherein not only the details of the product are displayed but also a customer can select the product and finally purchase it after completing the transaction. She then discussed questions on classification of the subject goods posed in their application for advance ruling and stated that, as regards importing the Display Unit, Connection box and Stand together in a consignment, the AR is of the view that the correct classification is under CTH 8470 as opposed to the Department’s response, wherein it is opined that the classification of the subject goods would be under CTH 8479 under the residuary category; the department in their comments considered, ‘display’ being the principal function of the machine thus in absence of specific heading, they are classified as residuary machine under CTH 8479; in support of their contention, the AR mentioned that the subject goods not only record all the transaction as they occur but also complete the transaction, working as data processor, as well, hence, the product is Electronic Cash Register and classified under appropriate Sub-heading of heading 8470; as regards the question of importing the components in combination such as display unit and connection box together, the AR pointed out that appropriate classification would again be under CTH 8470 with applicability of exemption under Notification No. 24/2005 because, only due to the logistic reasons, import of the subject goods is in disassembled form which can only be used as self-ordering kiosk on assembling the components after coming to India; lastly, on the question of importing the display unit, connection box and stand on standalone basis in multiple shipments, the AR believe that correct classification is under CTH 8473 as parts of the machine, which is classified under CTH 8470, mentioning that the components can only be used for self-ordering kiosk and not for any other machine; the AR then discussed correctness of their opinion regarding classification in light of rulings of other country and various case laws; the departmental representative reiterated the comments already furnished, in this regard and mentioned that cash register is an additional function and not the principal function; the principal function being the interactive signage thus subject goods are appropriately classifiable under heading 8479; further, on the question raised by the Authority, the AR replied that the applicant has imported a sample shipment however goods in question have not been imported commercially.
8. Finding that the application is valid in terms of the provisions of the Customs Act and the CAAR Regulations, 2021, having heard the applicant, and recognizing the importance of timely pronouncement of rulings, I proceed to examine the question on merits. Further, I note that the applicant has already imported a sample shipment however goods in question have not been imported commercially, thus I intend to issue ruling in the instant application for advance ruling as the same would provide certainty to classification even though, strictly speaking, the application relates to an on-going activity.
9. Since the question under the application for advance ruling relates to classification of goods proposed to be imported, guidance of the Harmonized Commodity Description and Coding System of the World Customs Organization, to which India is a signatory, would be useful.
10.1 Briefly, the applicant has sought ruling on classification and applicability of Notification No. 24/2005 — Customs, dated 01-03-2005, on proposed import of ‘Self-ordering Kiosk’, in disassembled form where its display unit, connection box and stand would be imported, simultaneously, in a single consignment or where its display unit and connection box (without stand) would be imported, simultaneously, in a single consignment or where its display unit, connection box and stand would be imported on a standalone basis, in separate consignments.
10.2 From the application for advance ruling and foregoing paras, I note inter-alia that, ‘Self-ordering Kiosk’ is a multi-functional device, having capability to perform a number of functions; ‘Self-ordering Kiosk’ has been designed to not just be a simple data processing machine but it performs a specific function of facilitating sale of products/services and enable customers to make payments via an interactive display interface; it possesses integrated payment terminals, printing function & bar-code/QR code scanning function; component/part of ‘Self-ordering Kiosk’ i.e ‘connection box’ is its integral part, designed to function solely/principally with it, with a pre-defined bracket, where ‘display unit’ is placed for the ‘Self-ordering Kiosk’ to start functioning and carries out various functions in ‘Self-ordering Kiosk’, inter-alia receipt printer, bar-code reader, QR code reader, payment terminals, wi-fi connectivity, NFC connectivity; component/part of ‘self-ordering kiosk’ i.e ‘display unit’ is an integral component/part, designed to function solely/principally with ‘self-ordering kiosk’ and aids its various functions viz. Touch-enabled display panel, processor, memory interface, storage unit and operating system; ‘stand’ is designed to be used solely with ‘Self-ordering Kiosk’, is also an integral part of ‘Self-ordering Kiosk’ but it is an optional accessory. Further, the applicant has declared that no processing whatsoever would be carried out on the imported goods, post importation into India.
10.3 I also note that, the applicant has sought ruling on the said six questions, vide Question No. 1 and 3, ruling has been sought on classification when ‘Self-ordering Kiosk’ is being imported in dis-assembled form; the only difference in these two questions is that, vide Question No. I , the applicant has sought ruling on classification when three components i.e. display unit, connection box and stand would be imported simultaneously, in a single shipment, in dis-assembled form whereas vide Question No. 3, ruling has sought on classification when two components i.e. display unit and connection box would be imported simultaneously, in a single shipment, in disassembled form.
10.4 Further, I have gone through the comments of the concerned Commissionerate regarding classification of ‘Self-ordering Kiosks’, imported in disassembled form into India, where Display Unit, Connection Box & Stand would be imported simultaneously, in a single shipment or where display unit and connection box would be imported simultaneously, in a single shipment, the display unit and connection box would merit classification under Sub-heading 84798999, whereas the stand would merit classification under Sub-heading 94032010/94032090 and as regards applicability of exemption under Notification under serial number 7 of Notification No. 24/2005 — Customs, dated 01-03-2005, the opinion is in negative. Further, the concerned Commissionerate has opined that the components/parts of ‘Self-ordering Kiosk’ namely display unit, connection box and stand, imported on standalone basis in different/separate consignments at different point of time, the part, display unit merit classifiable under Sub-heading 85285900 and the connection box is classifiable under Sub-heading 84798999, whereas, the stand, being not a part of the ‘Self-ordering Kiosk’, but is in the nature of optional accessory, would merit classifiable under Sub-heading 94032010/94032090, as the case may be; that the components/parts of ‘Self-ordering Kiosk’ namely display unit, connection box and stand appears to be not classifiable under heading 8470, the said goods are not entitled for exemption specified at serial number 7 of Notification No. 24/2005 — Customs, dated 01-03-2005, when imported on standalone basis in different/separate consignments over a period of time.
10.5 While deciding classification in the instant application, it appears that reference to GRI is mandatory and specifically rule 2(a) of GRI keeping in view, that the ‘Self-ordering Kiosk’ is not an automatic data processing machine but a multi-function machine and in the light of the foregoing, it is felt that reference drawn to Note 6(E) of Chapter 84 is relevant for the purposes of classification as the ‘Self-ordering Kiosks’ have specific end-use in retail environment and enables a smart solution to browse products/services and provide multiple payment options; therefore, the ‘Self-ordering Kiosk’ performs a specific function other than data processing; thus, by virtue of Note 6(E) of Chapter 84, the ‘Self-ordering Kiosk’ would not be classifiable as an ADP, under the heading 8471.
10.6 In order to arrive at the classification of ‘Self-ordering Kiosk’ in dis-assembled form, it is pertinent to refer to Explanatory Notes under Harmonized Commodity Description and Coding System of the World Customs Organization, particularly of heading 8470 wherein as regards the item, cash register it is inter-alia stated that these machines are used in shops, offices, etc., to provide a record for all transactions (sales, services rendered, etc.) as they occur, of the amounts involved, the total of the amounts recorded and, in some cases, the code number of the article sold, quantity sold, time of transaction, etc., data may be introduced either manually or automatically, Like calculating and accounting machines, some cash registers also have ancillary futilities for the automatic input of recurrent or pre-set data (e.g., card or tape readers). Usually, the result is visually displayed and printed, at the same time, on a ticket for the customer and on a tally roll. They may also incorporate or work in conjunction with devices such as multipliers for increasing their calculating capacity, calculators of change due, automatic change dispensers, trading stamp dispensers, credit card readers, check digit verifiers, or appliances for transcribing all or part of the data on transactions onto data media in coded form. This heading also covers cash registers working in conjunction, on-line or off-line, with an automatic data processing machine. This group also includes terminals for electronic payment by credit or debit card.
Further, I note that the functions performed by the goods in question are, facilitating sale transactions through an interactive display (enabling the browsing and selection of preferred products), provision of multiple payment options, and maintaining a record of such sale transactions, as and when they occur. Thus, in light of the provision under the said explanatory notes of heading 8470, functions performed by ‘Self-ordering Kiosk’ relates to the features of ‘Cash Register’ in terms of the said explanatory notes.
10.7 I note that rule 2(a) of GRI lays down that, any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished articles has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled. As the applicant intends to import, ‘Self-ordering Kiosk’ in dis-assembled form wherein either three components, display unit, connection box and stand or two components, display unit and connection box will be imported simultaneously, in a single shipment, I note that the applicant has declared that ‘Stand’ is an optional accessory. Since the item, ‘Stand’ is an optional accessory, ‘Self-ordering Kiosk’ with components, display unit and connection box will have the essential character of complete or finished article i.e. ‘Cash Register’. Thereby, components, ‘Stand’ being an optional accessory will merit classification under the heading appropriate to it. In this regard, I note that ‘The Accessories (Condition) Rules, 1963’ provides under rule 2, ‘Accessories of and spare parts and maintenance or repairing implements for, any article, when imported along with that article shall be chargeable at the same rate of duty as that article, if the proper• officer is satisfied that in the ordinary course of trade:
(i) such accessories, parts and implements are compulsorily supplied along with that article; and
(ii) no separate charge is made for such supply, their price being included in the price of the article.
10.8 In light of the foregoing, ‘Display Unit’ is a comprehensive component/part which acts as an interface with the customer and performs several functions on its own; moreover, Connection Box facilitates payments against sale of products; it is an integral part in functioning of ‘Self-ordering Kiosk’. Further, both, ‘Display Unit’ and `Connection Box’ are designed to function solely/principally with the ‘Self-ordering Kiosk’. In view of the observations, I am of the view that ‘Self-ordering Kiosk’ imported in disassembled form into India, where display unit, connection box are imported simultaneously, in a single shipment, would be classifiable under Sub-heading 84705010 and will be entitled for exemption stipulated under serial number 7 of Notification No. 24/2005 — Customs, dated 01-03-2005. Where ‘Self-ordering Kiosk’ imported in disassembled form into India, where display unit, connection box are imported simultaneously, in a single shipment along with ‘Stand’, then in terms of rule 2(a) of GRI, as presented, ‘Display Unit’ and ‘Connection box’, the incomplete or unfinished articles has the essential character of the complete or finished ‘Self-ordering Kiosk’ or ‘Cash Register’. ‘Stand’ being an optional accessory, not compulsorily supplied along with other components forming ‘Self-ordering Kiosk’, simultaneously in a single shipment, will merit classification under the heading appropriate to it under heading 9403, in terms of rule I of GRI.
11. As regards, applicability of exemption vide Notification No. 24/2005 — Customs, dated 01-03-2005 on import of different goods in terms of questions posed for advance ruling, it is noticed that under serial number 7 of the said notification, all goods falling under heading 8470 are exempt from whole of duty of Customs leviable thereon under the First schedule of the Customs Tariff Act, 1975 and under serial number 9 of this notification all goods falling under Sub-heading 84732100 or 84732900 are exempted. Thus, exemption from customs duties under serial number 7 and 9 is based on the classification of goods under said heading and Sub-heading respectively.
12. As regards classification of components/parts of ‘Self-ordering Kiosk’ namely (1) Display Unit, (2) Connection Box, (3) Stand, imported on standalone basis in different/separate consignments at different point in time, it has already been discussed that ‘Display Unit’ is a comprehensive component/part which acts as an interface with the customer and performs several functions on its own; moreover, Connection Box facilitates payments against sale of products; it is an integral part in functioning of `Self- ordering Kiosk’. Further, both, ‘Display Unit’ and ‘Connection Box’ are designed to function solely/principally with the ‘Self-ordering Kiosk’. Thus, Display Unit or Connection Box, imported on standalone basis would merit classification under Subheading 84732900 in terms of Note 2(b) of Section XVI read with heading 8470 read with rule 1 of GRI thereby concluding that parts and accessories which are designed for use solely or principally with a machine classifiable under headings 8470 — 8472, would be classifiable under the heading 8473. and ‘Stand’ would merit classification under heading 9403, classification of ‘Stand’ at the Sub-heading level would depend upon its constituent material and end-use.
13. In light of the foregoing paras, 1 rule as under:
(A) ‘Self-ordering Kiosks’ imported in disassembled form into India, where Display Unit, Connection Box & Stand would be imported simultaneously, in a single shipment, then `Self-ordering Kiosk’ with components, display unit and connection box will have the essential character of complete or finished article i.e. ‘Cash Register’ and merit classification under Sub-heading 84705010 thereby eligible for exemption vide serial number 7 of Notification No. 24/2005 — Customs, dated 01-03-2005 and ‘Stand’ being an optional accessory, not compulsorily supplied along with other components forming Self-ordering Kiosk’ will merit classification under heading 9403 thereby not eligible for exemption vide serial number 7 of Notification No. 24/2005 — Customs, dated 01-03-2005.
(B) ‘Self-ordering Kiosks’ imported in disassembled form into India, where Display Unit & Connection Box would be imported simultaneously, in a single shipment, then the ‘Self-ordering Kiosk’ with components, display unit and connection box will have the essential character of complete or finished article i.e. ‘Cash Register’ and merit classification under Sub-heading 84705010, thereby eligible for exemption vide serial number 7 of Notification No. 24/2005 — Customs, dated 01-03-2005.
(C) In case, components/parts of ‘Self-ordering Kiosk’ namely (1) Display Unit, (2) Connection Box, (3) Stand, imported on standalone basis in different/separate consignments at different point in time, then display unit or connection box would merit classification under Sub-heading 84732900 thereby eligible for exemption vide serial number 9 of Notification No. 24/2005 — Customs, dated 01-03-2005 and ‘Stand’ will merit classification under heading 9403 thereby not eligible for exemption vide serial number 9 of Notification No. 24/2005 — Customs, dated 01-03-2005.