Follow Us :

Case Law Details

Case Name : In re Compuage Infocom Limited (CAAR Mumbai)
Appeal Number : Ruling Nos. CAARJMum/ARC/15/2022
Date of Judgement/Order : 03/06/2022
Related Assessment Year :

In re Compuage Infocom Limited (CAAR Mumbai)

CAAR held that Creative Touch 5-series Interactive Flat Panel (IFP) (Model-5652RK, 5752RK, 5862RK) merit classification under sub heading 8471 4190 of the first schedule to the Customs Tariff Act, 1975.

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

M/s. Compuage Infocom Limited (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 11.04.2022 along with its enclosures in terms of Section 28H (1) of the Customs Act, 1962 (hereinafter referred to as the ‘Act’). The applicant is seeking advance ruling on the classification of Creative Touch 5-series Interactive Flat Panel (IFP) (Model-5652RK, 5752RK, 5862RK) which they intend to import.

2. The applicant indicated that they propose to import Creative Touch 5-series Interactive Flat Panel (IFP) (hereinafter referred to as the ‘subject item’) from China. The subject goods are an all-in-one (AIO) computer systems, functioning like a large size tablet computer, and has an inbuilt Mother Board, MT9950 (Quad Core A73) Micro Processor (CPU), Quad-core Mali G52 Graphics Card, 4GB RAM, and 32 GB SSD Storage. It also has an embedded Android system pre-loaded with Android, .9.0 (Oreo) Android Operating System (OS). The applicant is of the view that the subject goods are classifiable under CTH 8471 4190. They intend to import the said goods from China through the entry points of seaports/airport at Chennai, Nhava-Sheva, Mumbai, New Delhi and Kolkata. Accordingly, comments from the following jurisdictional Principal Commissioners/Commissioners of Customs were invited.

(i) Commissioner of Customs, Sea Port, Chennai 600 001

(ii) Commissioner of Customs, Air Port, Chennai 600 027

(iii) Commissioner of Customs, Nhava Sheva, Maharashtra 400 707

(iv) Commissioner of Customs, Air Port, Mumbai 400 059

(v) Commissioner of Customs, Air Port, Delhi 100 037

(vi) Commissioner of Customs, Sea Port, Kolkata 700 001

(vii) Commissioner of Customs, Air Port, Kolkata 700 001.

3. The applicant has submitted a detailed write up describing the functions and utilities of the subject goods proposed to be imported by them. It is submitted that the subject goods is an all-in-one (AIO) computer systems, functioning like a large size tablet computer, having central processing unit, mother board, graphic card, in-built 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 offer 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 notes for later viewing or sharing. It is submitted that the Panel has an “Embedded Android system” preloaded with Android 9.0 (Oreo) Android Operating System (OS), which delivers incredible software functionality, including a 4K-optimized user interface. 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 product has two variants in this Optional Module

(i) OPS2-15, which consists of Quad-core Intel Core i5 8250U Micro Processor (CPU), 8 GB DDR4 RAM, Intel UHD Graphics 620 Graphics Card and 128GB SSD; and

(ii) OPS2-17, which consists of Quad-core Intel Core i7 8550U Micro Processor (CPU), 8 GB DDR4 RAM, Intel UHD Graphics 620 Graphics Card and 256GB SSD.

In addition, the panel provides enhanced protection via programmable PIN code and USB port disable, thereby ensuring that the Optoma 5-series IFP is safe and secure for any environment.

4. The jurisdictional commissionerate of Nhava Sheva-V, in their comments vide letter dtd. 25.04.2022, has informed that in a similar case speaking orders have been issued to M/s. Cloudwalker Streaming Technologies who had filed bill entry no. 3846255, dated 06.05.2021 for clearance of goods declared as “interactive intelligent panel (Automatic Data processing Machine) Model: Cloudtouch” under CTH 84714190. The declared classification was disputed by the department and classification of the goods were reassessed to CTH 85285900. Accordingly, speaking order no. 308/2021-22/DC/Gr.-V/NS-VaNCH, dated 07.06.2021 was issued to the importer. The importer filed an appeal against the said speaking order and CESTAT vide order No. A/87407/2021, dated 03.12.2021 has set aside the speaking order and the appeal of M/s. Cloudwalker Streaming Technologies was allowed.

However, it is informed that the department has decided to file a SLP before the Hon’ble Supreme Court against the CESTAT order No. A/87407/2021, dated 03.12.2021.

5. The applicant, through their advocates, have submitted their rejoinder to the department’s comments. It has been submitted that the main crux of the department’s objection is that the goods, viz. interactive intelligent panel does not have the functionality of an automatic data processing machine as defined in chapter note 5(a) of chapter 84 of the customs tariff. It is further contented that in terms of note 5(e) to chapter 84 of the customs tariff, 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 a residual heading. Accordingly, it has been submitted by the department that the goods in question are mainly display devices incorporating and working in conjunction with an ADP machine, and therefore, the primary function of the goods is to display the given input data/images/pictures/videos etc. in this regard, it is submitted by the applicant that chapter note 5(A) and the HSN explanatory notes to CTH 84.71 provide what should constitute an ADP machine. According to the aforesaid chapter note on ADP machine 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 impugned goods are IFP having an in­built Mother Board, MT9950 (quad core A73) microprocessor (CPU), Quad-core Mali G52 Graphics Board, MT9950 (Quad Core A73) Micro Processor (CPU), 4GB RAM. In addition, they also have an internal storage capacity of 32GB. Thus, according to the applicant: –

(i) IFPs are machines which are capable of storing data or programmes for the execution of programmes and satisfi, condition no. (i) of Chapter Note 5(A) to Chapter 84.

(ii) IFPs are machines on which the user is able to load and execute a program. In other words, they are capable of executing any application/ program which is stored on their 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, IFPs 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.

(iii) These are capable of performing arithmetical computations depending on the input provided by the user. Thus, the requirements of condition (iii) of Chapter Note 5(A) to Chapter 84 is met.

(iv) A user can give a command 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.

(v) As all the four essential conditions contained in Note 5(A) to Chapter Note 84 are satisfied, the IFPs therefore, qualify as ADP machine classifiable under CTH 84 71. They 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

(vi) The IFPs are capable of working as ADP machine on a standalone basis and can also be used in conjunction with other ADP machines, but this would not mean that they would cease to be ADP machines in their own right, capable of working on a standalone basis. The large size display (65inches, 75 inches and 86 inches) is only a feature / specification of the product and this cannot be construed to be its function, much less its principal function. The department, therefore, committed an error in contending that the large size of display would mean that the IFPs are meant for display purpose to a large gathering and, therefore, in terms of Note 5(E) of Chapter Note 84, they would merit classification as per the specific use.

(vii) In terms of chapter notes 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 ADP machines, video camera or recorder. Such monitors do not have the 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.

(viii) The devices under consideration, on the other hand, are much more than meredisplay devices and, therefore, cannot be classified under CTH 8528 as monitors. The HSN Explanatory Notes to CTH 8528 also mention that the viewable image sizes of the monitors do not generally exceed 30 inches and that they usually cannot be operated by a remote control. In the present case, the display sizes are of 65 inches, 75 and 86 inches and do have a remote control. Therefore, classification under CTH 8528 is not —-.

6. Personal hearing in the matter was held on dtd. 24.05.2022 in virtual mode. Shri. Hari Radhakrishnan, Adv. represented the applicant and stated that they have received the comments of jurisdictional commissionerate and have submitted their rejoinder to it. He explained their rejoinder in detail, highlighting the fact that the comments of the jurisdictional commissionerate is generalised and is primarily because of their decision to file SLP in the Cloudwalker Streaming case in the Supreme Court against the order of Bombay bench of the Tribunal. No one represented the jurisdictional commissioner of customs in the hearing.

7. From the comments of the jurisdictional commissioner it emerges that in case of import of a similar item by M/s. Cloudwalker Streaming Technologies wherein the import documents for clearance of goods declared as “interactive intelligent panel (Automatic Data Processing Machine) Model: Cloudtech” under CTH 84714190, said goods were subjected to re-assessment vide speaking order no. 308/2021-22/DC/Gr-V/NS-WINCII, dated 07.06.2021 and classified under CTH85285900. Aggrieved by the said order, the importer filed an appeal before the Hon’ble CESTAT, which set aside the speaking order vide order no. A/87407/2021, dated 03.12.2021 and the appeal of M/s. Cloudwalker Streaming Technologies was allowed. Now, a decision has been taken to file an SLP before the Hon’ble Supreme Court against the order of the CESTAT. The proviso(b) to the section 28-1 (2) provides that the authority shall not allow the application where the question raised in the application is —

“(a) already pending in the applicant’s case before any officer of customs, the Appellate Tribunal or any Court”

As such it appears that there is no case pending in the applicant’s case before any officer of customs/tribunal/court. Therefore, I find no encumbrance in taking up the present application for rendering an advance ruling.

8. From the submission of applicant as well as the information available from open source, the subject item, namely Creative Touch 5-Series Interactive Flat Panel (IFP), is described as an ADP machine consisting of an integrated system with Central Processing Unit, Mother Board, Graphic Card, Memory (RAM + Storage), graphic processing unit, touch screen as virtual key board as an input device and video display unit as an output device, all in one place, within the display’s body. The subject item typically come loaded like a tablet computer system, with a mobile operating system and touch screen display processing circuitry, and can be used with either of the operating systems, i.e., mobile operating system. like Android 9.0 (Oreo) and/or desktop operating systems like Microsoft Windows, Apple Mac and Chrome OS. It has been suggested that the subject item merits classification under sub heading 84714190 as it satisfies all the requirements as mandated under Note 5 (A) to Chapter 84 of Customs Tariff Act, 1975 i.e., the machine is capable of: –

(i) storing the processing program 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.

It is further submitted that the subject item ” Creative Touch 5-Series Interactive Flat Panel”, has the necessary hardware memory (RAM+ Storage – SSD), in which the operating system as well as other software programs are stored to execute the data processing process, thereby satisfying the condition 5(A)(i) of the chapter notes. The software loaded in the IFP being freely programmable in accordance with the requirements of the user, fulfils the condition 5(A)(ii) of the chapter notes. Creative Touch 5-Series Interactive Flat Panel, performs arithmetical computations specified by the user which satisfies the condition 5(A)(iii) of the chapter notes. And it has a processing program, which makes it capable of modifying their execution by logical decision during the processing run, satisfying the condition 5(A)(iv) of the chapter notes.

9. I have considered all the materials placed before me in respect of the subject item for which an advance ruling has been sought. I have gone through the written submissions as well as the points made during personal hearing. The subject item for which advance ruling has been sought, its characteristics, functionality and utility etc. are discussed in detail in the previous paras. The issue involved is whether the impugned goods, namely ‘Creative Touch 5-series Interactive Flat Panel’ can be considered as ADP machines.

Heading 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 FNCLUDED.

8471 41 — Comprising in the same housing at least a central processing unit and an input and output unit, whether or not combined.

The digital data processing machines of this heading must be capable of fulfilling simultaneously the conditions laid down in Note 6 (A) (a) to this Chapter. That is to say, they must be 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.

Creative Touch 5- series Interactive Flat panel (IFP) merit classification under CTH 8471

Thus, 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. The digital data processing machines have storage capability and also stored programs which can be changed from job to job. Digital machines process data in coded form. A code consists of a finite set of characters (binary code, standard six-bit ISO code, etc.). The data input is usually automatic, by the use of data media such as magnetic tapes, or by direct reading of original documents, etc. There may also be arrangements for manual input by means of keyboards or the input may be furnished directly by certain instruments (e.g., measuring instruments). The input data are converted by the input units into signals which can be used by the machine, and stored in the storage units. Part of the data and program or programs may be temporarily stored in auxiliary storage units such as those using magnetic discs, magnetic tapes. etc. But these machines must have a main storage capability which is directly accessible for the execution of a particular program and which has a capacity at least sufficient to store those parts of the processing and translating programs and the data immediately necessary for the current processing run. Digital data processing machines may comprise in the same housing, the central processing unit, an input unit (e.g., a keyboard or a scanner) and an output unit (e.g., a visual display unit), or may consist of a number of interconnected separate units. In the latter case, the units form a “system” when it comprises at least the central processing unit, an input unit and an output unit.

10. As discussed above, a complete digital data processing system must comprise, at least:

(1) A central processing unit which generally incorporates the main storage, the arithmetical and logical elements and the control elements; in some cases, however, these elements may be in the form of separate units.

(2) An input unit which receives input data and converts them into signals which can be processed by the machine.

(3) An output unit which converts the signals provided by the machine into an intelligible form (printed text, graphs, displays, etc.) or into coded data for further use (processing, control, etc.).

Two of these units (input and output units, for example) may be combined in one single unit. Two or more of these systems may be interconnected, thus constituting, e.g., a local area network (LAN). These systems may include remote input or output units in the form of data terminals. Such systems may also include peripheral units, apart from the input or output units, designed to increase the capacity of the system, for instance, by expanding one or more of the functions of the central unit.

11. From the above considerations, it fairly comes out that the following conditions of Note 6 (A) to Chapter 84 of Customs Tariff Act, 1975 are fulfilled: –

(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.

Open-source information as well as the submissions of the applicant portrays the subject item as an A10 which is a fully functional ADP machine that operates without restrictions. The AIO is equipped with hardware and software that allow it to perform, without artificial constraints, general computing tasks, where users are free to add or remove applications of their choosing. In a similar matter, the principal bench of CESTAT, New Delhi, in FINAL ORDER NO. 50076-50077/2022 in CUSTOMS APPEAL NO. 50708 OF 2021 with CUSTOMS APPEAL NO. 50709 OF 2021 appeal filed by M/s. Ingram Micro India have held that goods would merit classification under CTI 8471 41 90 as claimed by the appellant and not under CTI 8528 52 00 as claimed by the department.

“The issue in both the appeals is regarding classification of the goods namely N (ViewBoard) ViewSonic IFP6550-2/65″ Interactive Display System; and (ii) (ViewBoard)-ViewSonic-IFP7550-2/75″ Interactive Display System. The appellant claims that the classification would be under Customs Tariff Item 3 8471 41 90, though, earlier at the time of self-assessment, the appellant had claimed it to be under CTI 8471 90 00. The Department claims that it should be under CTI 8528 52 00. The Deputy Commissioner rejected the self-assessment done by the appellant under CTI 8471 90 00 and ordered for re-assessment of the goods under CTI 8528 52 00. The case set up by the appellant at the time of assessment was that the goods were Automatic Data Processing Machines and not Monitors and, therefore, classifiable under CTI 8471 90 00 and not under CTI 8528 52 00. At the appellate stage, the appellant contended, on a re­consideration of the matter, that the goods were more specifically and correctly classifiable under CTI 8471 41 90.”

12. In the past also, for a similar item viz., “Creative Touch 5-series Interactive Flat Panel (IFP)” vide Ruling No. CAAR/Mum/ARC/04/2022 dtd. 02/02/2022 I have ruled that the subject goods merit classification under CTH 8471 and I do not find any reason to deviate from the same. Therefore, in view of my aforesaid discussions, I rule that Creative Touch 5-series Interactive Flat Panel (IFP) (Model-5652RK, 5752RK, 5862RK) merit classification under sub heading 8471 4190 of the first schedule to the Customs Tariff Act, 1975.

Join Taxguru’s Network for Latest updates on Income Tax, GST, Company Law, Corporate Laws and other related subjects.

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Post by Date
June 2024
M T W T F S S
 12
3456789
10111213141516
17181920212223
24252627282930