In re Nikon India Pvt Ltd. (CAAR Delhi)
CAAR held that Nikon Camera Model No. N2120 with standard accessories proposed to be imported by the applicant is correctly classifiable under Sub-heading 85258900 of the First Schedule to Customs Tariff Act, 1975. Also, in terms of, “The Accessories (Condition) Rules, 1963, the said camera along with the standard accessory, if presented together shall be chargeable under the sub heading 85258900. However, any item/accessory, optional in nature, would merit classification in the tariff heading appropriate to it. The benefit vide S. No. 502 of Notification No. 50/2017-Cus. Dated 30.06.2017 is available on import of the aforesaid Nikon Camera Model No. N2120.
FULL TEXT OF THE ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, DELHI
M/s Nikon India Pvt. Ltd., Plot No.-71, Sector-32, Institutional Area, Gurugram, Haryana-122001 having IEC No.0507023927 and PAN-AACCN5100F (applicant, in short) filed an application dated 07.05.2023 before the Customs Authority for Advance Rulings, New Delhi (CAAR, in short), seeking advance ruling under section 28-H of the Customs Act, 1962. The application was accordingly registered under serial number 11/2023 dated 08.05.2023.
2. The applicant, vide the aforesaid application, has sought ruling from CAAR, New Delhi on the question of classification and applicability’ of notification. The applicant has proposed to import Nikon Camera Model No. N2120 (subject goods, in short) as a complete product [i.e. camera body, lens (optional), battery’ and battery charger, Adapter etc.] and stated that, the subject goods have a design concept that is based on the traditional still image cameras with interchangeable lens and a viewfinder along with the shutter release button; the subject goods have a high resolution (45.7million) sensor (with a sensor size of this camera is 35.9mm x 23.9mm); these design elements make the subject goods more suited for still photography; the subject goods in addition to the capturing still images are able to record video for more than 30 minutes in a single sequence, however, maximum video recording capability’ is subject to temperature inside the camera caused by shooting modes, connectivity’ and other usages and storage space available in the internal/external memory. As regards other features, it is also stated inter-alia that, the subject goods do not host any dedicated heat management module in line with its design language; these are made compact and lightweight due to the mirrorless technology it uses; the grip design used in the subject goods is a notable feature for still image cameras; these goods support almost all the essential and extended range of accessories including, but not limited to, speedlights, flash triggers, battery packs, remote controls and other still photographs- related accessories.
3. The questions on which advance ruling has been sought are as follows:-
(a) Whether the subject goods proposed to be imported by the applicant are classifiable under Custom Tariff item 85258900 of the Customs Tariff?
(b) If the answer to question (a) is affirmative, whether the applicant can claim benefit under S. No. 502 of Notification No. 50/2017-Cus. dated 30.06.2017?
(c) If the answer to the question (a) and/ or (b) is in the negative, then, what is the appropriate classification of subject goods when imported along with accessories under the Customs Tariff and/or effective rate of duty under such appropriate classification?
4.1 The applicant has also stated that, they had imported the subject goods earlier for the limited purposes of BIS testing, certification and demo; they had classified the subject goods under Sub-heading 85258900 of the First Schedule to the Customs Tariff Act 1975 and claimed exemption from payment of Customs duties under serial number 502 of Notification No. 50/2017-Cus. dated 30.06.2017; although, the definition of advance ruling, as staled under Section 28E(b), includes questions raised in respect of goods prior to its importation, the applicant submits that such past imports of the subject goods, prior to the filing of this application, does not affect the eligibility of the applicant in terms of the section 28H of the Customs Act, 1962; moreover, the activity of commercial imports of the subject goods by the applicant still remains a ‘proposed activity, past imports of goods do not disqualify the applicant from seeking an advance ruling application pertaining to permissible questions on import of such goods, the same was held by the Hon’ble Delhi High Court in the case of D.R.I. vs. M/s Spraytec India Ltd., 2023/DHC/000367 wherein the relevant extract of the judgement states, In order for a question to be considered as pending before any officer of customs, it would be necessary for the question to be raised in any notice enabling the assessee to respond to the said issue. It is only after this stage that it would be necessary for the officer of customs to render its decision on the question. Merely because an officer of customs contemplates that a question may arise, does not mean that the question is pending consideration. For a question to be stated to be pending, the concerned officer must formally set forth the same for the assessee to contest the same. Any preliminary exercise done by an officer of customs, to consider whether any question for consideration arises, would not preclude the CAAR from giving its advance ruling on that question. The possibility that a question would arise for consideration of a customs officer, appellate tribunal or court, is not a ground contemplated under Clause (a) of the proviso to Section 28-1(2) of the Customs Act. in light of the above, the applicant is satisfying the afore-stated conditions; the applicant in the present case proposes to commercially import subject goods for sale in the Indian market; for the purpose of clearing the subject goods for domestic consumption, it is essential for the applicant to identify the correct classification under which such goods would be cleared and the applicable rate of customs duty thereon; therefore, it flows that in the present case, the applicant satisfies all the three-criteria required for filing the application for advance ruling, namely:-
(a) The applicant possesses a valid IEC number 0507023927;
(b) The application for advance ruling is in relation to clause (a) & (b) of Section 28H(2) of the Customs Act.
(c) The application is not barred under proviso to Section 281 (2) of the Customs Act.
4.2 The applicant has further stated that it is significant to note that the Customs Tariff is based on the Harmonised Commodity Description and Coding System CHSN in short) published by the World Customs Organisation and Explanatory Notes to HSN have long been recognised by the courts as a safe guide to interpret the Customs Tariff; furthermore, it is equally settled principle of law that classification of the goods mentioned in the Customs Tariff is governed by the General Rules for Interpretation of Import Tariff (GRI, in short); as per Rule 1 of GRI. the goods under consideration should be classified in accordance with the terms of the heading or relevant Section or Chapter Notes; therefore. Section Notes and Chapter Notes are relevant for the purposes of determining classification of the goods; moreover, on application of GRI 6 which requires that while interpreting the sub-headings of the tariff for classification, the guidance of the GRls can be applied mutatis mutandis; on application of the aforementioned GRI I, the only relevant heading under the Customs Tariff which covers subject goods and alike having the ability to digitally capture still images and recorded videos, are covered under Customs Tariff Heading 8525 of the Customs Tariff, which reads as “Television Cameras, Digital Cameras and Video Camera Recorders , Sub-heading Note 1 to Chapter 85 defines ‘High-speed’ television cameras, digital cameras and video camera recorders as the one having one or more of the following characteristics:-
– Writing speed exceeding 0.5mm per microsecond;
– Time resolution 50 nanoseconds or less;
– Frame rate exceeding 225,000 frames per second;
similarly, sub-heading Note 2 and 3 of the Customs Tariff defines ‘radiation-hardened tolerant television cameras, digital cameras and video camera recorders and night vision, television cameras, digital cameras and video camera recorders’ in the following manner, “2. In respect of sub-heading 852582, radiation-hardened or radiation-tolerant television cameras, digital cameras and video camera recorders are designed or shielded to enable operation in a high-radiation environment. These cameras are designed to withstand a total radiation dose of at least 50 x 103 Gy(silicon) (5 x 106 RAD (silicon)), without operational degradation; 3. Sub-heading 8525 83 covers night vision television cameras, digital cameras and video camera recorders which use a photocathode to convert available light to electrons, which can be amplified and converted to yield a visible image. This sub-heading excludes thermal imaging cameras (generally sub-heading 8525 89). “; it is important to note that the aforementioned definitions have been inserted into the HSN 2022 as part of Strategic Trade Control (STC) to protect the society from trans-national acquisition of strategic weapons and goods used to develop or deliver them; it can be seen that the subject goods do not satisfy any of the conditions mentioned in Sub-Heading Note 1,2 or 3 of Chapter 85 of Customs Tariff; the applicant submits and undertakes that the subject goods cannot perform the functions of radiation-hardened cameras, high-speed cameras and night-vision cameras; the subject goods are neither designed for the above stated functions nor has the capability of performing these functions; the cameras imported by the applicant are regular consumer goods for use in standard environments and use cases; thus, the subject goods are not classifiable under Sub-headings 85258100, 85258200 and 85258300 of the Customs Tariff; therefore, on application of rule 6 read with rule 1 of the GRI, the subject goods merit classification under the residuary Sub-heading 85258900 of the Customs Tariff, which reads as “Television cameras, digital cameras and video camera recorders: Other”‘, hence, according to the applicant, the subject goods are appropriately classifiable under the Sub-heading 85258900 of the Customs Tariff.
4.3 The applicant has also stated that as per the Customs Tariff, the goods falling under the Sub-heading 85258900 of the Customs Tariff are chargeable to BCD at the rate of 20% ad valorem, prior to the introduction of HSN 2022, the applicant has been claiming exemption from payment of BCD under serial number 502 of Notification No. 50/2017-Cus. for other models of cameras similar to the present camera, however, with the amendment in the Customs Tariff, the afore-stated exemption entries have also been amended; Notification No. 50/2017-Cus. provides for exemption from payment of BCD, if the imported goods fulfil the conditions mentioned in Column (2) and (3) of the Customs Tariff; in this regard, serial number 502 of Notification No. 50/2017-Cus. grants exemption to goods classifiable under Sub-heading 85258900 of the Customs Tariff which satisfy the condition of ‘Digital Still Image Video Cameras other than Camera or Camera Module of cellular mobile phones’: here, it is significant to note that post the introduction of HSN 2022 into the Customs Tariff, vide Notification No. 55/2021-Cus dated 29.12.2021, Column (2) to serial number 502 was changed from b5258020 to ‘85258900’ in essence, at present, serial number 502 of Notification No. 50/2017 provides exemption to (a) goods falling under Sub-heading 85258900; and (b) confirm to the description of’ Digital Still Image Video Cameras other than Camera or Camera Module of cellular mobile phones”, in the present case, the applicant submits that the subject goods are classifiable under Sub-heading 85258900 of the Customs Tariff and accordingly, the subject goods satisfy the condition mentioned in Column (2) to serial number 502 of Notification No. 50/2017-Cus.; on perusal of the preamble to Notification No. 50/2017, it provides that this notification superseded then prevailing notification No. 12/2012-Customs, dated 17-3-2012 except for things omitted before such suppression; at this juncture it is important to note that Notification No. 50/2017-Cus. is a successor notification to Notification No. 12/2012; it carries forward exemptions for majority of the products and the need for a fresh notification was necessitated with the introduction of the GST regime; ‘Digital Still Image Video Cameras’ were identically granted exemption under serial number 428A of Notification No. 12/2012; hence, it would be important to understand the scope of exemption entry under S. No. 428A of Notification No. 12/2012 and apply the same while interpreting S. No. 502 of Notification No. 50/2017; serial number 428A of Notification No. 12/2012 was introduced by virtue of Notification No. 28/2015-Cus dated 30.04.2015; vide this Notification, conditional exemption was granted to ‘Digital Still Image Video Cameras’ under the earlier entry to Notification No. 12/2012 was made unconditional; during this time, Letter DOF No. 334/5/2015-TRU dated 30.04.2015 was issued by the Ld. Joint Secretary, Ministry of Finance providing a summary of changes in Central Excise, Customs and Service Tax rates; vide this TRU Letter, it was provided, “All Digital Still Image Video Cameras (DSC) falling under tariff item 85258020 irrespective of their specification [including the restriction with reference to video recording time] and their parts are being exempted from Basic Customs Duty. S. No. 428A and 429 of notification No. 12/2012-Customs, dated 17-3-2012 as amended by notification No. 28/2015-Customs, dated 30-4-2015 refer”‘, on perusal of the foregoing, vide Letter, the Department clarified that the exemption under S. No. 428A of Nott tea No. 12/2012 (pari materials. No. 502 of Notification No. 50/2017) was to be gran e to all ‘Digital Still Image Video Cameras’ irrespective of their video recording capability; further, reference is also made to the decision in Creative Peripherals Distribution Ltd. v. CC. ACC Mumbai. 2020 (7)TM1 489- CESTAT Mumbai, wherein the Hon ble Tribunal relied upon the decision of the U.S. Court of the International Trade, New York in the case of Sony Electronics, Inc. v. United States, Slip Op 13-153 dated 23.12.2013, held that the ‘Digital Still Image Video Camera, which are electronically capable of recording videos (without any limitation on time) and capture images, are classifiable under the CTI 85258020 (prior to HSN 2022) as ‘digital camera only; it was also held that such cameras would be eligible to exemption from payment of BCD under Notification No. 50/2017 and that the absence of technical conditions in Notification No. 50/2017 will make all digital cameras covered under CTI 85258020 to be eligible for the exemption; in the light of the foregoing discussion, the interpretation given under TRU Letter read with Creative Peripherals (Supra) must govern the scope of S. No. 502 of Notification No. 50/2017; moreover, the restrictive interpretation given under S. No. 13 of Notification No. 25/2005-Cus. dated 01.03.2005 read with Circular No. 32/2007-Cus dated 10.09.2007 will not govern the interpretation of S. No. 502 of Notification No. 50/2017; this is because the scheme of exemption under S. No. 13 of Notification No. 25/2005-Cus is different from S. No. 502 of Notification No. 50/2017; therefore, S. No. 502 of Notification No. 50/2017 will cover all ‘Digital Still Image Video Cameras’ classifiable under CTI 85288900 of the Customs Tariff irrespective of their video recording time; in the present case, the subject goods are capable to capture still images and record videos; thus, the applicant is of the considered view that the subject goods are eligible to claim exemption benefit under serial number 502 of Notification No. 50/2017-Cus.; it is pertinent to note that the applicant has obtained BIS Certification for the subject goods under the category of ‘Digital Cameras’; the categorization of subject goods under this segment further showcases that the subject goods are eligible to claim the exemption benefit; similar to classification, Section and Chapter Notes also act as guiding factor for claiming exemption benefit; Note 3 to Section XVI of Customs Tariff provides that unless otherwise required, the goods must be classified basis their principal function; keeping the aforementioned in mind, the applicant most humbly submits that it used to classify earlier models in the erstwhile Customs Tariff under CTI 85258020 as ‘digital camera’ basis their predominant function to click still images; in the present case, the subject goods can record videos in a single sequence without any limitation subject to storage and device heating; thus, the applicant submits that fresh assessment of eligibility to claim exemption benefit based on principal function of subject goods is necessitated; for this determination, following parameters of the subject goods become necessary to be understood:
