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Case Law Details

Case Name : In re Audio Distribution House Pvt. Ltd (CAAR Mumbai)
Appeal Number : CAAR/Mum/ARC/16/2022
Date of Judgement/Order : 08/06/2022
Related Assessment Year :
Courts : CAAR

In re Audio Distribution House Pvt. Ltd (CAAR Mumbai)

CAAR held that projectors Optoma X309ST, Optoma X319ST, Optoma W319ST, Optoma ZW350 and Optoma ZX300 are classifiable under sub-heading 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 01.03.2005, as amended.

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

Ruling

M/s. Audio Distribution House Pvt. Ltd. filed an application on 22.04.2022 seeking advance rulings on the classification of data projectors Optoma X309ST, Optoma X319ST, Optoma W319ST, Optoma ZW350, Optoma ZX300 and applicability of Sr. No.17 of Notification No. 24/2005-Customs, dated 01.03.2005, as amended.

2. The applicant is a registered private limited company engaged in the trading business. They intend to import data projectors mentioned in para I from China. As per the applicant, the subject goods are data projectors used in schools, business meetings, and conferences, and are principally meant for use with an automatic data processing system. They are designed to function in places like conference rooms, business meetings, financial institutions, etc., with a connection to a computer or a laptop. In other words, the subject goods are stated to be designed to enable them to function in well-lit places. The model ZW 350 has a resolution of 1280 x 800 (WXGA), while all other models have a native resolution of 1280 x 768 (XGA). These products support various computer display standards like XGA and WXGA. The products under consideration have brightness specifications in the range of 3500-4000 ANSI lumens. The contrast ratio of the projectors ranges from 20000:1 to 25000:1. The native aspect ratio of the products in question is 4:3. The applicant stated that though in respect of the models, W319ST, ZW350 and ZX300, the aspect ratio can be enhanced to 16:9 or 16:10, the default aspect ratio for its effective functioning is 4:3 and the enhancement capability is only superficial. These devices support connections such as HDMI, VGA-in/out, composite, audio-in/out, USB-A and RS232. They have proposed CTH 85286200 as an appropriate classification, which mentions projectors capable of connecting to an automatic data processing system.

2.1 The applicant has compared their devices with home theatre video projectors, classifiable under CTH 85286900. A home theatre projector generally supports high resolution (4K UHD 3840*2160). They are characterised by high contrast ratio in the range of 100000: lto 1200000:1 and possess a native aspect ratio of 16:9. Therefore, there are significant variations between the features of a data projector and a video projector. It is stated that impugned devices are not home theatre projectors. According to the applicant, subject goods having additional features of HDMI port, composite S-Video port, etc., are data projectors, which are designed primarily to be used with an automatic data processing system. In support of the above, the applicant has submitted the following case laws:

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

Commissioner of Customs v. M/s. Epson India Pvt. Ltd., ELTA173 (SC);

Commissioner of Customs v. Vardhman Technology Pvt. Ltd., (301) ELT 42;

M/s. Casio India Co. Pvt. Ltd, V. Commissioner of Customs, (Tribunal Delhi), vide Final order dated 55283/2016;

Sony India Pvt. Ltd. V. Commissioner of Customs and Central Excise, New Delhi, (370) ELT 1774 (7’ri-Del).

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

3. In their CAAR – I form, the applicant has declared that they would import through the jurisdiction of Principal Commissioner/Commissioner of Customs, Mumbai, Zone II. The application was forwarded to the jurisdictional Commissioner of Customs for comments. However, no reply has been received, though reminders have also been sent.

Optoma data projectors classifiable under sub-heading 85286200

4. The application was listed for hearing on 24.05.2022. The applicant was represented by Shri Hari Radhakrishnan. No one appeared on behalf of the jurisdictional Commissioner. Shri Radhakrishnan explained the features of five models of data projectors proposed to be imported by them. He explained that in respect of the 3 models, the user can change the aspect ratio as per their requirements. He explained that the brightness and contrast features of these models are that of data projectors and not video projectors.

5. I have considered all the materials placed before me for the subject products. I have gone through the submissions made by the applicant during the personal hearing. No reply has been received from the jurisdictional Commissioner. In the absence of any such comments on the impugned subject matter, I proceed to render advance rulings on the basis of available information. The issue at hand is to decide the classification of the data projectors Optoma X309ST, Optoma X319ST, Optoma W319ST, Optoma ZW350, Optoma ZX300 and the applicability of Sr. No. 17 of Notification No. 24/2005-Customs, dated 01.03.2005, as amended. 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 the 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 falling under CTH 85286900 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 resolution 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

Sr. No. Feature Data Projector
(Product Catalogue)
Video Projector (Normal range) Remarks
1. Native
Aspect
Ratio
X309ST-4:3;
X319ST-4:3;W319ST-4:3, 16:9, 16:10;ZW350-4:3, 16:9,16:10, LBX;ZX300-4:3, 16:9,16:10, LBX.
16:9 A projector’s aspect ratio refers to the ratio between its width and height. 16:9 is the standard aspect ratio of Blu-ray discs and HDTV signals. It is the only widescreen aspect ratio     natively supported by DVDs. Most home theatre projectors  employ this    aspect   ratio.
Business projectors usually have an aspect ratio of 4:3, as this is more suitable for  documents  and presentations. Though in respect of the models, W319ST, ZW350 and ZX300, the aspect ratio can be enhanced to 16:9 or 16:10, the basic aspect ratio for their effective functioning is 4:3  and the ability to adjust the aspect ratio to 16:9/16:10 is for adaptability purpose.
2. Native Resolution X309ST-1024*768; X319ST-1024*768; W319ST-1280*768; ZW350-1280*800; ZX300-1024*768. 3840*216 0 Resolution refers to the number of lines of an image displayed on the screen. The greater the   resolution,  better is the picture quality. The resolution range in data projectors is less as compared to video projectors. As seen, the projectors under consideration have a low native resolution.
3. Contrast Ratio X309ST-25000:1; X319ST-25000:1; W319ST-20000:1; ZW350-25000:1; ZX300-25000:1. 100000:1 to 1200000:1 This indicates the difference between the brightest and darkest colours. It is higher in video projectors as compared to data projectors. The impugned devices have a low contrast ratio.
4. Brightness in lumens X309ST-3700;

X319ST-3900;

W319ST-4000;

ZW350-3500;

ZX300-3500.

1800 to 2400 Data projectors are generally much brighter than video projectors as they are designed to fill much larger spaces. Also, they are usually equipped to deal with rooms with more ambient light. A video projector does not need such brightness.  The devices under consideration have high brightness.

5.1  Rule I 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 CTHs 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 1-dash sub-heading covers projectors. CTH 85286200 covers projectors; capable of directly connecting to and designed for use with an automatic data processing machine of heading 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 processing such data, not elsewhere specified or included. Chapter Note 5 (E) to Chapter 84 states that 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. Therefore, projectors working in conjunction with devices under 8471 will be classified under heading 8528. The product data sheet lists computer graphics compatibility standards of the product, namely, UXGA, WXGA, SXGA, XGA, SVGA, VGA and Mac. Further, the VGA port facilitates the connection between the said projector and a 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 India 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 CTH 85286100 (erstwhile tariff heading for projectors capable of directly connecting to and designed for use with an automatic data processing system of heading 8471).

5.2  The projectors under consideration have got certain additional ports such HDMI, S-Video, audio-video, which make them capable of being a video projector and consequently classifiable under CTH 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”. The websites, https://www.optomausa.com/ and https://www.optoma.com/in/product/x319ust/ , of the manufacturer of the impugned devices were referred to understand how these projectors are marketed by the manufacturer. These are listed under the business/education/professional category of projectors on the said website. The product descriptions present on the website are reproduced here:

X309ST: Project bright and vibrant presentations effortlessly any time of day. Designed for small meeting rooms and classrooms, this short-throw projector boasts amazing colour, a long lamp life and energy saving features for a lower overall cost of ownership. Multiple inputs, USB power and a built-in speaker provide an easy set-up – perfect for connecting to laptop, PC or Blu-ray player for clear projected images with sound.

X319ST: The X319ST, is perfect for businesses, schools and colleges. It is bright (3000 lumens) and uses a new generation of TouchBeam finger-touch interactive technology, enabling several people to work simultaneously on the screen without using a pen.

W319ST: Project bright vibrant presentations effortlessly any time of day. Designed for small meeting rooms and classrooms, this short throw projector boasts Amazing colour, long lamp life and energy-saving features to provide you with a low overall cost of ownership. Multiple inputs, USB power and a built-in speaker provide an easy set-up – perfect for connecting to laptop, PC or Blu-ray player for clear projected images with sound.

ZW350: Designed for maintenance-free continuous operation, it can be installed in virtually any orientation. The ZW350 is geared for medium-sized exhibition venues, events, tradeshows or meeting rooms.

ZX300: The ZX300 is geared for medium-sized exhibition venues, events, tradeshows or meeting rooms. It maintains excellent image quality as brightness and color saturation is preserved for longer compared to lamp-based systems.

From the above description, it is clear that these are marketed as data projectors only. From the product catalogues and information available on the websites, it is clear that data projectors are principally meant for use with an automatic data processing system. They are designed to project in places like conference rooms, business meetings, financial institutions, tradeshows, exhibition venues etc. with connectors matching that of a laptop/ computer. They possess both indoor and outdoor projection capability. The projectors proposed to be imported by the appellant have got additional features such as an S-Video port, HDMI port etc. along with the capability to adjust the aspect ratio in 3 models. The additional ports give additional utility in the form of an audio-video display and the ability to adjust the aspect ratio to 16:9/16:10 is for adaptability purposes. The differentiating features of data projectors compared to that of video projectors are discussed in table 1, which substantiates that the principal use of impugned goods, based on functions and features, is with automatic data processing machines. The presence of additional features cannot dis-entitle the impugned goods from classification under sub-heading 85286200. Reliance is placed upon Commissioner of Customs v. Vardhman Technology Pvt. Ltd., (301) ELT 42, where it was held that the projectors merely having additional function cannot be denied classification under CTH 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. 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 heading 852862. As the impugned goods are held as classifiable under sub-heading 85286200 and are principally used in/with automatic data processing system they are entitled to the exemption.

7. In view of the foregoing discussions, I rule that the projectors Optoma X309ST, Optoma X319ST, Optoma W319ST, Optoma ZW350 and Optoma ZX300 are classifiable under sub-heading 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 01.03.2005, as amended.

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