Case Law Details

Case Name : In re Audio Distribution House Pvt. Ltd (CAAR MUMBAI)
Appeal Number : Advance ruling CAAR/Mum/ARC/63/2021
Date of Judgement/Order : 28/10/2021
Related Assessment Year :

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

The projector under consideration has got certain additional ports such as HDMI, S-Video, audio-video, which make it 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 website, https://www.optomausa.com/, of the manufacturer of the impugned device was referred to understand how the projector is marketed by the manufacturer. It is listed under the business category of projectors on the said website. The product description present on the website is reproduced here: “The product projects bright vibrant presentations effortlessly any time of day. Designed for meeting rooms and classrooms, the X400L Ve boasts amazing colour, long lamp life and energy-saving features to provide you with a low overall cost of ownership. This projector is easy to connect, offering robust input options, including HDMI, VGA and composite enable connectivity to a wide range of devices. An integrated 10-watt speaker delivers crisp, room-filling audio that enhances presentations and videos without additional equipment. The portable and lightweight projector can be installed or taken on the go for off-site meetings”. From the above description, it is clear that these are marketed as data projectors only. From the product catalogue and information available on the website, 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 etc. with connectors matching that of a laptop/ computer. They possess both indoor and outdoor projection capability. The projector imported by the appellant has got additional features such as an S-Video port, HDMI port etc. The additional ports give additional utility in the form of an audio-video display. The differentiating features of data projectors compared to that of video projectors are discussed in table I, 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 Vardhaman Technology P. Ltd. the Tribunal 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. No. 17 of Notification No. 24/2005-Customs, dated 01.03.2005, as amended, exempts all goods under heading 852862. As the impugned goods are held as classifiable under sub-heading 85286200, they are entitled to the exemption.

7. In view of the foregoing discussions, I rule that the Optoma X400LVe projectors 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 THE ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, MUMBAI

M/s Audio Distribution House Pvt. Ltd. filed an application on 01.09.2021 seeking advance rulings on the classification of data projector (Optoma X400LVe) 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 trading business. They intend to import “data projectors (Optoma X400LVe)” 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 in such a way that enables them to function in well-lit places. The product has a native resolution of I 024*768 (XGA). It also supports computer signals up to ultra-extra graphics array (UXGA). It provides a brightness of 4000 ANSI lumens. The contrast ratio of the projector is 25000:1 and a native aspect ratio is 4:3. The device supports connections such as HDMI, VGA-in/out, composite, audio-in/out, USB-A, RS232. They have proposed CTH 85286200 as an appropriate classification, which mentions the projectors that are capable of connecting to an automatic data processing system.

2.1 The applicant has compared their device with a home theatre/ video projector, classifiable under CTH 85286900. A home theatre projector generally supports high resolution (4K UHD 3840*2160).

They are characterised with high contrast ratio in the range of 100000:1 to 500000:1 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., ELT A173 (SC).

Commissioner of Customs V. Vardhaman Technology Pvt. Ltd., (301) ELT 427,

M/s. Casio India Co. Pvt. Ltd. V. Commissioner of Customs, (7’ri-New Delhi), vide Final order dated 55283/2016.

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

2.2 The applicant further stated that they are eligible to claim 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 Principal Commissioner of Customs for comments. However, no reply has been received, though reminders have also been sent.

4. The application was listed for hearing on 12.10.2021. The applicant was represented by Shri Hari Radhakrishnan. No one appeared on behalf of the jurisdictional Principal Commissioner. Shri. Radhakrishnan explained the application in detail. The applicant stated that customs authorities tend to take different views in respect of the classification of impugned goods and therefore, they have sought this advance ruling. Shri Radhakrishnan said that they will submit the classification adopted in the export document and bill of entry filed.

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 Principal Commissioner/ Commissioner. In the absence of any comment from the jurisdictional Principal Commissioner/ Commissioner of Customs, on the impugned subject matter, I proceed to render an advance ruling on the basis of available information. The issue at hand is to decide the classification of data projector (Optoma X400LVe) and 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 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 projectors can be summarised as below: –

Table 1: Comparison between Data projectors and Video projectors

Sr. No. Feature Data
Projector
(Product
Catalogue)
Video Projector (Normal range) Remarks
1. Aspect
Ratio
4:3 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 the DVD. 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.
2. Resolution 1024*768 3840*2160 Resolution refers to the number of lines of an image displayed on the screen. The greater the resolution, the greater the picture quality. The resolution in data projectors is less as compared to video projectors.
3. Contrast Ratio 25000:1 100000:1 to 500000:1 This indicates the difference between the brightest and darkest colours. It is higher in video projectors as compared to data projectors.
4. Brightness in lumens 4000 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.

5.1 Rule 1 of the GI Rules lays down that the titles of sections, chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes. The relevant 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, WUXGA, UXGA, WXGA, SXGA+, SXGA, XGA, SVGA, VGA resized, VESA, PC 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 (7’ri- 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 projector under consideration has got certain additional ports such as HDMI, S-Video, audio-video, which make it 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 website, https://www.optomausa.com/, of the manufacturer of the impugned device was referred to understand how the projector is marketed by the manufacturer. It is listed under the business category of projectors on the said website. The product description present on the website is reproduced here: “The product projects bright vibrant presentations effortlessly any time of day. Designed for meeting rooms and classrooms, the X400L Ve boasts amazing colour, long lamp life and energy-saving features to provide you with a low overall cost of ownership. This projector is easy to connect, offering robust input options, including HDMI, VGA and composite enable connectivity to a wide range of devices. An integrated 10-watt speaker delivers crisp, room-filling audio that enhances presentations and videos without additional equipment. The portable and lightweight projector can be installed or taken on the go for off-site meetings”. From the above description, it is clear that these are marketed as data projectors only. From the product catalogue and information available on the website, 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 etc. with connectors matching that of a laptop/ computer. They possess both indoor and outdoor projection capability. The projector imported by the appellant has got additional features such as an S-Video port, HDMI port etc. The additional ports give additional utility in the form of an audio-video display. The differentiating features of data projectors compared to that of video projectors are discussed in table I, 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 Vardhaman Technology P. Ltd. the Tribunal 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. No. 17 of Notification No. 24/2005-Customs, dated 01.03.2005, as amended, exempts all goods under heading 852862. As the impugned goods are held as classifiable under sub-heading 85286200, they are entitled to the exemption.

7. In view of the foregoing discussions, I rule that the Optoma X400LVe projectors 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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