Interactive Flat Panels classifiable as ADP Machines: CESTAT Sets Aside ₹34.89 Cr Customs Duty Demand [Read Order]
Classification must primarily be determined under GRI 1, based on the terms of headings and relevant Section/Chapter Notes, and that trade parlance or end-use tests cannot override statutory guidance.
The Chennai Bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has set aside a customs duty demand of ₹34.89 crore holding that the imported Interactive Flat Panels (IFP) are correctly classifiable as Automatic Data Processing (ADP) machines under Customs Tariff Heading (CTH) 8471, and not as monitors under CTH 8528.
The bench observed that the department failed to discharge its burden of proving that the goods were classifiable under the heading proposed by Revenue, and found that the adjudicating authority had misread the relevant Section and Chapter Notes, which proved fatal to the demand.
Hitevision Tech India Pvt. Ltd., the appellant had imported goods declared as “Interactive Flat Panel with inbuilt CPUAIO-VDU”and “parts and accessories of IFPD” through various Bills of Entry during 09.08.2023 to 19.03.2024, classifying them under CTI 8471 4900 and CTI 8473 3099 respectively, before warehousing the goods.
The imports were taken up for investigation by Customs, and during examination by SIIB officers.
The department viewed that interactive devices such as Interactive Whiteboards / Smartboards / Interactive Flat Panel Displays essentially function as display monitors, capable of acting as output devices for computers, and therefore should be classified as monitors rather than ADP machines.
The Commissioner of Customs, Chennai-II (Imports) passed an order classifying the goods under CTI 8528 5900 and their parts under CTI 8529 9090, raising a differential duty demand of ₹34,89,01,972/- under Section 28(8) with interest under Section 28AA, along with fine and penalties.
The appellant approaches the appellate tribunal.
The appellant contended that the Interactive Flat Panels were not passive monitors but self-contained computing devices, having Central Processing Unit (CPU), Touchscreen facility, Graphics Processing Unit (GPU), Inbuilt software and multiple input/output interfaces.
Therefore, according to the company, the goods are used widely in education and corporate environments for meetings, teaching and conferences. Thus, it qualifies as ADP machines under CTH 8471, while parts should fall under CTH 8473.
The counsel also sought permission for a live demonstration of the product’s functioning before the Tribunal, which was allowed, with no objection from the Department.
The department however defended the classification under CTH 8528, arguing that the main function of the device was display, and though it could receive signals and perform some processing, its primary character remained that of a monitor used in schools, hospitals and conferences.
The Tribunal found that the adjudicating authority wrongly applied Section XVI Note 3 and Note 4, which relate to composite machines and combinations of machines, whereas the imported Interactive Flat Panel was a single integrated unit, with all hardware contained in one housing.
The bench also noted the Supreme Court’s recent decision in Commissioner of Customs (Import) v. Welkin Foods, stating that classification must primarily be determined under GRI 1, based on the terms of headings and relevant Section/Chapter Notes, and that trade parlance or end-use tests cannot override statutory guidance.
The Tribunal further noted that the impugned order itself admitted that the device had several interfaces like VGA, HDMI, USB, LAN, WiFi module etc., and could be used directly without connecting to an external CPU.
The bench, therefore observed that these devices were large-format tablet-type computers, and it would be a misnomer to call them mere monitors.
‘The impugned ‘Interactive Flat Panel’ remain classified at the 4- digit level under CTH 8471 and their parts under CTH 8473, as self- assessed. The appeal hence succeeds and the impugned order is set aside’ ruled Ajayan T V (Judicial Member) and M. Ajit Kumar (Technical member)
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
