Kronos 4500 Touch ID Terminal Chips are Classifiable under Category of ‘Electrical machines and Apparatus: CESTAT [Read Order]

The Bangalore bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the Kronos 4500 touch ID terminal chips are classifiable under the category of electrical machines and apparatus. 

Kronos Systems India Pvt. Ltd, the respondent assessee had imported the ‘553 series for 4500 Full A/N Prox. Exp Memory and the item were to be part of the computer and accordingly classified items as part of the computers. 

The revenue appealed against the order passed by the Commissioner (Appeals) for classifying the terminal chips under the category of automatic data processing device. 

K. Vishwanath, the counsel for the revenue contended that the item was not a data processing machine or any part or accessory of the same even though the product was a Central Processing Unit keyboard and display. Since the item imported only collects the data as and when the card was swiped and the pin was entered but does not process the data, it cannot be construed as an automatic data processing machine. 

Also submitted that the device itself was not able to perform any data processing operations; it only acts upon the program run by the central server; it had the functionality and the characteristics of proximity card readers and hence, are rightly classifiable under the category of electrical machines and apparatus. 

The Bench observed that based on the General Rules of Interpretation and the Chapter Notes, the item needs to be classified in the heading to it or where the specific description was provided and in the case of Commissioner of Customs, Bangalore vs.Scatia, the court held that a similar product viz., the fingerprint scanner was classified under electrical machines and apparatus. 

The two-member bench comprising A Augustian (Judicial) and Bhagya Devi (Technical) allowed the classification made by the revenue and rejected the classification made by the Commissioner (Appeals) while allowing the appeal filed by the revenue. 

To Read the full text of the Order CLICK HERE

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