2023(04)LCX0198(AAR)

Gurmat Impex & Shipping Services

decided on 11-04-2023

CUSTOMS AUTHORITY FOR ADVANCE RULINGS
NEW CUSTOM HOUSE, BALLARD ESTATE, MUMBAI - 400 001
E-MAIL: cus-advrulings.mum@gov.in

11^th April, 2023
Ruling No. CAAR/Mum/ARC/23/2023
in
Application No. CAAR/CUS/APPL/86/2022/ 0/o Commr-CAAR-MUMBAI

Ruling

M/s. Gurmat Impex & Shipping Services (hereinafter referred to as 'the applicant') filed application for advance ruling before the Customs Authority for Advance Rulings, Mumbai (CAAR). The said application was received in the secretariat of CAAR, Mumbai, along with enclosures, on 12.12.2022, in terms of Section 2814 (1) of the Customs Act, 1962 (hereinafter referred to as the 'Act'). The applicant is seeking advance ruling on the classification of `VIEWSONIC Brand LCD Monitors (hereinafter referred to as 'subject goods'), which they intend to import. The models of Monitors intended for import are as follows:

1. VA 2732 MH - IN 1 (with HDMI and Speakers)
2. VA 2209 - H (with HDMI)
3. VA 2215 - H - IN 1 (with HDMI)
4. VA 2432 - MH - IN 1 (with HDMI & Speaker)
5. VX 3276 - MHD - 3 (with HDMI & Speaker)
6. VA 1903H-2 (with HDMI)

2. In their application, the applicant has inter alia submitted that Monitors are capable of directly connecting to and designed for use with an Automatic Data Processing System (hereafter known as ADPS) of heading 8471 as per Note 6 (E) of Chapter 84; that the ADPS Monitor have Low Emission standards, while monitors designed for other uses have a high emission standard as they are viewed from a distance and are not used for close proximity over a prolonged period of time like desktop monitors; that the additional High-Definition Multimedia Interface (HDMI) port and Speaker available in the subject goods is to enrich viewers experience; that the HDMI has an aspect ratio of 16:9 so the picture is rectangular and HDMI has a higher resolution of 1920 X 1080 pixels as compared to the analog signals having 704 x 480 pixels and it receives signals digitally, thereby avoids spending time or processing power converting the signal from an analog format; that since I-ID-DVD players are no longer in vogue, HDMI is used with ADPS primarily. The applicant seeks to classify the subject goods under Chapter 85, specifically under sub-heading 8528 52 00 of Customs Tariff Act, 1975, attracting an eligibility benefit of exemption under Sr. No. 17 of Notification No. 24/2005-Customs, dated 01.03.2005, as amended. The applicant has submitted detailed information on technical specifications and characteristics of Models proposed to be imported. The same is reiterated below:

2.1 The applicant has drawn attention to Circular No. 33/2007-Cus. dated 10.09.2007, issued by Central Board of Excise and Customs, wherein the Board has issued guidelines distinguishing the technical features of computer monitors from other types of Television/video monitors. Further, they have bought to notice the absence of guidelines for technical features like HDMI port or Speaker, which are currently built-in the subject goods intended for import. In this regard they have opined that the absence could be on account of the fact that the said features came into existence at a later date and technology has greatly evolved since issue of the said Circular. The moot question as per the applicant is whether presence of HDMI Port and Sound Capabilities through speakers in the subject goods, eliminates its prime function of being principally designed to be used with ADPS, thus making eligibility benefit of exemption under Sr. No. 17 of Notification No. 24/2005-Customs, dated 01.03.2005, as amended, inadmissible.

    In support of their claim, applicant has relied upon the case of Benq India Private Ltd. by the hon'ble CESTAT Delhi, wherein in the case of Projector, Hon'ble Tribunal held that mere presence of multiple ports does not undermine the basic nature of the goods, namely being Capable of directly connecting to and designed for use with an automatic data processing machine of heading 8471. Further, reference has been made to a judgement in case of AVECO Viscomm Private Ltd by CESTAT Hyderabad, in Appeal No. C/31037/2017, in the case of Projector classification and opined that the words "Solely or Principally Designed" does not rule out possibility of other usage. The applicant has held on the conviction that advancement in technology should not lead to principal usage being overlooked completely.

   Concurrently, the applicant has quoted ruling by CAAR, Delhi no. CAAR/DEL/SHARP/31/2021 dated 19.04.2022, where in the case of 10 monitors having built in media player , one with the capability of playing AV and PC modes simultaneously in picture in picture mode and another with touchscreen to be used without PC with facility to plug in external storage via SD Card mode, it was held as not eligible for exemption benefit of Sr. No. 17 of Notification No. 24/2005-Customs, dated 01.03.2005, as amended, as they were capable of being used without ADP machines. Citing the above ruling, the applicant has emphasized on the fact that the Monitors intended to be imported by them do not have built in USB drivers, SD card external storage connectivity and touch screen capability, thus rendering them compatible to function with an ADPS.

3. The applicant intends to import the said goods through Nhava Sheva-V Commissionerate, Raigad. Accordingly, comments from the jurisdictional Commissioner of Customs, Zone II, Nhava Sheva-V Commissionerate, Raigad were invited immediately after receipt of applications on 12.12.2022. However, no response has been received from the jurisdictional Commissionerate.

4. A personal hearing in the matter was conducted on 31.01.2023 at the behest of the applicant. The applicant was represented by Shri. Rajesh Gosalia, Proprietor. He reiterated CAAR-I application by taking recourse to grounds of the application, relevant extracts of the tariff, explanatory notes, previous rulings and technical write-up. Shri Rajesh sought time period upto 03.02.2023 to submit additional submissions in the matter. The same was allowed. He finally requested, on the basis of expanded scope of CTH 8471 due to new technological developments, to issue ruling in the present case based on the facts on record and extend the duty exemption benefit under Sr. No. 17 of Notification No. 24/2005-Customs, dated 01.03.2005, as amended. No one represented the jurisdictional Commissionerates of Customs in the hearing.

5. Subsequently the applicant submitted a rejoinder dated 02.02.2023, providing additional information, distinguishing monitors capable of accepting signal from CPU of an ADPM and providing Graphical presentation of the Data processed. The same is verbatim reproduced below:

    The applicant, while building their argument on functionality and physical characteristics of the product, have submitted that monitors other than those capable of directly connecting to and designed for use with an ADPM of heading 84.71, are not fitted with connectors characteristic of data processing systems (VGA, HDMI, display port ETC), nor do they have tilt, swivel mechanism, glare free surface, flicker free display to permit prolonged period of viewing at close proximity. Furthermore, since Viewsonic monitors have all the above characteristics they are rightly classifiable under 8528 52 00 and not under 8528 59 00 (other). Likewise, Viewsonic monitors do not have television tuner, channel selector or video tuner, thereby eliminating both 8528 59 00 and 8528 72 00 and making them eligible for duty exemption benefit under Sr. No. 17 of Notification No. 24/2005-Customs, dated 01.03.2005, as monitors solely or principally designed for use in ADPS.

5. I have considered all the materials placed before me in respect of the subject goods for which an advance ruling has been sought. I have gone through the case presentation, written submissions, rejoinder dated 02.02.2023, reliance placed on the case of Benq India Pvt Ltd by CESTAT Delhi and AVECO Viscomm Pvt Ltd (CESTAT Hyderabad) in Appeal No. C/31037/2017, CAAR New Delhi ruling CAAR/DEL/SHARP/31/2021 dated 19.04.2022 and CBIC Circular No. 33/2007-Cus. dated 10.09.2007. The present case needs to be deliberated upon in light of legal framework governed by the Customs Tariff Act, 1975, specifically Chapter 84 & 85, its corresponding Chapter notes, supplementary notes and relevant HSN explanatory notes. In the absence of comments from jurisdictional authority on subject goods, I proceed to pronounce ruling on the issue, on basis of information available on record. The subject goods for which advance ruling has been sought, its technical specifications, characteristics, functions etc. have been broadly mentioned in aforesaid paras. The issue involved for advance ruling is, if the subject goods namely "WIEWSONIC Brand LCD Monitor", which are described as Monitors capable of directly connecting to and designed for use with an Automatic Data Processing System are classifiable under Chapter subheading 8528 52 00 of Customs Tariff Act, 1975 or not, and whether they attract duty exemption benefit under Sr. No. 17 of Notification No. 24/2005-Customs, dated 01.03.2005, as amended, or not.

6 Based on the contents of the application and further submissions I find that the subject goods have graphic ports from Advanced Micro Devices, INC, and have built-in VGA and HDMI connectors. The viewable image size of the subject goods are 30 inches except for VX3276-MHD-3 model which is 32 inches. Similarly, to ensure suitability for close proximity viewing, the display pitch size of subject goods is set below 0.3 mm, except for VX3276-MHD3 model which is at 0.364 MM and VA 2732 ME - IN 1 model at 0.31 mm. The emission standards for the subject goods is low, as they are designed for close proximity over a prolonged period of time like desktop monitors, while monitors designed for other uses have a high emission standard as they are to be viewed at a distance. While models VA 2732 ME - IN 1, VX3276-MHD-3 and VA 2432-MH-IN-1 have a built in speaker of 2 x 2 watts, the other models do not have built in speaker. The subject goods have physical control buttons on front panel in all the models and have various ergonomic features such as tilt, swivel, height adjusting mechanism, glare free surfaces and flicker free display. They are compatible in utilizing wireless communication protocol, with additional accessories and are capable of accepting signal from CPU of an ADPM and providing a graphical presentation of the data processed. Furthermore, they are not incorporated with technical features as seen in TV/Video Monitors like built-in USB drives, SD Card, touch screen capability, television tuner, channel selector, video tuner and remote control facility. As per the applicant since the subject goods have all the above characteristics they are rightly classifiable under Chapter heading 8528 52 00 of Customs Tariff Act, 1975 and not under 8528 59 00, and attract duty exemption benefit under Sr. No. 17 of Notification No. 24/2005-Customs, dated 01.03.2005, as amended.

6.1 I find that the applicant has drawn attention to the contents of the CBIC Circular no. 33/2007 dated 10.09.2007, wherein inter alia, it has been categorically stated that due to changes in Harmonized System of Nomenclature (HS) 2007 all types of monitors and projectors which are solely or principally used with an ADP machine are covered under the sub-headings 8528 41 (Cathode Ray Tube Monitors), 8528 51 (Other types) and 8528 61 (Projectors) [erstwhile tariff heading ] and are extended with Customs duty exemption benefit vide Sr. No. 17 of notification No. 24/2005-Customs dated 1-3-2005. Further the CBIC Circular provides a comparative chart on technical features, distinguishing computer monitors from other types of Television/Video monitors that could be used as guidance for assessment and examination of the said goods. As illustrated in the chart, some of the technical features that distinguish Computer monitors are that they do not incorporate a TV Tuner Card instead have DVI and/or mini D-Stub connectors to connect to the CPU; that they have few ports like VGA, DVI, USB to receive signals from CPU or storage devices; that they receive RGB signals and do not possess separate audio circuits,; that they are characterized by low emission standards and have various ergonomic features such as swivel, tilt mechanism, glare free and flicker free surfaces to enable close proximity and prolonged viewing; that the display pitch size is usually 0.28 mm or less and the horizontal frequency is 15 to 155KHZ; that they do not contain components like audio amplifying system, remote function, control panel functions, selection panel with buttons for volume, channel etc., on display unit and wall mounting facility.

    On examining the inclusions and exclusions of features and specifications as stated in para 6, with the clarification on technical features as provided in the CBIC Circular no. 33/2007 dated 10.09.2007, I find that the subject goods have the essential characteristics to be classified as computer monitors, except that the features of HDMI port or speakers that are present in the subject goods are not quoted in the CBIC Circular. In the instant case, I agree with the applicant's contention that technology has been ever evolving, and the presence of HDMI port and sound capabilities through speakers do not negate the principal function of the subject goods. It is also seen that consequent to HS 2007 changes monitors used along with ADP machines have been classified under sub heading 8528 40 [erstwhile tariff heading] and they were extended the benefit of exemption of customs duty vide Sr. No. 17 of notification No. 24/2005-Customs dated 1-3-2005.

6.2 It is pertinent to mention that the principles for classification of goods are governed by the General Rules for Interpretation specified under the First Schedule-Import Tariff of the Customs Tariff Act, 1975. In terms of GRI- Rule 1, "titles of Sections, Chapters and subchapters 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." In case of any ambiguity in understanding the scope of entries in Tariff recourse is taken to the Harmonized Commodity Description and Coding System (Harmonized System or HSN). Honourable Supreme Court in multiple cases has underlined the importance of HSN Explanatory Notes as of significant guidance value in deciding the matters of classification under the Customs Act, 1962 and the Customs Tariff Act, 1975. The applicant has stated that the subject goods are classifiable under CTH 8528 as monitors capable of directly connecting to and designed for use with an Automatic Data Processing System (hereafter known as ADPS) of heading 8471. Accordingly, I proceed to verify the eligibility of impugned goods for classification under sub heading 8528 52 00 as requested by the applicant.

6.3 Chapter heading 8528 stipulates that, "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". This heading is further subdivided into four 1-dash subheading. These subheading covers, inter alia, monitors, that are sub-categorized as "cathode-ray tube monitors" and, "other monitors". The sub heading, "other monitors" under 8528 52 00 states, "Capable of directly connecting to and designed for use with an automatic data processing machine of heading 8471". Further, in terms of HSN Explanatory Notes to heading 8528, "This group includes monitors which are capable of accepting, a signal from the central processing unit of an automatic data processing machine and provide a graphical presentation of the data processed. These monitors are distinguishable from other types of monitors and from television receivers. The monitors of this group may be characterised by the following features:

i. They usually display signals of graphics adaptors (monochrome or colour) which are integrated in the central processing unit of the automatic data processing machine;

ii. They do not incorporate a channel selector or video tuner;

iii. They are fitted with connectors characteristic of data processing systems (e.g., RS-232C interface, DIN, D-SUB, VGA, DVI, HDMI or DP (display port) connectors);

iv. The viewable image size of these monitors does not generally exceed 76 cm (30 inches);

v. They have a display pitch size (usually smaller than 0.3 mm) suitable for close proximity viewing;

vi. They may have an audio circuit and built-in speakers (generally, 2 watts or less in total);

vii. They usually have control buttons situated in the front panel;

(viii) They usually cannot be operated by a remote control;

(ix) They may incorporate tilt, swivel and height adjusting mechanisms, glare-free surfaces, Flicker-free display, and other ergonomics design characteristics to facilitate prolonged Periods of viewing at close proximity to the monitor;

x. They may utilize wireless communication protocol to display data from an automatic data processing machine of heading 84.71.

  I find that the applicant, vide rejoinder letter dated 02.02.2023, have acknowledged availability of all the above mentioned features in their subject goods, thus contending that the subject goods are monitors which are capable of accepting signal from central processing unit of an automatic data processing machine and providing graphical presentation of data processed. Though the subject goods appear to merit classification under 8528, there is a need to ensure that they are capable of directly connecting to and principally designed for use with an ADPS of heading 8471. It is thus pertinent to refer to the relevant Chapter Notes of Chapter 84, for classification of the subject goods.

6.4 Chapter 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 processing such data, not elsewhere specified or included." As per Chapter notes 6(C) of Chapter 84, read with para (D) and (E ), a unit is to be regarded as being part of an automatic data processing system, if it meets all of the following conditions: (i) it is of a kind solely or principally used in an automatic data processing system; (ii) It is connectable to the central processing unit either directly or through one or more other units; and (iii) It is able to accept or deliver data in a form (codes or signals) which can be used by the system. I find that the subject goods do not have a built in USB driver or SD card external storage connectivity, thus they cannot be used without an ADPS, instead it has VGA port that enables receiving signal from a CPU or storage device and has a HDMI port which is a proprietary audio/video interface for transmitting data digitally. Consequent, it is seen that the subject  goods meet the criteria as laid down in the relevant chapter note, reproduced above, so as to be regarded as being part of an automatic data processing system falling under CTH 8471.

   It is seen that Chapter note 6(C) is to be read with paragraph (D) & (E). Paragraph 6(D) inter alia specifies, that heading 8471 does not cover, "Monitors, not incorporating television reception apparatus" when presented separately. And paragraph 6 (E), 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 or, failing that, in residual headings.

   I find that subject goods can be regarded as being part of an automatic data processing system as it meets all of the conditions specified in Chapter notes 6(C) of Chapter 84. Further, the absence of built in USB driver, SD card external storage connectivity and touch screen capability ensures that the principal function of the subject goods is connecting to an ADPS. However as per paragraph 6(D) & 6(E), monitors, not incorporating television reception apparatus when presented separately, cannot be classified under Chapter heading 8471 and have to be classified in the headings appropriate to their respective functions. Accordingly, by virtue of terms of the headings, relative Chapter Notes and HSN Explanatory notes, I find that the subject goods satisfy all essential conditions to merit classification under Chapter sub heading 8528 52 00 as, "Monitors capable of directly connecting to and designed for use with an automatic data processing machine of heading 8471".

7. Further 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 heading 8471" falling under heading 852852 from the whole of the duty of Customs leviable thereon. As the impugned goods are held as classifiable under sub-heading 8528 52 00 they are entitled to the duty exemption benefit under the notification mentioned above.

8. In view of foregoing discussion I rule that all the models of `VIEWSONIC Brand LCD Monitors' covered under present application are classifiable under sub-heading 8528 52 00 of the first schedule to the Customs Tariff Act, 1975 and would be eligible to avail benefit of duty exemption under sr. no. 17 of Notification No. 24/2005-Customs, dated 01.03.2005, as amended.

 This copy is certified to be a true copy of the ruling and is sent to: -

1. M/s. Gurmat Impex & Shipping Services R. No. 315, 3^rd Floor, C-wing, Antophill, Warehouse Complex, VIT College Road, Wadala (E), Mumbai — 400037.
Email: gurmat.impex@gmail.com

2. The Commissioner of Customs (Nhava Sheva -V), Jawaharlal Nehru Customs House, Nhava Sheva, Tal Uran, District Raigad, Maharashtra — 400707.
Email: commr-ns5@gov.in

3. The Customs Authority for Advance Rulings O/o the Chief Commissioner of Customs, Delhi Zone, New Customs House, Near IGI Airport & Cargo Complex, New Delhi-110037
Email: cus-advrulings.del@gov.in

4. The Principal Chief Commissioner of Customs, Mumbai Customs Zone-I, Ballard Estate, Mumbai - 400001.
Email: ccu-cusmum1@nic.in

5. The Chief Commissioner (AR), Customs Excise & Service Tax Appellate Tribunal (CESTAT), West Block-2, Wing-2, R.K. Puram, New Delhi - 110066.
Email: cdrcestat123@gmail.com,ccar.cestat-delhi@gov.in

6. The Member (Customs), Central Boards of Indirect Taxes & Customs, North Block, New Delhi-110001.
Email: mem.cus-cbec@nic.in

7. The Commissioner (Legal), CBIC Offices, Legal/CX.8A, Cell, 5^th floor, Hudco Vishala Building, C-Wing, Bhikaji Cama Place, R. K. Puram, New Delhi — 110066.
Email: anishgupta.irs@gov.in,commr.legal-cbec@nic.in

8. The Webmaster, Central Boards of Indirect Taxes & Customs.
Email: webmaster.cbec@icegate.gov.in

9. Guard file.