2025(03)LCX0137(AAR)

UFO MOVIEZ INDIA LTD

decided on 20-03-2025

Customs Authority for Advance Rulings

New Custom House, Ballard Estate, Mumbai - 400 001
E-MAIL: cus-advrulings.mum@gov.in

N.B.:

A copy of this order made under sub-section (2) of Section 281 of the Customs Act. 1962 is granted to the concerned free of charge.

Any officer authorised by the Board, by notification or the applicant may file an appeal before the High Court of concerned jurisdiction against any ruling or order passed by the Authority, within 60 days from the date of the communication of such ruling or order.

The advance ruling pronounced by the Authority under Section 28 -1 shall remain valid for three years or till there is a change in law or facts on the basis of which the advance ruling has been pronounced, whichever is

Where the Authority finds that the advance ruling was obtained by the applicant by fraud or misrepresentation of facts, the same shall be declared void ab initio

Advance Ruling

    M/s UFO Moviez India Ltd., (having IEC No. 0304084654) and hereinafter referred to as ‘the applicant’, in short) filed application (CAAR-1) for advance ruling before the Customs Authority for Advance Rulings, Mumbai (CAAR in short). The said application was received in the secretariat of the CAAR, Mumbai on 20.12.2024 along with enclosures in terms of Section 28H (1) of the Customs Act, 1962 (hereinafter referred to as the ‘Act’ also). The applicant is seeking advance ruling on the classification of Digital Cinema Projector under CTI 85286900 of the First Schedule of the Customs Tariff Act, 1975 or otherwise.

2. The Applicant vide their application dated 19.12.2024 has submitted as follows:

2.1 M/s. UFO Moviez India Ltd. (hereinafter referred to as the “Applicant”) is providing digital cinema services to various theatres, distributors & advertisers across the country. The company’s core business is leasing of Digital Cinema Equipment, “DCE”, comprising of a digital cinema projector, digital server, UPS, and VSAT. To give this effect, company is importing Digital Cinema Projectors from vendor located outside India. The information about Digital Cinema Projectors are as follows: -

Projector: As per the oxford dictionary the projector is define as “a piece of equipment that projects pictures or films onto a screen or wall”

Digital Projector: A digital projector is a device that takes digital video or image data and projects it onto a screen, wall, or other surface for viewing. It typically uses a combination of a light source and a lens system to produce and magnify the image, allowing for large-scale displays. Digital projectors are commonly used for presentations, movie screenings, and educational purposes.

2.2 The purpose of these projectors to project the films which are recorded in digital form.

2.3 Technology of Digital Cinema Projector:

These projectors are:

a. Based on digital light processing (“DLP”) Cinema technology;

b. Digital Cinema Initiative (“DCI”) compliant. The DCI specification is a set of technical and quality standards established by a consortium of major Hollywood studios to ensure the uniform and high-quality distribution and playback of digital cinema content.

c. Based on Digital Micromirror Device (DMD) for image projection.

d. Have standard input HD-SDI input for 2K source content and DVI (HDMI) input for alternative content.

e. Capable of connecting to an automatic data processing machines and other input device, for receipting inputs.

Applicant’s interpretation of Law/Facts

3.1 The company is importing Digital Cinema Projectors by classifying them under the Chapter heading 8528, “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.”

3.2 The company classifying digital cinema projectors under Tariff item 85286900 as “Other projectors” of the First Schedule to the Custom Tariff Act, 1975. The tariff item 85286900 attracts the following customs duties and IGST:

3.3 The company has relied on the Explanatory Note to Heading 8528 (for Projectors) as follows:

    “8528 - 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 includes:

1. Monitors and projectors, not incorporating television reception apparatus.

2. Television reception apparatus, whether or not incorporating radio-broadcast receivers or sound or video recording or reproducing apparatus, for the display of signals (television sets).

3. Apparatus for the reception of television signals, without display capabilities (e.g., receivers of satellite television broadcasts).

Monitors, projectors and television sets utilize different technologies, such as CRT (cathode ray tube), LCD (liquid crystal display), DMD (digital micro mirror device), OLED (organic light emitting diodes) and plasma, to display images.

Monitors and projectors may be capable of receiving a variety of signals from different sources.

However, if they incorporate a television tuner they are considered to be reception apparatus for television.

(C) PROJECTORS

Projectors enable the image normally reproduced on the screen of a television receiver or of a monitor to be projected on an external surface. They may be based on CRT or flat panel (e.g., DMD, LCD, plasma) technology.

This heading excludes, inter alia:

(a) …

(c) Cinematographic projectors (heading 90.07) and image projectors of heading 90.08″

3.4 The company would like to refer the recent AAR ruling passed by CAAR, Mumbai in case of “Ingram Micro India Pvt Ltd” Appeal no: CAAR/Mum/ARC/02/2024 dated 10.01.2024. It is held that Projectors are classified under the tariff head 8528.

3.5 The applicant submitted that it has come to the knowledge of the company that these projectors are being classified under the Chapter heading 9007, :” Cinematography cameras and projectors, whether or not Incorporating sound recording or reproducing apparatus”, by the other players in the industries. The other players are classifying these digital cinema projectors under Tariff item 90072090 as “other projectors” of the First Schedule to the Custom Tariff Act, 1975. The tariff item 90072090 attracts the following customs duties and IGST:

3.6 The HSN Explanatory Notes to Heading 9007 (for cinematographic projectors) is appended below for your ready reference:

    “9007 Cinematographic cameras and projectors, whether or not incorporating sound recording or reproducing apparatus.

    This heading covers:

(    C) Cinematographic projectors which are static or portable apparatus for the diascopic projection of moving pictures whether or not having a sound track on the same film. They have an optical system which consists essentially of a light source, reflector, condenser and projection lens. The projectors also have a mechanism, generally consisting of a maltese cross movement, which draws the film intermittently past the optical system, usually at the same rate as the film was taken, and the light source is cut off when the film is being moved through the projection gate. The light source in cinema projectors is commonly an electric arc-lamp, but filament lamps may be used in some projectors. Cinematographic projectors may be equipped with a device to rewind the film and with a fan. Some projectors may be equipped with a refrigerated water cooling system.

The heading includes special types of cinematographic projectors, for example, projectors which project magnifications of varying degree on to an optically flat surface to permit a scientific study of photographed phenomena. “Frames” may be examined singly or continuously at varying numbers of frames per second. On the other hand, “animated” viewers, specially designed for editing _.films, are excluded (heading 9010).

This heading covers motion picture cameras, etc., whether for the film industry or for use by amateurs. The heading also covers special type cinematographic cameras, e.g., those designed to be fitted on aircraft (aerial cinematography); watertight cameras for submarine cinematography; cameras and projectors for colour, three-dimensional (stereoscopic) or ‘Panoramic” films. Cinematographic apparatus presented without optical parts remain in this heading”.

3.7 Based on the above facts, the company seeks guidance on the correct classification of the digital cinema projectors.

Port of Import and reply from concerned jurisdictional Commissionerate

4.1 The applicant in their CAAR-1 indicated that they intend to import the subject goods i.e. Digital Cinema Projector at the jurisdiction of Office of the Commissioner of Customs, Air Cargo Complex, Mumbai. The application was forwarded to the Office of the Commissioner of Customs, Air Cargo Complex, Mumbai for their comments on 26.12.2024.

4.2 The concerned Commissionerate vide their letter dated 22.02.25 submitted as follows:

• Since, cinematographic projector is specifically covered under CTH 9007, consequently, the term “projector” being discussed in CTH 8528 talks about the kinds of projectors which are other than cinematographic projectors.
   

• The sub-heading 852862 specifically covers “Projectors capable of directly connecting to and designed for use with an automatic data processing machine of heading 8471”. Projectors that receive data in digital formats, rather than relying on physical film reels, represent a significant advancement in display technology. These projectors are specifically designed to process and project visual data without the need for traditional analog film mechanisms. Instead of using reels of film, they receive digital signals through various input sources such as HDMI, USB, or wireless connections. The primary function of these projectors is to display images or videos that are generated or processed by external devices such as computers, servers, or other digital storage units.
   

• Due to their digital nature, these projectors offer enhanced flexibility, allowing seamless integration with modem computing systems. They are specifically designed to function with Automatic Data Processing Machines (ADPM), which fall under Customs Tariff Heading (CTH) 8471. ADPMs include a range of computing devices such as laptops, desktops, and servers that process and transmit digital information. When connected to an ADPM, these projectors act as an external display unit, rendering processed visual data for presentations, entertainment, or educational purposes. They are commonly used in conference rooms, educational institutions, home theaters, and professional setups where high-quality digital projection is required. Their classification under customs regulations is influenced by their reliance on digital input rather than analog film mechanisms. Unlike cinematographic projectors, which are designed to display film-based content, these digital projectors are tailored for electronic data processing. Their ability to directly interface with computing devices distinguishes them from traditional projectors that operate independently. Consequently, their classification and tariff treatment are aligned with digital display technologies rather than traditional cinematographic equipment.
   

• In view of the submissions, the Digital Cinema Projector appears to be more appropriately classifiable under CTH 85286200 with Basic Customs Duty @ 10% and IGST @ 28%, whereas Cinematographic projectors are more appropriately classifiable under CTH 900720 with Basic Customs Duty @ 10% and IGST @ 18%.

    Details of Hearing

5.1 A hearing was held on 04.03.2025 at 12.00 PM. Shri. Nilesh Lad, Associate Vice President of the company appeared for the hearing and reiterated the contention submitted with the application that whether the digital cinema projector is correctly classifiable under CT1 90072090 or otherwise. They claimed that as per market player the same is classifiable under CTH 9007 under Cinematographic Projector. He sought one-week time to provide the comments on the submission made by the department.

    Nobody appeared on behalf of the Department for hearing.

    Discussion and findings

6.1 I have considered all the materials placed before me in respect of the subject goods. I have gone through the submissions made by the applicant during the personal hearing and comments received from the concerned Commissionerate. I proceed to pronounce a ruling on the basis of information available on record as well as existing legal framework.

6.2 At the outset, I find that the issue raised in the question in the Form CAAR-1 is squarely covered under Section 28H(2) of the Customs Act, 1962, being a matter related to classification of goods under the provisions of this Act.

6.3 Before deciding the issue, let me deliberate on the legal framework prescribed in Customs Tariff Act, 1975, Chapter/ Section notes along with HSN explanatory notes. As per Rule 1 of GRI, 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.

6.4 The Applicant stated that a digital projector is a device that takes digital video or image data and projects it onto a screen, wall, or other surface for viewing. It typically uses a combination of a light source and a lens system to produce and magnify the image, allowing for large-scale displays. Digital projectors are commonly used for presentations, movie screenings, and educational purposes. The purpose of these projectors to project the films which are recorded in digital form.

Digital cinema projectors are based on Digital Light Processing (DLP) Cinema technology and comply with Digital Cinema Initiative (DCI) standards to ensure high-quality and consistent content playback. They also use Digital Micromirror Device (DMD) technology for image projection. These projectors support standard HD-SDI input for 2K content and DVI (HDMI) input for alternative content. These are also capable of connecting to automatic data processing machines and other input devices for data reception.

6.4.2 Before classifying digital cinema projectors, it’s important to understand how movies are projected in theatres using modern digital cinema technology. Movies are distributed to theaters as Digital Cinema Packages (DCP), which are encrypted files containing the video, audio, and metadata. The DCP is loaded into a media server connected to the projector, which decrypts and decodes the content. A Key Delivery Message (KDM) is required to unlock the encrypted files, ensuring secure playback. Most projectors today use Digital Light Processing (DLP) or SXRD (Silicon X-tal Reflective Display) technology. In DLP projectors, a Digital Micromirror Device (DMD) chip with millions of microscopic mirrors reflects light to create the image. For color, a rapidly spinning color wheel (in DLP) or separate laser sources (in laser projectors) generate red, green, and blue light. The light is then directed through a lens onto the cinema screen, producing a sharp, bright image. Modem projectors increasingly use laser light sources instead of traditional lamps for better brightness, color accuracy, and longer lifespan. This process ensures high-quality, consistent playback and reduces maintenance compared to traditional film projection. The visual representation of the process involved is shown below:

These cinema projectors are principally used in cinema theaters for projection of movies. These cinema projectors do not incorporate video recording and reproducing apparatus.

6.4.3 I note that the Customs Tariff Heading (CTH) 8528 covers “Monitors and projectors, not incorporating television reception apparatus; reception apparatus for television, whether or not incorporating radiobroadcast receivers or sound or video recording or reproducing apparatus”. The relevant Customs Tariff entries and HSN Explanatory Notes to Heading 8528 is reproduced below for ease of reference:

“This heading includes:

1. Monitors and projectors, not incorporating television reception apparatus.

2. Television reception apparatus, whether or not incorporating radio-broadcast receivers or sound or video recording or reproducing apparatus, for the display of signals (television sets).

3. Apparatus for the reception of television signals, without display capabilities (e.g., receivers of satellite television broadcasts).

Monitors, projectors and television sets utilize different technologies, such as CRT (cathode tube tube), LCD (liquid crystal display), DMD (digital micro mirror device), OLED (organic light-emitting diodes) and plasma, to display images. Monitors and projectors may be capable of receiving a variety of signals from different sources. However, if they incorporate a television tuner they are considered to be reception apparatus for television.

(C)Projectors

Projectors enable the image normally reproduced on the screen of a television receiver or of a monitor to be projected on an external surface. They may be based on CRT or flat panel technology.”

    As per the Explanatory Notes to Heading 8528, a projector is a device that enables the image, which is normally reproduced on the screen of a television receiver or a monitor, to be projected onto an external surface such as a wall or a screen. Projectors work by receiving a video signal from an external source, processing it, and converting it into a format suitable for projection. They may use different technologies for image formation, including CRT (Cathode Ray Tube) or flat panel technology such as DLP (Digital Light Processing), LCD (Liquid Crystal Display), or LCoS (Liquid Crystal on Silicon).

In the present case, the product, namely the Digital Cinema Projector, employs DLP (Digital Light Processing) technology to project movies in theatres. Therefore, the product, i.e., the Digital Cinema Projector, is appropriately classifiable under CTH 8528 (Monitors and projectors, not incorporating television reception apparatus; reception apparatus for television, whether or not incorporating radiobroadcast receivers or sound or video recording or reproducing apparatus) of the First Schedule of the Customs Tariff Act, 1975.

6.4.4 As discussed above, it is evident that the aforementioned goods, having the primary function of projecting movies in theatres, fall within the scope of Chapter Heading 8528 (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), in accordance with the Explanatory Notes to Chapter 85.

It is noted that under the category of projectors classified under CTH 8528, there are two specific entries: CTI 85286200 covers “Capable of directly connecting to and designed for use with an automatic data processing machine of heading 8471,” while CTI 85286900 covers “Others.” In the present case, the digital cinema projectors are primarily used in cinema theatres for the projection of movies and receive input from a server. The applicant, through their email dated 12.03.2025, has also confirmed that these projectors are installed in cinema halls for movie exhibition and are used along with cinema servers.

Thus, the subject goods, namely Digital Cinema Projectors, are appropriately classifiable under CTI 85286900 (Projector — Others) of the First Schedule of the Customs Tariff Act, 1975. in accordance with General Interpretative Rule (GIR) 1 and the Explanatory Notes to Chapter Heading 8528.

6.5 The applicant has sought clarification on the classification of Digital Cinema Projector under CTI 90072090 (Other Projectors) of the First Schedule of the Customs Tariff Act, 1975.

    In this regard, it is submitted the Chapter Heading 9007 covers “Cinematographic cameras and projectors, whether or not incorporating sound recording or reproducing apparatus”. The relevant Explanatory Notes to heading 9007 is reproduced bellow for ease of reference:

    “9007 Cinematographic cameras and projectors, whether or not incorporating sound recording or reproducing apparatus.

    This heading covers:

(C) Cinematographic projectors which are static or portable apparatus for the diascopic projection of moving pictures whether or not having a sound track on the same film. They have an optical system which consists essentially of a light source, reflector, condenser and projection lens. The projectors also have a mechanism, generally consisting of a maltese cross movement, which draws the film intermittently past the optical system, usually at the same rate as the film was taken, and the light source is cut off when the film is being moved through the projection gate. The light source in cinema projectors is commonly an electric arc-lamp, but filament lamps may be used in some projectors. Cinematographic projectors may be equipped with a device to rewind the _.film and with a fan. Some projectors may be equipped with a refrigerated water cooling system.

The heading includes special types of cinematographic projectors, for example, projectors which project magnifications of varying degree on to an optically flat surface to permit a scientific study of photographed phenomena. “Frames” may be examined singly or continuously at varying numbers of frames per second On the other hand, “animated” viewers, specially designed for editing films, are excluded (heading 90.10).

Cinematographic projectors may be combined with sound recording or reproducing apparatus, these being equipped with a reader which incorporates a photoelectric sound-head and a charge-coupled device. The sound tracks for most commercial films are printed in dual format, i. c., analogue and digital. The analogue format sound tracks are printed between the frames and the sprocket perforations whereas digital format sound tracks are printed either on the edges of the _.film, outside the sprocket perforations, or between the sprocket perforations. Some commercial films are printed with an analogue sound track and digital timecode information only on the edges of the _.film, where the digital sound track is not printed on the film but is recorded separately on a CD-ROM As the film passes through the reader the photoelectric sound-head reads the analogue sound track and the charge-coupled device reads the digital sound track, or in the latter case the time code information to ensure synchronisation of sound from the CD-ROM with the projected moving pictures. The printing of dual format sound tracks enables sound to be reproduced if one of the sound track formats is damaged or where the sound reproducing apparatus does not have dual format reading capability.

Other cinematographic projectors may be equipped with either a photoelectric or a magnetic sound-head depending upon the process used for recording the sound-track or with both types of sound-head _.for alternative use”.

From the above, it is evident that a cinematographic projector is designed to project movies from physical film reels using a mechanical movement system. In the present case, however, the digital cinema projector processes data from a digital file known as a Digital Cinema Package (DCP) rather than from physical film reels. The difference between a Digital Cinema Projector and a Cinematographic Projector are as follows:

    Therefore, the digital cinema projector does not meet the definition of a cinematographic projector under CTH 9007 and cannot be classified under this heading.

6.6. The concerned jurisdictional Commissionerate has proposed that the primary function of these projectors is to display images or videos generated or processed by an external device, such as a computer or other digital storage units. These projectors are specially designed to function with Automatic Data Processing Machines (ADPM). Therefore, the Digital Cinema Projector appears to be more appropriately classifiable under CTI 85286200 (Projector -Capable of directly connecting to and designed for use with an automatic data processing machine of heading 8471).

I have carefully considered the submission of the department and perused the record. The department has contended that these projectors are designed for use with an automatic data processing system of heading 8471. In this regard, it is submitted that the Digital Cinema Projectors are principally used for projecting movies in theatres. These projectors receive input from a cinema server that is connected to the projector, but they are not primarily designed to function with an automatic data processing machine (ADP) of heading 8471. The cinema server acts as a content source rather than an ADP machine, and the projector’s main purpose is to deliver high-quality movie projection rather than functioning as an output device for an ADP machine.

Therefore, these are not principally designed for use with an ADP machine. Hence, the contention that the Digital Cinema Projector is classifiable under CTI 85286200 (Projector Capable of directly connecting to and designed for use with an automatic data processing machine of heading 8471), does not appear to be tenable.

7. In view of the above discussions and findings, I reach to conclusion that the product i.e. Digital Cinema Projector is classifiable under CTH 8528(Monitors and projectors, not incorporating television reception apparatus; reception apparatus for television, whether or not incorporating radiobroadcast receivers or sound or video recording or reproducing apparatus), more specifically under CT1 85286900 (Projector-Other) of the First Schedule of the Customs Tariff Act, 1975.

8. I rule accordingly.

(Prabhat K. Rameshwaram)         
Customs Authority for Advance Rulings, Mumbai

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

1. M/s UFO Moviez India Ltd.,
Valuable Techno Park,
Plot 53/1, Road No. 7,
MIDC Marol, Andheri (E), Mumbai-400 093.
{Email: nilesh.lad@ufomoviez.com}

2. The Commissioner of Customs, Import,
Air Cargo Complex, Sahar, Andheri(E),
Mumbai - 400099
Email- import.acc@gov.in

3. The Customs Authority for Advance Rulings,
Room No. 24, New Customs House,
Near IGI Airport, 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 Commissioner (Legal), CBIC Offices,
Legal/CX.8A, Cell, 5th floor, Hudco Vishala Building,
C-Wing, Bhikaji Cama Place, R. K. Puram, New Delhi -110066.
Email: commr.legal-cbec@nic.in

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

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

8. Guard file.

(Vivek Dwivedi)           
Dy. Commissioner & Secretary
Customs Authority for Advance Rulings,
Mumbai