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SUPREME COURT OF INDIA
SURYA KANT, VIKRAM NATH, JJ.
Hewlett Packard India Sales Pvt. Ltd. (Now HP India Sales Pvt. Ltd.) – Appellant
Versus
Commissioner of Customs (Import), Nhava Sheva – Respondent
Civil Appeal No. 5373 of 2019
WITH
Lenevo (India) Pvt. Ltd. – Appellant
Versus
Commissioner of Customs (Import), Nhava Sheva – Respondent
Civil Appeal No. 6715 of 2019
Decided On : 17-01-2023
Central Excise Act, 1944 – Section 4A – Central Excise Tariff Act, 1985 – First Schedule – Classification of Automatic Data Processing Machines(‘All-in-One Integrated Desktop Computer’) – No element of ‘functionality’ is contemplated for the purpose of classifying concerned Goods as ‘portable’ – Word ‘portable’ should have been interpreted in context of ADPs – Weight cannot be sole factor to determine factum of portability – Instead, essential ingredients to logically establish whether an ADP is ‘portable’ are twofold – First ingredient is their ability to be carried around easily which includes all aspects such as weight and their dimensions – In appropriate cases, this assessment would also take into consideration necessary accessories which are required for safe and efficient usage such as mounted stands or any power adapters – Second ingredient is that ADP must be suitable for daily transit of a consumer and would include aspects such as durability to withstand frequent commute and damage protection – Concerned Goods are not portable. (Paras 12, 17, 18 and 22)
Result : Appeals allowed.
JUDGMENT :
SURYA KANT, J.
1. The question that arises for our consideration pertains to correct classification of Automatic Data Processing Machines (hereinafter ‘ADP’) which are popularly known as ‘All-in-One Integrated Desktop Computer’ (hereinafter ‘Concerned Goods’) under the First Schedule to the Central Excise Tariff Act, 1985 (hereinafter ‘First Schedule’).
FACTS
2. The Appellants imported certain units of the Concerned Goods and classified them under ‘Tariff Item 8471 50 00’ as per the prevalent self-assessment procedure. During subsequent examination by the Custom Authorities, the Concerned Goods were classified under ‘Tariff Item 8471 30 10’ which was later confirmed by the Assistant Commissioner of Customs and Commissioner of Customs (Appeal). These findings were further affirmed by the Customs, Excise and Service Tax Appellate Tribunal (hereinafter ‘CESTAT’), West Zonal Bench, Mumbai vide the impugned judgments dated 19.12.2018 and 24.06.2019.
3. While the rate of duty is same under both the Tariff Items, the method of computing them is different. Goods under ‘Tariff Item 8471 30 10’ attract the application of Section 4A of Central Excise Act, 1944, which valued the excisable goods on the basis of percentage of retail sale price. In contrast, a classification under ‘Tariff Item 8471 50 00’ invites valuation based on price mechanism under Section 4 of Central Excise Act, 1944 which would have effectively reduced the overall liability to pay the requisite duty. This difference in liability is the precise reason behind the present dispute regarding classification under the correct Tariff Item which calls for adjudication.
4. Before delving into the reasoning of the revenue authorities and CESTAT, which is more or less identical, it would be appropriate to reproduce the following relevant parts of the First Schedule:
| Heading/Sub-Heading/Tariff Item1 | Description of goods2 |
| 8471 | Automatic data processing machines and units thereof; magnetic or optical readers, machines for transcribing data on to data media in coded form and machines for processing such data, not elsewhere specified or included |
| 8471 30 | Portable digital automatic data processing machines, weighing not more than 10 kg, consisting of at least a central processing unit, a keyboard and a display |
| 8471 30 10 | Personal computer |
| 8471 30 90 | Other |
| Other automatic data processing machines | |
| 8471 41 | Comprising in the same housing at least a central processing unit and an input and output unit whether or not combined |
| 8471 41 10 | Micro computer |
| 8471 41 20 | Large or main frame computer |
| 8471 41 90 | Other |
| 8471 49 00 | Other, presented in the form of systems |
| 8471 50 00 | Processing units other than those of subheading 8471 41 or 8471 49, whether or not containing in the same housing one or two of the following types of unit: storage units, input units, output units |
(Emphasis Applied)
_____________________
1. Additional Notes to The Customs Tariff Act 1975, Sch. 1 states that:
(a) “Heading” in respect of goods, means a description in list of tariff provisions accompanied by a four-digit number and includes all subheadings of tariff items the first four-digits of which correspond to that number.
(b) “Subheading” in respect of goods, means a description in list of tariff provisions accompanied by a six-digit number and includes all tariff items the first six-digits of which correspond to that number.
(c) “Tariff Item” means a description in list of tariff provisions accompanied by a six-digit number means a description of goods in the list of tariff provisions accompanying either eight-digit number and the rate of the duty of excise or eight-digit number with blank in the column of the rate of duty.
2. General Explanatory Notes to The Customs Tariff Act 1975, Sch. 1 st
Weight cannot be sole factor to determine factum of portability. Automatic Data Processing Machines are not portable.
The classification of imported goods as automatic data processing machines hinges on their primary function rather than nominal characteristics, necessitating the burden of proof on customs to refute....
Classification of goods must focus on predominant use rather than mere technical specifications, granting exemptions accordingly.
Imported monitors designed for use with ADP machines must be classified accordingly under the Customs Tariff, ensuring adherence to proper duty rates as established by regulatory standards.
The classification of goods for customs duty purposes must be based on evidence and specific legal standards; the burden of proving misclassification rests on the revenue, not the importer.
Imported goods must be classified based on their specific tariff heading rather than their ultimate end-use. Under the Customs Tariff, specific entries for articles take precedence over general 'part....
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