Summary
Customs reclassified HP's imported all-in-one desktop computers from Tariff Item 8471 50 00 to 8471 30 10, which covers portable machines weighing under 10 kg. That attracted valuation on retail sale price under Section 4A of the Central Excise Act. The CESTAT upheld the change, reasoning that anything under 10 kg is portable. The Supreme Court reversed. 'Portable' must be read in the context of automatic data processing machines and in trade parlance, not by its dictionary sense. It requires both ease of carriage, judged by weight, dimensions and needed accessories, and suitability for daily transit. Large, fixed, stand-mounted units needing mains power are not portable. The Revenue failed to discharge its burden, so the declared classification stood.
Issues
- Whether all-in-one integrated desktop computers weighing under 10 kg are 'portable' automatic data processing machines classifiable under Tariff Item 8471 30 10 of the First Schedule to the Central Excise Tariff Act, 1985, or fall under Tariff Item 8471 50 00.
Provisions considered
- First Schedule, Heading 8471, Sub-heading 8471 30 and Tariff Item 8471 50 00, Central Excise Tariff Act, 1985Sub-heading 8471 30, preceded by a single dash, is a sub-classification of Heading 8471, so 'portable' must be understood with reference to automatic data processing machines. (¶¶ 4, 15, 16)
- Sections 4 and 4A, Central Excise Act, 1944Classification under 8471 30 10 attracts retail-price-based valuation under Section 4A, while 8471 50 00 attracts transaction value under Section 4, hence the dispute. (¶ 3)
Held
- The HSN explanatory note to sub-heading 8471.30 says such machines 'may be' capable of operating without external power, so a built-in power source or functionality is not a condition of portability. (¶¶ 11, 12)
- Courts and adjudicating authorities should be cautious in relying on crowd-sourced online sources such as Wikipedia for resolving legal disputes and should encourage reliance on authentic sources. (¶ 14)
- Weight alone does not determine portability; following Krishna Carbon Paper and technical literature, an automatic data processing machine is portable if it can be carried easily, considering weight, dimensions and necessary accessories, and is suited to a consumer's daily transit, considering durability and protection. (¶¶ 13, 16, 17, 18, 21)
- The goods, with displays of at least 18.5 inches, needing a stand, external power and fixed vertical use, and without protective cases for transit, are not portable; the Revenue bore and failed to discharge the burden of proving its classification, so the declared Tariff Item 8471 50 00 applies. (¶¶ 19, 20, 22, 23)
Result
Civil Appeal Nos. 5373 and 6715 of 2019 allowed; the CESTAT judgments dated 19.12.2018 and 24.06.2019 classifying the goods under Tariff Item 8471 30 10 set aside and valuation directed under Tariff Item 8471 50 00, with consequences to follow.