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D. Murali

An imported inkjet printer is at the crux of this company's case with the Customs. If only classification was hooked straight to the tariff...

LIPI is known for its heavy-duty computer printers, which used to be housed in separate rooms as we do to many of our bosses, more to contain the noise they created than for any other reason. Recently, Lipi Marketing had to argue with the Customs Commissioner at the Chennai tribunal about an inkjet printer that the company had imported.

While Lipi said that the printer has to be classified under heading 8471 of the Customs Tariff, the Department insisted that the item fell under 8443.

On www.cbec.gov.in you can catch up with the tariff in question. Chapter 84 is titled "Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof". Heading 8471 reads, "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."

Under this, you can find personal computer (30 10), large or mainframe computer (41 20), laser jet printer (60 26), inkjet printer (60 27) and so forth. Heading 8443 reads, "Printing machinery used for printing by means of the printing type, blocks, plates, cylinders and other printing components of heading 8442; ink-jet printing machines, other than those of heading 8471; machines for uses ancillary to printing."

At the tribunal, Lipi's advocate D.M. Rangam drew attention to Note 5(D) in Chapter 84, that printers, keyboards, X-Y co-ordinate input devices and disk storage units which satisfy the conditions of paragraphs (B) (b) and (B) (c), are in all cases to be classified as units of heading 8471.

And 5(B) states that `subject to paragraph (E)' a unit is to be regarded as being a part of a complete system if it meets all of the following conditions, viz: "(a) it is of a kind solely or principally used in an automatic data processing system; (b) it is connectable to the central processing unit either directly or through one or more other units; and (c) it is able to accept or deliver data in a form (codes or signals) which can be used by the system." Rangam said that inkjet printers are attached to the computers and therefore satisfied (b) and (c) fully.

Now, let us look at what the Department had to say. Its representative R.Bhagyadevi cited Note 5(E), which reads, "Machines performing a specific function other than data processing and incorporating or working in conjunction with an automatic data processing machine are to be classified in the headings appropriate to their respective functions or, failing that, in residual headings."

She also referred to an extract from the HSN (Harmonised System of Nomenclature) explanatory notes on digital machines w.r.t. Chapter 84: "Inkjet printers working in conjunction with an automatic data processing machine but having, particularly in terms of their size, technical capabilities, and particular applications, the characteristics of a printing machine designed to perform a specific function in the printing or graphics industry (production of pre-press colour proofs, for example) are to be regarded as machines having a specific function classifiable in heading 8443."

Bhagyadevi had done her homework well, one realises when reading in the text of the tribunal's order about further evidence she produced at the hearing. She had pulled out from the company's Web site information that the printers imported are mainly used in the printing industry. "Lipi products include digital printing machines, plotters, laser engraving machines, 3D CNC routing machines, seaming machines, hot wire thermocol cutting machines, felx, vinyl, ink and all other materials used in the signage industry... Lipi products are signage solutions, large format printing solutions, large format printing machines, cutting plotters... "

She referred to the catalogue of the imported machine to read out the specifications. "Weight of the machine is 118 kg. Stand alone weighs 116.4 kg. Media of printing is roll and sheet, maximum printing width is 66 inches, print speed is indicated as 280 sq ft/ hr." All these point to the fact that the machine is used in industry and not with any general-purpose computer, said Bhagyadevi. In response, Rangam said that the Tariff did not prescribe any parameters to classify the goods under heading 8443.

Tribunal members P.G. Chacko and T.K.Jayaraman heard the rival contentions and reasoned that one cannot go simply by Note 5(D) in isolation, ignoring 5(B) and 5(E). "In the present case, no doubt, the imported inkjet printer satisfies condition 5(D). In that sense, one can classify it under heading 8471. But Note 5(E) also cannot be ignored," said the tribunal.

Considering the HSN note cited by Bhagyadevi, which amplifies Note 5(E), the tribunal observed that inkjet printers, which are normally used in conjunction with computer in office or home, would rightly be classifiable under heading 8471. However, from the specifications of the machines imported by Lipi, it was obvious that the gizmo was for use in industry "in the sense that these machines print in rolls and sheets". They are not normal papers, they are actually PVC or plastic media and are used mainly in signage industry, noted the tribunal.

"Hence, we are of the considered view that the impugned goods are rightly classifiable under heading 8443," is how the ruling reads. The tribunal pointed out how 8443 too named inkjet printers. "That means inkjet printers are capable of two classifications, one classification under heading 8471 and the other under 8443. A reading of heading 8443 reveals that machines included therein are mainly used in printing/ graphics industry."

Dale Dauten once remarked, "It's called a pen. It's like a printer, hooked straight to my brain." If only classification were something similar - `hooked straight' to the tariff without requiring human interpretation - many disputes may never arise in the first place.

And we may not be spilling ink on an inkjet printer such as of Lipi.

Picture by Bijoy Ghosh

Cases@TheHindu.co.in

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