AUTHORITY FOR ADVANCE
RULINGS
(CUSTOMS, CENTRAL EXCISE & SERVICE TAX)
NEW DELHI
PRESENT
Hon'ble Mr. Justice Syed
Shah
Mohammed Quadri (Chairman) |
Mr. Somnath Pal
(Member)
|
Dr. B.A. Agrawal
(Member) |
Ruling No. AAR (CUS)/05/2004
Application No.AAR/107/CUS/2004
Applicant
|
M/s.Bloomberg
Data Services ( India )
Pvt. Ltd.,
51 A, Maker Chambers IV,
Nariman Point
Mumbai-400 021
|
Commissioner designated
|
Shri R.K. Singh
Additional Director General
Directorate of Revenue Intelligence
New Delhi.
|
Present : for the applicant |
Shri D. Arvind,
Consultant
Shri Udayan D.Choksi,
Consultant
Shri Mohit Dubey,
Technical Expert for the Commissioner designated
|
|
Shri R.K. Singh,
Additional Director General
|
RULING
( By Mr Somnath Pal, Member )
An
application has been filed by M/s Bloomberg Data Services (India) Pvt. Ltd.,
(the name of the applicant as amended and to be referred to hereinafter as the
'applicant') seeking advance ruling under section 28 H (2) (a) of the Customs
Act, 1962. The issue, though not shaped in a question form, on which an advance
ruling has been sought by the applicant, is in respect of classification of
Bloomberg Keyboard under Customs Tariff Act, 1975.
2. In the statement of the relevant facts having bearing on the question
on which the advance ruling is required, the applicant has stated that they are
engaged in the business of providing on-line financial information. For this
purpose, they provide computer hardware facilities. In this regard the
applicant is proposing to import keyboards used for personal computers.
According to the applicant, the keyboard is having additional features to cater
to the needs of the applicant. It also has an audio system consisting of
speakers and a microphone for use with multimedia applications and to conduct
telephone calls. The keyboard also contains a low-speed embedded processor and
a liquid crystal display which shows keyboard status information.
In the statement containing the applicant's interpretation of law
and of facts, it has been further stated that this product can perform more than
one function i.e. it can also be used to receive and make telephone calls
amongst applicant's networks. According to the applicant, the product would
still fall under the heading 84.71 of the First Schedule Customs Tariff Act,
1975 ( hereinafter referred to as "the Schedule") The product, the applicant
contends, is predominantly essential for data input function without which the
subscribers of the applicant will not be able to gain access to the services
offered by the applicant. The additional facilities particularly the telephone
are only incidental and ancillary to the main function and use, which is
inputting financial information. The product has essential character of a
standard personal computer keyboard and needs to be classified as such under
tariff item 8471.60 which reads as "input or output units whether or not
containing storage units in the same housing". The applicant has referred to
Rule 3 and Rule 4 of the General Rules for the Interpretation of the Schedule
and also the HSN Explanatory Notes given in section XVI which covers
multi-function machines and composite machines. Attention has been drawn in
particular to Note VI thereof, according to which multi-function machines in
general are classified according to the principal function of the machine. It
has been further contended by the applicant that based on the appearance of the
product and the details contained in the features list for the product, there
can be little doubt that the principal function of the article is as a personal
computer keyboard.
3. The applicant has also drawn our attention to the "Bloomberg Keyboard
Technical Information" leaflet as well as to the 'Installation and Reference
Guide' as on
28th
September 2004
in further support of their view. They also furnished a copy of the
communication dated 13/1/2004 apparently from H.M. Customs and Excise,
International Trade Operations, Essex, U.K addressed to M/s Bloomberg LP, London
giving a Binding Tariff Information for the goods described as "A PC keyboard
that can be used with all standard windows applications and has additional keys
specifically for use with Bloomberg applications. The keyboard incorporates
stereo speakers and a microphone for use with multimedia applications and voice
over internet protocol capabilities. The keyboard also features an LCD to
display keyboard status information..........". The classification of the goods has
been indicated in the said communication as 8471 60 5000 in the customs
nomenclature.
4. The Departmental representative is also of the view that despite the
add- on functions, the essential function of this product basically remains to
be data input to a personal computer. It cannot be used as a telephone set or a
speaker system separately. The product contains essential characteristics of an
input device of an automatic data processing machine and hence it appears
classifiable under Customs Tariff heading 8471 being a keyboard with add-on
functions to be used with a Personal Computer.
5. From the " Bloomberg Keyboard Installation & Reference Guide as on 28th
September, 2004, version : 2.5" submitted by the applicant, we observe that it
is described as a standard PC Keyboard that has been specially designed for use
with the Bloomberg Professional service. Under the heading "keyboard features",
the following aspects, inter alia, have been specified:-
"(i) The keyboard can be used with all standard Windows applications.
(ii) The
keyboard is equipped with keys that have been specifically designed for use with
the Bloomberg Professional service.
(iii) The
keyboard has integrated VoIP (Voice over Internet Protocol) hardware that
supports voice communication over the Bloomberg network.
(iv) The
keyboard contains high quality stereo speakers and a directional microphone that
support Windows multimedia audio and Bloomberg VoIP."
6. In the pictoral depiction of the " keyboard overhead" as given in the
leaflet d "The Bloomberg Keyboard - Technical Information", also submitted
by the applicant, various functional keys and other features have been clearly
indicated. These include inbuilt "speakers for PC or Bloomberg VoIP audio
output", "VoIP key" which "activates Bloomberg internet telephony features",
"Microphone mute" which "activates & mutes the keyboard microphone" and
"Microphone records to PC applications or Bloomberg internet telephony
applications". It is thus evident that the integrated VoIP as well as the
stereo speakers and the microphone are all built in features of the keyboard
itself. Moreover, the VoIP facility is operable through the "VoIP key" of the
keyboard. As per the Webopedia - an online encyclopedia dedicated to computer
technology - the "Internet Telephony" is "a category of hardware and software
that enables people to use the Internet as the transmission medium for
telephone calls. For users who have free, or fixed - price Internet access,
Internet telephony software essentially provides free telephone calls anywhere
in the world. To date, however, Internet telephony does not offer the same
quality of telephone service as direct telephone connections.
There are many Internet telephony applications available. Some like Cooltalk and Net Meeting come bundled with popular Web browsers. Others
are stand alone products. Internet telephony products are sometimes
called IP telephony, Voice over the Internet (VoI) or Voice over IP (VoIP)
products."
From the
above, it appears to us that the Bloomberg Keyboard - the product in question -
has an integrated hardware and software which would enable the people to use the
internet as the transmission medium for telephone calls. It is an additional
facility provided to the user of the Internet.
7. Turning now to the classification issue, we find that "keyboard " is
specifically covered by the sub-sub-heading 8471 60 40 of the Schedule under
the sub-heading 8471 60 which reads as "Input or output units, whether or not
containing storage units in the same housing ", which in turn falls under the
main tariff heading 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."
8. The short point which thus arises for our consideration is whether
the product in question ceases to be a "keyboard" by virtue of the additional
facilities built into it, particularly the VoIP or the internet telephony. From
the technical literature submitted by the applicant and the details highlighted
above, we have no doubt in our mind that functionally the product is basically a
keyboard which can function as a keyboard even without the additional facilities
which have been integrated into it. As per the Chapter note 5 (D) of Chapter 84
of the Schedule, Printers, Keyboards, X-Y co-ordinate input devices and disk
storage units which satisfy the conditions of paragraphs (B) (b) and (B) (c) of
the Chapter note 5, are in all cases to be classified as units of heading 8471.
The said conditions namely, "it is connectable to the central processing unit
either directly or through one or more other units," and "it is able to accept
or deliver data in a form (codes or signals) which can be used by the system",
are satisfied in the case of the product in question. We, therefore, find it
reasonable to hold that the product under consideration would be classifiable as
a unit of the heading 8471. It would indeed be too much to treat it as a
telephone set falling under the heading 8517. The principal purpose is to use
the product as a keyboard while the VoIP, stereo speakers and microphone are
ancillary to this principal purpose. Chapter note 7 of Chapter 84 of the
Schedule stipulates that "a machine which is used for more than one purpose is,
for the purposes of classification, to be treated as if its principal purpose
were its sole purpose". The principal purpose of the product in question being
that of a keyboard, it has therefore to be appropriately classified as per its
principal purpose and accordingly it would fall under the heading 8471 60 40 of
the Schedule.
9. In the light of what has been discussed above, we rule that the
product in question namely 'Bloomberg keyboard' would be classifiable as an
input unit of an automatic data processing machine, falling under the specific
tariff item 8471 60 40 of the Schedule ( 2004-2005).
Sd/-
( B.A.
AGRAWAL )
MEMBER
|
Sd/-
( JUSTICE S.S.M.QUADRI )
CHAIRMAN
|
Sd/-
( SOMNATH PAL
)
MEMBER
|
Dated 28th October, 2004.
No.AAR/44/107/04
|