Emotionally Intelligent Companion device is Human-like Companion for Children, classifiable as ADP: CESTAT quashes Customs Duty Demand [Read Order]

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) quashed customs duty demand and held that Emotionally Intelligent Companion Device is human-like companion for children and the same is classifiable as automatic data processing ( ADP ). The version, for which application was preferred, did obtain registration with Bureau of Indian Standards ( BIS ) and it is the claim of the appellant the rejection of the earlier version, which was then under import, did not exclude it from ‘automatic data processing ( ADP ) machine’ or include it as ‘toy’ for customs classification which is to be in conformity with its own convention and rules and that, in any case, MIKO II too was incorporated in the registration. The goods were confiscated under section 111(m) and 111(d) of Customs Act, 1962, though permitted for redemption on payment of fine of ₹ 38,00,000, and on which differential duty of ₹ 99,74,345, stemming from adoption of classification proposed in the show cause notice, was ordered to be recovered under section 28(4) of Customs Act, 1962, along with applicable interest thereon under section 28AA of Customs Act, 1962, in order of Commissioner of Customs ( Import ), which is under challenge. It was submitted by the counsel for the appellant that descriptions in product literature and marketing platforms cannot determine classification which must be all about features of the product and that, even if user is a child, it is not a toy by default in the face of sophisticated electronic processing carried out by the product. Its multifarious use for statistical analysis and as a driving companion installed by vehicle manufacturers would, according to the Counsel, not lend amenability to classification as toy, even for adults. The Authorized Representative who, on behalf of respondent, contended that, without any distinguishable difference from goods imported earlier, viz., MIKO I, the appellant sought to place their imports under a heading that would obtain for them substantial exemption from duties of customs. The counsel submitted that, in the context of the response of Ministry of Electronics and Information Technology ( MeitY ) as well as the technical literature furnished, it could not be held that the goods would fit within ‘automatic data processing ( ADP ) machines’ and, relying on the description of the goods in the trade channels as ‘electronic toy’ intended for children between the ages of 5 and 10, it was contended that, in effect and notwithstanding its redeeming features, it continued to entertain and educate in the same manner that any toy would. A Two-Member Bench comprising Ajay Sharma, Judicial Member and CJ Mathew, Technical Member observed that “The facts, indelibly clear, does not controvert conformity with the essential requirements set out in note 5(A) in chapter 84 of First Schedule to Customs Tariff Act, 1975 There is no finding that the impugned goods, by incorporating or working in conjunction with ‘automatic data processing ( ADP ) machines’, performs the function of ‘toys’ which should be the consummation of resort to note 5(E) in chapter 84 of First Schedule to Customs Tariff Act, 1975 and such finding is well nigh impossible in the absence of any authoritative guidance on ‘toys’ and its intended functions.” “A thought process conditioned by one’s own childhood or parenting experience is not a tenable substitute. Even if this note comes into play insofar as the impugned goods are concerned, the impossibility of appending ‘toys’ renders the claimed classification to be the only one remaining in the ring. Consequently, the classification claimed must remain. The impugned order is set aside to allow the appeal” the Tribunal noted. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates