CAAR: Cryptogenic Device/Token Classifies As ‘Other Units of Automatic Data Processing Machines’ Under Customs Tariff Act, 1975

CAAR: Cryptogenic Device/Token Classifies As ‘Other Units of Automatic Data Processing Machines’ Under Customs Tariff Act, 1975

The Customs Authority for Advance Rulings (CAAR), Maharashtra, has held that 'Cryptogenic Device/Token' (ProxKey and ProxKey PRO) would be classified under Tariff entry 8471 80 00, which pertains to ‘Other units of automatic data processing machines’ of Chapter 84 of the Customs Tariff Act, 1975.

The factual matrix of the case is that the applicant- M/s. Pagaria Infotech Ventures LLP is a registered LLP (Limited Liability Partnership) company involved in the business of trading. The applicant was intending to import ‘Cryptogenic Device/Token’ (ProxKey and ProxKey PRO) (herein after referred as 'subject goods').

The applicant was seeking advance ruling on the classification of subject goods, proposed to be imported and applicability of Serial No. 2 of Notification No. 24/2005-Customs, dated 1 March, 2005, as amended.

The single member Narendra V. Kulkarni found that the possible tariff headings required to be examined for the classification of impugned goods i.e., cryptographic device/token under the first schedule of Customs Tariff Act, 1975 were 8523, 8471 and 8473. Recourse was required to be taken to, HSN Explanatory Notes and provisions of General Rules of Interpretation, opined the Authority.

The CAAR in view of exclusion made in HSN Explanatory Notes for chapter 85 the machinery and apparatus of a kind covered by chapter 84 stands excluded from the scope of any of the headings of chapter 85 and further observed due to technicalities 8523 is not the appropriate classification heading for the impugned products.

The Authority observed that the classification of goods should be based on its primary function. In this regard, the Authority noted that the product had specific character which were in consonance with the principles laid to Chapter note 5C of 84, Worlds Custom Organization (WCO) Explanatory notes related to Tariff entry 8471 80.

The Authority relied on the Supreme Court’s decision in the case of Collector of Customs, Bombay vs. Business Forms Ltd., wherein it was held that the Explanatory Notes to HSN must be given due consideration for classifying goods.

Therefore, the Authority ruled that the ‘Cryptogenic Device/Token’ (ProxKey and ProxKey PRO) fell under Tariff entry 8471 80 00 pertaining to ‘Other units of automatic data processing machines’ of chapter 84 of the first schedule of the Customs Tariff Act, 1975.

The Authority further held that the said goods were eligible for duty exemption under serial number 8 of the notification. No. 24/2005- Customs.