CESTAT Bangalore- allows the classification of projectors under CTH 85286100 with exemption benefits

Case Overview:

This case involves an appeal filed by M/s. BenQ India Pvt. Ltd. against Order-in-Original No. 1/2017-18 dated 24.01.2018, issued by the Commissioner of Customs, Airport and Air Cargo Complex, Bangalore.

The dispute centers around the classification of imported data projectors and their eligibility for customs duty exemption under various notifications. The customs authorities classified the projectors under a different Customs Tariff Heading (CTH), thereby denying the claimed exemption and imposing customs duty, interest, and penalties.

Key Issues in the Case:

Classification of Imported Projectors:

BenQ India Pvt. Ltd. classified its imported projectors under CTH 8528 6100, arguing that they were “solely and principally used with Automatic Data Processing (ADP) machines” (i.e., computers)
The Customs Department reclassified them under CTH 8528 6900, claiming that the projectors were also compatible with DVD players, HDMI, Composite Video, and S-Video inputs, making them unsuitable for exemption under customs notifications.

2. Denial of Exemption:

Due to the reclassification, customs authorities denied exemptions under the following notifications:
- Notification No. 69/2004-Cus. (Sl. No. 11E) dated 09.07.2004
- Notification No. 24/2005-Cus. (Sl. No. 17) dated 01.03.2005
- Notification No. 28/2007-Cus. dated 01.03.2007
- Notification No. 21/2012 (Sl. No. 2) dated 17.03.2012

3. Customs Duty Demand & Penalty:

Customs duty of ₹1,12,86,872 was demanded under Section 28 of the Customs Act, 1962.
An equal penalty was imposed under Section 114A, alleging misdeclaration of the goods’ classification to avail undue exemption benefits.

Arguments by Both Sides:

Arguments by BenQ India Pvt. Ltd. (Appellant):

The imported projectors were data projectors primarily used in educational institutions and business presentations.
They submitted sales invoices showing that the projectors were sold to educational institutions, proving their use as data projectors.
Cited previous tribunal rulings where similar projectors were classified under CTH 8528 6100 and granted exemption benefits.
Relied on precedents such as:
- CC, Bangalore v. M/s. Antrax Technologies Pvt. Ltd. and M/s. Acer India Pvt. Ltd. (2024)
- M/s. BenQ India Pvt. Ltd. v. ADG (Adjudication), New Delhi (2022)
- Epson India Pvt. Ltd. v. CC, Chennai (2019) (affirmed by the Supreme Court)

Arguments by the Customs Department (Respondent):

The projectors could accept signals from multiple sources (DVD players, HDMI, etc.), making them multi-functional rather than solely used with ADP machines.
Classification under CTH 8528 6900 was justified, and the exemptions claimed were invalid.
Since the importer knowingly misclassified the projectors, the penalty under Section 114A was valid.

Tribunal’s Key Findings & Ruling:

Classification Should Be Under CTH 8528 6100:

The principal function of the imported projectors was to work in conjunction with ADP machines.
Additional features like HDMI, S-Video, or Composite Video ports do not change the principal use of the product.
Citing past judgments, the tribunal ruled that such projectors must be classified under CTH 8528 6100.

2. Precedents Already Established in Favor of the Importer:

The tribunal referred to similar past cases where the same classification issue had been resolved in favor of the importers.
Notably, the Supreme Court had already affirmed similar rulings in the Epson India Pvt. Ltd. case (2019).
As the issue was no longer res integra (not open to further debate), the tribunal ruled in favor of BenQ India Pvt. Ltd.

3. Exemption Benefits Were Rightfully Applicable:

Since the projectors were correctly classifiable under CTH 8528 6100, the denial of exemptions was unjustified.
BenQ India Pvt. Ltd. was eligible for duty exemption under Notification No. 24/2005-Cus. and others.

4. Demand for Customs Duty & Penalty Set Aside:

The tribunal set aside the customs duty demand of ₹1,12,86,872 as the exemption was applicable.
The penalty under Section 114A was also quashed, as there was no misdeclaration or intent to evade duty.

Final Tribunal Decision:

The appeal was allowed in favor of BenQ India Pvt. Ltd.
The customs duty demand of ₹1,12,86,872 was set aside.
The penalty under Section 114A of the Customs Act was quashed.
The imported projectors were reclassified under CTH 8528 6100, making them eligible for exemption benefits.

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Source: CESTAT Bangalore

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