If a machine manufacture with primary purpose than it would not be covered by entry 41A clause XXIII

Court :
HIGH COURT OF DELHI

Brief :
By an interim order dated 6th July, 2009 in the case of Canon India Pvt. Ltd., it was directed that there shall be stay of the impugned demand. The said interim order has continued. In fact, the writ petition filed by Canon India Private Limited was entertained as at that stage reference was made to the decision of the advance ruling authority i.e. Commissioner, Trade and Taxes, Delhi in the case of Ricoh India Limited. The said decision of advance ruling authority was affirmed by the Appellate Tribunal and thereafter was challenged in this Court in STA 6/2010. In STA 6/2010, we have examined the question whether or not multi functional printers are input or output units under Entry No.41A of the notification issued under the Act. In the said case, we have held as under:- “18. … Therefore, in respect of the period prior to 30th November, 2005, we answer the aforesaid question of law recording that the multi function machines may or may not be computer peripheral, depending upon the main purpose or function which the machine was designed and manufactured to perform. If the principal and predominant purpose was to act as a computer printer or scanner or as an input or output devise of the computer, the multi functional machine would qualify and fall under entry 41A clause XXIII. However, if the machine was designed and manufactured for some other primary purpose, then it would not be covered by Entry 41A clause XXIII. Mere description or the nomenclature given by the manufacturer or trader is not relevant and the assessee should justify and establish their claim. We have applied the doctrine/test of principal and dominant purpose, as it is the most appropriate and logical test. The said test was applied by the Supreme Court in the case of Xerox India Ltd. (supra) for the purpose of Customs Act. A multi functional printer or machine may be able to perform several functions, but an ancillary or incidental function would not be relevant. The relevant determining factor in such cases even for the period before 31st November, 2005, would be the dominant or main purpose. This would prevent misuse and mis-declaration by the seller, who may try and sell a photocopier and a duplicating machine as a computer peripheral when, in fact, the main purpose and object of the machine was is to make copies or duplicate documents.

Citation :
CANON INDIA P. LIMITED..... Petitioner Through Mr. S. Ganesh, Sr. Adv, Mr. Rajiv K. Virmani, Sr. Adv. with Amar Gupta, Mr. Dheeraj Nai and Mr. Cheetan Chopra, Advs. Versus VALUE ADDED TAX OFFICER AND ANR. ..... Respondent Through Mr. H.C. Bhatia and Mr. K.K. Ahuja, Advs.