Kronos 4500 Touch ID Terminal Chips are Classifiable under the Category of Electrical Machines and Apparatus

The CESTAT, Bangalore has ruled that Kronos 4500 Touch ID terminal chips, used for employee attendance and data collection, are to be classified as electrical machines and apparatus under Chapter Heading 8543. The tribunal found that the device's specific function of recording attendance and processing data, when used with a central server, excluded it from classification under Chapter 84.

The CESTAT,Bangalore in the case of The Commissioner of Customs v. M/s. Kronos Systems India Pvt. Ltd. [Customs Appeal No. 558 of 2010 dated October 20, 2023] held that, the Kronos 4500 Touch ID terminal chips are classifiable under the category of electrical machines and apparatus. 

Facts

M/s. Kronos System India Private Limited ("the Respondent") had imported the '553 series for 4500 Full A/N Prox. Exp Memory'. The importers claimed that this item was to be part of a computer, on examining the samples, it was found that the item imported was described as a data collection device known as Kronos 4500 Touch ID terminal chips with an integrated badge reader. It has an integrated bar code reader, proximity reader, and magnetic reader. 

When an employee swipes his card in the card reader slot or enters his pin through the alphanumeric keys, the machine identifies the employee and marks his attendance and exit. The data collected is rooted to a central server, which is further processed.
The Commissioner of Customs ("the Appellant") states that from the description of the product catalog submitted, by the respondent, it does not fall under "Electrical machines and apparatus having individual functions."

Issue

Whether the terminal chips fall under the category of automatic data processing devices?

Held

The CESTAT, Bangalore in Customs Appeal No. 558 of 2010 held as under:

• Observed that, based on the General Rules of Interpretation and the Chapter Notes, the item needs to be classified in the heading akin to it or where the specific description is provided. Thus, the data collection device imported by the respondent is nothing but a card reader working in conjunction with the server. Therefore, this device's functions are specifically classified under Chapter Heading No. 8543. 
• Further Observed that, on plain reading of Chapter Note 5(E) to Chapter 84, it indicated that the specific function of the imported item, i.e., to mark attendance or to take note of the persons of the employees for attendance or payroll or leave, cannot be classified under Chapter 84 as it excludes from Chapter Note 5(E).
• Relied on the judgement of Commissioner of Customs, Bangalore vs. Scatia[2019 (370) ELT 703 (Tri.-Bang.)], which held that a similar product, i.e., fingerprint scanner, was classified under Chapter Heading 8543 as per the observations made by the Tribunal.
• Held that, the product is rightly classifiable under chapter 8543.