ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 08.12.2025
CESTAT Kolkata Upholds Correct Classification of Biometric Devices in Favor of Importers
This Article has been written by Shri Ravi Shekhar Jha, Advocate based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.comor on his Mobile +91-9999005379.
In a significant ruling, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Kolkata, has delivered a judgment favoring FACE IT Systems LLP and Fortuna Impex Pvt. Ltd. in a long-standing dispute over the classification of imported biometric devices. โ The case revolved around the classification of “Access Controller Face Recognition Systems” imported by the appellants, with the central question being whether these devices should be classified under Customs Tariff Heading (CTH) 8471 or CTH 8543. โ
Background of the Case
The appellants, FACE IT Systems LLP and Fortuna Impex Pvt. โ Ltd., imported face recognition systems from China, declaring them under CTH 84716090 as “Data Collection Terminals (based on face recognition).” โ This classification allowed them to claim NIL duty benefits under Notification No. โ 024/2005 โ Customs dated 01.03.2005. โ However, the Revenue alleged that the goods were misclassified and should instead fall under CTH 8543, which attracts a basic customs duty of 7.5%. โ
The dispute escalated when the Special Intelligence and Investigation Branch (SIIB) intercepted the consignments, alleging misclassification and misdeclaration. โ The Revenue also raised concerns about undeclared items found in the shipment, including old integrated circuit boards and other components. โ A Show Cause Notice (SCN) was issued, demanding differential duty, interest, and penalties for both the live consignment and past consignments. โ
Arguments Presented
The appellants argued that the imported devices met the criteria for classification under CTH 8471, which covers Automatic Data Processing Machines. โ They presented detailed technical reports from STQC IT Service and Jadavpur University, which confirmed that the devices were microcomputer-based systems capable of automatic data processing. โ The reports highlighted the devices’ ability to store and process data, perform arithmetic computations, and execute programs without human intervention. โ
The appellants also cited several case laws, including decisions from the Delhi and Ahmedabad benches of the Tribunal, which had previously ruled that similar biometric devices were classifiable under CTH 8471. โ They contended that the extended period for demanding differential duty on past consignments was not applicable, as the issue was one of interpretation rather than suppression of facts. โ
On the other hand, the Revenue argued that the devices were electrical machinery and should be classified under CTH 8543. โ They also justified the confiscation of undeclared items and the penalties imposed on the appellants. โ
CESTAT’s Decision
After a detailed examination of the technical reports, case laws, and arguments from both sides, the Tribunal concluded that the imported devices were indeed Automatic Data Processing Machines and should be classified under CTH 8471. โ The Tribunal rejected the Revenue’s claim that the devices were electrical machinery under CTH 8543, stating that the devices did not meet the criteria for such classification. โ
The Tribunal also set aside the confirmed demand for the extended period in the case of FACE IT Systems LLP, ruling that the issue was one of classification interpretation and not suppression of facts. โ Consequently, the penalties imposed on the appellants and other notices were also dismissed. โ
Key Takeaways
This ruling is a landmark decision in the realm of customs classification disputes, particularly for importers dealing with advanced biometric devices. The judgment underscores the importance of technical evaluations and expert opinions in determining the correct classification of goods. โ It also highlights the need for clarity in customs regulations to avoid disputes arising from differing interpretations.
Conclusion
The CESTAT Kolkata’s decision to uphold the classification of the biometric devices under CTH 8471 is a significant win for FACE IT Systems LLP and Fortuna Impex Pvt. Ltd. The ruling not only provides relief to the appellants but also sets a precedent for similar cases in the future. Importers dealing with advanced technology can take solace in the fact that the Tribunal recognizes the evolving nature of technology and its implications for customs classification.
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Source: CESTAT Kolkata
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