HEWLETT PACKARD INDIA SALES PVT. LTD. (NOW HP INDIA SALES PVT. LTD.) v. COMMISSIONER OF CUSTOMS (IMPORT), NHAVA SHEVA

ABCDEFGH1124SUPREME COURT REPORTS[2023] 1 S.C.R.ingredients to logically establish whether an Automatic DataProcessing Machines (ADP) is ‘portable’ are twofold. The firstingredient is their ability to be carried around easily which includesall aspects such as weight and their dimensions. This Court musthasten to add that in appropriate cases, this assessment wouldalso take into consideration the necessary accessories which arerequired for safe and efficient usage such as mounted stands orany power adapters. The second ingredient is that the ADP mustbe suitable for daily transit of a consumer and would includeaspects such as durability to withstand frequent commute anddamage protection. An example of the same would be theavailability of protection cases which allows users to carry theADPs in hand or possibility of carrying the same in normalbriefcases or shoulder bags. [Para 18][1134-B-D]

On applying these core ingredients to the characteristicsof Concerned Goods, there is no room to doubt that they are not‘portable’. Firstly, the dimensions of the Concerned Goods makeit illogical and unviable for daily transit. While it is true thatclassification of the goods must not be usually made on theadvertisement material of the manufacturer, the user guidesproduced before this Court showcase that placing the product inother than the specified orientation could lead to damage to the Concerned Goods. The user guides also emphatically highlightthat the Concerned Goods were meant to be used at a fixed placeand contained specifications that made them ideal for beingmounted on a wall. Secondly, the inability of the consumer to carrythese goods around in the absence of any protective case or anycovering bags, which makes the Concerned Goods vulnerable todamage during transit. As noted in the literature relied uponbefore this Court, the weight was not the sole consideration forbeing considered as ‘portable’. For example, there used to becomputers which are now no longer in common use which werepopularly known as ‘luggable’. They used to weigh more than 10kilograms. These old predecessors of laptops were designed atthe relevant time to be portable and used to fold up neatly in onebox with a handle. Despite their weight and the size comparableto small suitcase, they could still be transported, albeit without awagon. [Paras 19 and 20][1134-E-H; 1135-A] ABCDEFGH11253. Keeping in view the applicable understanding of theelement of ‘portable’ as understood in common parlance used inthe trade of ADPs, this Court must hold that the Concerned Goodsare not portable for the reasons that-Firstly, the diagonaldimension of the Concerned Goods being minimum of the lengthof 18.5 inches and the same needs to be transported along withthe power cable as well as the applicable stand in most cases if itis to be mounted and; secondly there being no protective casedesigned by the markets for daily transport for these ConcernedGoods. Such requirements make the Concerned Goods unableto be carried around easily during daily transit. This, thus, holdthat the Concerned Goods are not ‘portable’. [Para 22][1135-D-F]

It goes without saying that since the customs authoritieswanted to classify the goods differently, the burden of proof toshowcase the same was on them, which they failed to discharge. Hence under the prevalent self-assessment procedure, theclassification submitted by the appellants must be accepted. [Para23][1135-F-G]CCE v Krishna Carbon Paper Co. (1989) 1 SCC 150;[1988] 3 Suppl. SCR 12 – relied on. Mathuram Agrawal v State of MP (1999) 8 SCC 667: [1999]4 Suppl. SCR 195; collector of Central Excise, Shillong v Wood Craft Products Limited (1995) 3 SCC 454 : [1995]2 SCR 797; Commissioner of Customs, Bangalore v Acer India (P) Ltd. (2008) 1 SCC 382: [2007]11 SCR 558;Dabur India Ltd. v CCE, Jamshedpur (2005) 4 SCC 9 :[2005] 3 SCR 144 – referred to. Case Law Reference[1999] 4 Suppl. SCR 195referred to Para 8[1995] 2 SCR 797referred to Para 12[2007] 11 SCR 558referred to Para 14[1988] 3 Suppl. SCR 12relied on Para 16[2005] 3 SCR 144referred to Para 23CIVIL APPELLATE JURISDICTION : Civil Appeal No.5373of 2019.HEWLETT PACKARD INDIA SALES PVT. LTD. v.

Since, the reasoning confirming the classification under ‘TariffItem 8471 30 10’ by the adjudicating authorities including CESTAT isidentical, hence, it would be sufficient to discuss the key findings of theimpugned decisions in brevity. These observations are :-a) The Concerned Goods weighed less than 10 kilogram and wereeasily carried from one place to another. In this respect the CESTATrelied on dictionary meaning of the word ‘portable’ to hold that the goodswere rightly classified under ‘Tariff Item 8471 30 10";b) The absence of in-built power source does not render the Concerned Goods as non-portable;c) The dimensions of the Concerned Goods as well as the factthat it was not foldable did not impact the element of portability;d) The Concerned goods had a display unit, a touch screen whichcould function as a keyboard and thus it fulfilled the description mentionedunder ‘Tariff Item 8471 30 10’.B. CONTENTIONS6. We have heard learned counsel for the parties and perused thedocuments produced on record. It must be noted that both sides havenot disputed the findings of the adjudicating authorities except in respectof the aspect of portability of Concerned Goods. Hence, the only limitedquestion that falls for consideration before us in these proceedings iswhether the Concerned Goods are ‘portable’ or not under ‘Tariff Item8471 30 10’. ABCDEFGH1129HEWLETT PACKARD INDIA SALES PVT. LTD. v. COMMISSIONEROF CUSTOMS (IMPORT), NHAVA SHEVA

[SURYA KANT, J.]

Mr. V Lakshmikumaran, learned counsel for the Appellants, has made four key contentions. Firstly, that ‘Tariff Item 8471 30 10’pertains to class of ADPs which are popularly known as laptops ornotebooks. He has highlighted that the classification under ‘Tariff Item8471 30 10’ involves an element of ‘functionality’ which is not applicablein the present case as Concerned Goods are not capable of functioningwithout an external source of power. Secondly, he contended that Concerned Goods have been wrongly held to be ‘portable’ by the CESTATon the sole aspect that their weight was less than 10 kilograms. Heargued that mere weight cannot be the sole consideration for decidingwhether any good is ‘portable’ or not, and it is necessary to consideradditional aspects such as functionality and ease of transportability whichis suitable for a mobile lifestyle of the user. Thirdly, he urged that theCESTAT erroneously relied on the general definition of ‘portable’ givenin dictionaries and instead the same should have been defined in relationto the class of goods, i.e. ADPs. In this respect, he pointed out that therelevant ‘Sub-Heading 8471 30’ which entails the condition of being‘portable’ in the description of goods was preceded by a single ‘-’ andconsequently all the goods under the said sub-heading should be takenas a sub classification of the goods covered by the ‘Heading 8471’.Finally, to buttress the aforementioned arguments, he highlighted thatthe Concerned Goods are not considered as ‘portable’ by the EuropeanCommission’s classification and are also not covered by the ‘Tariff Item8471 30 10’ as per the World Customs Organization’s Harmonized SystemExplanatory Notes (hereinafter, ‘HSN’). We must also bring to the foreand appreciate the efforts of learned counsel for the Appellants whophysically demonstrated by setting up one of the sample units of the Concerned Goods to showcase the aspects of portability involved inpresent matter.

On the contrary, Mr. Arjit Prasad, learned senior counsel forthe Respondent while supporting the observations in the impugneddecisions, put forth two counter arguments. Firstly, that since the word‘portable’ is nowhere defined in the statute, it should be interpreted onthe principle of general parlance. In other words, he submitted that thedictionary meaning of the word ‘portable’ is sufficient to resolve thedispute regarding its interpretation. Secondly, he maintained that thelegislature’s intention was crystal clear in qualifying the term ‘portable’by providing the condition in the description that any ADP less than10Kgs would automatically become portable. In furtherance of this ABCDEFGH1130SUPREME COURT REPORTS[2023] 1 S.C.R.3 Mathuram Agrawal v State of MP (1999) 8 SCC 667, para 12.4 It must be noted that in respect of current market trends, generally the largest displayfor laptops/notebooks is around 17 inches.argument, he relied on the Constitution Bench decision of this Court in Mathuram Agrawal v State of MP3 to urge that the intention of thelegislature has to be discerned from the plain and unambiguous meaningof the language used in a taxation statute and any other interpretation isimpermissible.

We now examine these contentions of both parties.ANALYSIS10. Before we ponder over the question whether the ConcernedGoods are ‘portable’ or not, it would be appropriate to highlight their keycharacteristics which are as follows :-a) The central processing unit is embedded within the displayunit;b) The display unit is generally a touch screen which can be usedas an input unit also, such as in the capacity of a keyboard or a mouse;c) The units generally come along with in-built speakers as wellas ports for further connectivity including a port for establishing linkswith internet network;d) The diagonal length of the display is at the minimum of 18.5inches. It may be clarified that presently certain models of the ConcernedGoods even exceed this aspect by having the display’s diagonal lengthas wide as 25 inches while still being weighed under 10 kilograms;4e) It needs a constant source of external power source to function;f) It is non-foldable and cannot be carried around in the usuallaptop bags because of its dimensions;g) The Concerned Goods for efficient functioning need to remainin a vertical state and to be tethered to a stand which is provided alongwith it or requires support of something else such as a wall. It must benoted that the user guides brought on record in respect of one of themodels of the Concerned Goods indicate that any other method of usageincluding horizontal use was harmful and could cause damage to the Concerned Goods.

The first aspect which we will address is with respect to theissue of constant source of power and whether the same is a necessary ABCDEFGH1131HEWLETT PACKARD INDIA SALES PVT. LTD. v. COMMISSIONEROF CUSTOMS (IMPORT), NHAVA SHEVA [SURYA KANT, J.]characteristic to treat goods as ‘portable’. In this respect, the Appellantsargued that ‘Tariff Item 8471 30 10’ is only applicable to laptops/notebooksand that the applicable sub-heading HSN indicated this. The relevantpart of the same reads as follows –

Subheading 8471.30This subheading covers portable automatic data processingmachines weighing not more than 10 kg. These machines, which are equipped with a flat screen, may be capable ofoperating without an external source of electric power andoften have a modem or other means for establishing a linkwith a network.

(Emphasis Applied)

While it appears well settled that the HSN is to be normallytaken as a safe guide for classifying goods under the First Schedulebecause it is based on an internationally recognized ‘harmonizednomenclature’5, a bare reading of the explanatory note applicable to thesub-heading clearly lays out the fact that there is no mandatory conditionfor being operable without any external source of power. We are thusunable to agree with the Appellants that only ADPs with a built-in powersource is necessarily required to be classified under ‘Tariff Item 847130 10’. In other words, no element of ‘functionality’ is contemplated forthe purpose of classifying the Concerned Goods as ‘portable’.

The second aspect deals with the question as to whether merefactum of weighing less than 10 kilograms would be sufficient to classifythe Concerned Goods as ‘portable’ or not. In this respect, it may be seenthat the CESTAT vide its impugned order(s) has relied on the dictionarymeaning which defined ‘portable’ as - “that can be easily carried andnot permanently fixed in a place”. It then went on to conclude that thedimensions of the Concerned Goods were not a concern as long as itcould be easily lifted and moved. As noted above, a similar argumenthas been raised by learned senior counsel for the Respondent before usalso.

At the outset, we must note that the adjudicating authoritieswhile coming to their respective conclusions, especially the Commissionerof Customs (Appeal) have extensively referred to online sources such5 Collector of Central Excise, Shillong v Wood Craft Products Limited (1995) 3 SCC454. ABCDEFGH1132SUPREME COURT REPORTS[2023] 1 S.C.R.as Wikipedia to support their conclusion. While we expressly acknowledgethe utility of these platforms which provide free access to knowledgeacross the globe, but we must also sound a note of caution against usingsuch sources for legal dispute resolution. We say so for the reason thatthese sources, despite being a treasure trove of knowledge, are basedon a crowd-sourced and user-generated editing model that is notcompletely dependable in terms of academic veracity and can promotemisleading information as has been noted by this court on previousoccasions also.6 The courts and adjudicating authorities should rathermake an endeavor to persuade the counsels to place reliance on morereliable and authentic sources.

Moving forward, we must now address the issue at hand, namely, the interpretation of the word ‘portable’ and more so when thereasoning of the CESTAT solely hinges on the aspect of weight. Suchan approach is apparently erroneous because despite the fact that the‘portable’ was not defined under the statute, it was incorporated in‘Sub-Heading 8471 30’ and was preceded by a single ‘-’, which meantthat classification of goods under the same would be taken as a sub-classification of the ‘Heading 8471’.

In other words, ‘portable’ should have been defined in referenceto the ADPs instead of relying on dictionary meaning which contains allkinds of hues of associated meanings as held by this Court in CCE vKrishna Carbon Paper Co.7. The cited decision also explains the correctapproach to be taken in case when a word is to be defined in context ofany entry under the First Schedule. It thus holds that :–

10. The trade meaning is one which is prevalent in thatparticular trade where the goods is known or traded. Ifspecial type of goods is subject-matter of a fiscal entry thenthat entry must be understood in the context of thatparticular trade, bearing in mind that particular word. Where, however, there is no evidence either way then thedefinition given and the meaning following (sic flowing) fromparticular statute at particular time would be the decisivetest.

8(Emphasis Applied)6 Commissioner of Customs, Bangalore v Acer India (P) Ltd. (2008) 1 SCC 382,para 17.7 CCE v Krishna Carbon Paper Co. (1989) 1 SCC 150, para 6.8 ibid, para 10. ABCDEFGH1133HEWLETT PACKARD INDIA SALES PVT. LTD. v. COMMISSIONEROF CUSTOMS (IMPORT), NHAVA SHEVA

[SURYA KANT, J.]

In our considered opinion, the word ‘portable’ should havebeen interpreted in the context of ADPs. In this regard, relevant technicaland commercial literature has been perused by us. On a minute analysisthereof, we deem it appropriate to extract the following relevant material:-The Institute of Electrical and Electronics Engineers defines‘portable computer’ as -“A personal computer that is designed and configured topermit transportation as a piece of handheld luggage” 9The Dictionary of Computer and Internet Terms defines it as -“able to be carried around. A portable computer is largerthan a laptop computer, but is still easily movable” 10The Oxford Dictionary of Computer Science defines ‘portable’ inrespect of computers as -“A computer that can be simply carried from one place toanother by one person. They cannot necessarily be used intransit. Examples include laptop computers.” 11The Microsoft Computer Dictionary also provides a definition alongwith an illustrative chart depicting various types of ‘portable computers’–“Any computer designed to be moved easily. Portablecomputers can be characterized by size and weight.” 12Type Approximate weight Power source Comments Transportable 15–30 lb. House current Sometimes called luggable; usually has floppy and hard drives; standard CRT screen. Laptop 8–15 lb. House Current or batteries Can be held on the lap; usually has a floppy drive; uses flat LCD or plasma screen. 9The Institute of Electrical and Electronics Engineers, IEEE Standard ComputerDictionary (1990) 155.10 Douglas A. Downing and others, Dictionary of Computer and Internet Terms (10thedn, Barron’s Educational Series 2009) 374.11Andrew Butterfield and Gerard Ekembe Ngondi (eds), Oxford Dictionary of Computer Science (7th edn, OUP 2016).12 Alex Blanton (ed), Microsoft Computer Dictionary (5th edn, 2002) 412-413. ABCDEFGH1134SUPREME COURT REPORTS[2023] 1 S.C.R.screen. Ultralight 2–8 lb. Batteries or transformer pack Easy to carry in a briefcase; sometimes uses RAM drive or EPROM instead of floppy or hard drive; thinner models are known as notebook computers. Handheld Less than 2 lb. Batteries or transformer pack Also called palmtop or palm- sized; can be held in one hand.

On a conjoint reading of the relevant material and inputs, it isexplicitly clear that weight cannot be the sole factor to determine thefactum of portability. Instead, the essential ingredients to logically establishwhether an ADP is ‘portable’ are twofold. The first ingredient is theirability to be carried around easily which includes all aspects such asweight and their dimensions. We must hasten to add that in appropriatecases, this assessment would also take into consideration the necessaryaccessories which are required for safe and efficient usage such asmounted stands or any power adapters. The second ingredient is thatthe ADP must be suitable for daily transit of a consumer and wouldinclude aspects such as durability to withstand frequent commute anddamage protection. An example of the same would be the availability ofprotection cases which allows users to carry the ADPs in hand orpossibility of carrying the same in normal briefcases or shoulder bags.

On applying these core ingredients to the characteristics of Concerned Goods, there is no room to doubt that they are not ‘portable’.Firstly, the dimensions of the Concerned Goods make it illogical andunviable for daily transit. While it is true that classification of the goodsmust not be usually made on the advertisement material of themanufacturer, the user guides produced before us showcase that placingthe product in other than the specified orientation could lead to damageto the Concerned Goods. The user guides also emphatically highlightthat the Concerned Goods were meant to be used at a fixed place andcontained specifications that made them ideal for being mounted on awall.

Secondly, the inability of the consumer to carry these goodsaround in the absence of any protective case or any covering bags, which makes the Concerned Goods vulnerable to damage during transit. As noted in the literature relied upon before us, the weight was not thesole consideration for being considered as ‘portable’. For example, thereused to be computers which are now no longer in common use which ABCDEFGH1135HEWLETT PACKARD INDIA SALES PVT. LTD. v. COMMISSIONEROF CUSTOMS (IMPORT), NHAVA SHEVA [SURYA KANT, J.]were popularly known as ‘luggable’. They used to weigh more than 10kilograms. These old predecessors of laptops were designed at therelevant time to be portable and used to fold up neatly in one box with ahandle. Despite their weight and the size comparable to small suitcase, they could still be transported, albeit without a wagon.

Furthermore, we must also use this opportunity to highlightthe impact of technological advancement on law. It’s a matter of factthat at the time when the relevant entries of the First Schedule cameinto effect, weight was definitely an important criterion for decidingwhether any ADPs was ‘portable’. Scientific progress has greatlyreduced the weight associated with high performance in the context ofADPs. It is not surprising that the advent of LED technology, fastermicrochips, etc. has made it possible for mobile phones to haveperformance specifications which merely a decade ago was possibleonly on high end laptops. We must therefore be cognizant of such animpact on the consumer’s understanding of any good or trade.

Keeping in view the applicable understanding of the elementof ‘portable’ as understood in common parlance used in the trade ofADPs, we must hold that the Concerned Goods are not portable for thereasons that- Firstly, the diagonal dimension of the Concerned Goodsbeing minimum of the length of 18.5 inches and the same needs to betransported along with the power cable as well as the applicable stand inmost cases if it is to be mounted and; secondly there being no protectivecase designed by the markets for daily transport for these ConcernedGoods. Such requirements make the Concerned Goods unable to becarried around easily during daily transit. We, thus, hold that the ConcernedGoods are not ‘portable’.