AI-Powered MIKO-3 Smart Robot Classified As ADP Machine, Not Electronic Toy; Exempt From Basic Customs Duty: CESTAT Chennai

The Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that the AI-powered MIKO-3 smart robot performs the essential function of Automatic Data Processing (ADP) Machines and cannot be classified as an electronic toy merely because it offers learning or entertainment features. P. Dinesha (Judicial Member) and Vasa Seshagiri Rao (Technical Member) observed that the Revenue has not discharged its burden of disproving the classification declared by the Assessee, and also not established with evidence as to its attempt to re-classify the goods in question as “electronic toys” alone. In the case at hand, the assessee/appellant was engaged in the business of import and manufacture of Automatic Data Processing Unit for Learning and Entertainment Model (ADPM) for learning, educating and interacting with humans under the brand name 'MIKO'. In the later years, the Assessee launched two higher versions/models, viz. MIKO–2 & MIKO–3, which are more advanced versions of the basic MIKO-1. The issue in the present Appeals revolves around the classification of the 'MIKO-3' model; the admitted position is that MIKO-1, which was claimed to be a basic model, was classified under Customs Tariff Heading (CTH) 95030030. Considering the advancement in Technology and Composition, MIKO-2 & MIKO-3 were classified by the assessee under CTH 84714190 with description ADPU for learning and entertainment model MO201 and ADPU for learning and entertainment model EMK301, respectively. The model in dispute, i.e. MIKO–3 is claimed to be sold by the Assessee on its own website as well as through e-commerce platforms, and it was claimed that the said model is a social Robot. It was the case of the Assessee that it had cleared MIKO-3 with classification as claimed above and thereby claiming exemption under Sl.No.8 of Notification No.24/2005–Cus. dated 01.03.2005 from the payment of Basic Customs Duty (BCD). The Faceless Assessment Group had entertained a view that the goods in question were only 'toys' and liable to be classified under CTH 9503, which attracted BCD at 60%. The Adjudicating Authority passed an order rejecting the declared classification and ordered the confiscation of the goods, apart from allowing redemption of the goods upon payment of a fine of Rs.10 lakhs for the purpose of re-export. The assessee filed an appeal before the Commissioner of Customs (Appeals), Chennai, which was rejected. The Tribunal stated that the Commissioner has predominantly gone by what is mentioned on the package, but has, for the reasons known to him, ignored the technical descriptions apart from the Advice of the Principal Scientific Advisor to the Government of India and the certificate issued by Meity and BIS. The bench upheld the classification declared under CTH 84714190 admitted by the assessee. In view of the above, the Tribunal allowed the appeal. Case Title: M/s. RN Chidakashi Technologies Pvt. Ltd. v. The Commissioner of Customs, (Imports) Case Number: Customs Appeal No. 40655 of 2023 Counsel for Appellant/ Assessee: Prakash Shah and Mihit Mehta Counsel for Respondent/ Department: O.M. Reena Click Here To Read/Download Order

AI-Powered MIKO-3 Smart Robot Classified As ADP Machine, Not Electronic Toy; Exempt From Basic Customs Duty: CESTAT Chennai

Mehak Dhiman

Tags