Customs | Face Recognition Access Control Systems Qualify As Automatic Data Processing Machines; NIL Duty Benefit Allowed: CESTAT Kolkata

The Kolkata Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that Face Recognition Access Control Systems perform data processing functions, such as data storage, read-write memory operations and automated processing, and therefore qualify as an Automatic Data Processing Machine under CTH 8471. The bench clarified that these systems are eligible for NIL customs duty exemption. R. Muralidhar (Judicial Member) and K. Anpazhakan (Technical Member) noted that the Access Controller Face Recognition System has read and write memory, has 4 GB RAM, 64 GB nano flash, is capable of processing program, can read from camera, card and QR code and there is embedded Linux Operating System. It is capable for automatic face detection even with mask. The configuration and functions show that there cannot be any doubt that the device has all the functions qualifying to be classified as Automatic Data Processing Machine. In the case at hand, the assessee/ appellants imported “Access Controller Face Recognition System” from the manufacturer Hanwang Technology Co. Ltd, China. The goods were declared as “Data Collection Terminal (based on face recognition)” and were filed claiming classification UTH 84716090 by the assessee. It was alleged that the item imported is wrongly classified under 84716090, availing NIL duty benefit under Notification No. 024/2005 – Customs dated: 01.03.2005, whereas goods are required to be classifiable under Tariff heading 8543, attracting basic Customs duty @ 7.5%. The Show Cause Notice was issued demanding the Customs Duty along with interest and proposing to impose a penalty on the company, the CHA and the Director of the company. The SCN also demanded the differential duty along with interest for the 38 consignments imported earlier by the assessee. The demands were confirmed, and penalties were imposed on the assessee company and the Director of the company, and goods were held liable for confiscation, and a redemption fine option was given. The Tribunal observed that the Access Controller Face Recognition System is not like any Television, which is not capable of storing data, having RAM, or any process or Linux Operating System. The bench opined that the device is clearly Automatic Data Processing machinery falling under CTH 8471. The device is definitely not any Electrical Machinery or Equipment or part thereof. The Tribunal held that the goods are classifiable under CTH 8471 only and not under CTH 8543. Hence, the confiscation and consequent Redemption fine imposed does not survive in respect of both the assessee companies. In view of the above, the Tribunal allowed the appeal. Case Title: M/s. Face IT Systems LLP v. Commissioner of Customs (Airport & ACC), Kolkata Case Number: Customs Appeal No.76501 of 2025 Counsel for Appellant/ Assessee: S.C. Ratho Counsel for Respondent/ Department: A.K. Choudhary Click Here To Read/Download Order

Customs | Face Recognition Access Control Systems Qualify As Automatic Data Processing Machines; NIL Duty Benefit Allowed: CESTAT Kolkata

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Customs | Face Recognition Access Control Systems Qualify As Automatic Data Processing Machines; NIL Duty Benefit Allowed: CESTAT Kolkata

Mehak Dhiman

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