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Rapid Advancement of Intelligent Freight Protection Devices: Are Customs Rules Struggling to Keep Pace?

Customs Authorities should expand their perspective to encompass the electronics sector, adjusting classification methods to match advancements like Interface Flat Panel Displays (IFPDs).

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Technology Advancements of IFPDs Outpacing Customs Regulations: A Growing Concern?
Technology Advancements of IFPDs Outpacing Customs Regulations: A Growing Concern?

Rapid Advancement of Intelligent Freight Protection Devices: Are Customs Rules Struggling to Keep Pace?

In the ever-evolving landscape of global trade, the classification of new electronic products, such as Interactive Flat Panel Displays (IFPDs), presents a challenge. These devices, while primarily functioning as display and output devices with integrated touch and software features, are capable of performing independent data processing functions, much like a computer. However, under Indian Customs law, they are primarily classified under tariff heading 85285900, which covers "other monitors and projectors," rather than under Automatic Data Processing (ADP) machines heading 8471.

This classification results in IFPDs attracting a higher 28% GST and a 20% Basic Customs Duty compared to standard monitors, due to their enhanced interactive features. Despite several judicial and quasi-judicial rulings supporting the classification of IFPDs as not being ADP machines, the classification of these devices continues to face uncertainty.

The CESTAT Mumbai, for instance, upheld this approach in Cloudwalker Streaming Technologies Pvt. Ltd. case, supporting classification under tariff heading 85285900 rather than 8471. Similarly, in In re: Supertron Electronics Pvt. Ltd. 2024 (3 TMI 505), the CAAR New Delhi classified the 'Optoma Creative Touch 5-series' IFPD as an automatic data processing machine due to its high-end computing hardware and embedded Android OS.

To provide clarity and certainty, the Ministry of Finance and the Central Board of Indirect Taxes and Customs (CBIC) have issued notifications and circulars clarifying the technical criteria that distinguish IFPDs from conventional monitors or ADP machines. These include features like touch interactivity, built-in software for collaboration, screen size, and resolution. However, the rapid technological evolution of IFPDs outpaces the existing customs classifications, leading to disputes.

The government is moving to make classification more uniform and transparent through technical guidelines to maintain consistent treatment. The Union Budget 2025 amended the tariff rate for Tariff Item 8528 59 00, increasing it from 10% to 20%, but specifically excluded IFPDs from this rate change, indicating legislative recognition of the distinct nature of IFPDs.

In conclusion, the classification of IFPDs under Indian Customs law reflects the current consensus among Customs authorities, tribunals, and the Finance Ministry. The core function of these devices (display & interaction) determines their classification, not ancillary computing features. Despite this, the technological complexity of IFPDs continues to cause ongoing classification disputes.

This article is authored by Rohini Mukherjee, Partner, and Aashna Sehgal, Associate at Lakshmikumaran & Sridharan attorneys.

[1] Cloudwalker Streaming Technologies Pvt. Ltd. vs. CC, Nhava Sheva 2022 (1 TMI 1078) [2] In re: Supertron Electronics Pvt. Ltd. 2024 (3 TMI 505) [3] CESTAT Mumbai, Cloudwalker Streaming Technologies Pvt. Ltd. case [4] CAAR Mumbai, In re: Netlink ICT Pvt. Ltd. CAAR / Mum / ARC / 03 / 2022 [5] Circular No. 12/2025-Customs ("Circular 12")

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