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2. The substantial question of law, on which we have heard learned counsel for the parties and which requires adjudication, is as under:-

"Whether the multi functional printers/machines and their spares and consumables, during the period 1st April, 2005 to 31st March, 2007, are taxable under Entry No. 41A of the third schedule of the Delhi Value Added Tax, 2004 or are taxable under the residuary head @ 12.5%?"

3. The appellant had filed an application under Section 84 of the VAT Act seeking advance ruling in respect of the applicable VAT rate on the multi functional printers/machines and their spares and consumables during the period 1st April, 2005 to 31st March, 2007 (hereinafter referred to as "the relevant period"). We may notice that the application and the question raised in the said application itself stated that the multi functional printers/copiers/scanners fall under the HSN code No.8471.60.29 and the spares and consumables fall under the HSN code No.8473.30.99. However, the declaration/statement ignores the controversy, whether the product(s) of the appellant are in fact "multi functional printers", which fall within the aforesaid HSN Code. Another aspect/question raised is whether and to what extent the HSN Code is applicable as far as Entry No.41A to the third schedule of the VAT Act is concerned.

18. We have quoted above the relevant portion of the decision of the Supreme Court in Xerox India Ltd. (supra). In the said case, after applying the relevant notes or rule of interpretation, the finding recorded was that the multi functional machines therein had 84% or 74% parts of a computer printer and, therefore, it was held that they were output devices covered under Entry No. 8471.60. Therefore, in respect of the period prior to 30th November, 2005, we answer the aforesaid question of law recording that the multi function machines may or may not be computer peripheral, depending upon the main purpose or function which the machine was designed and manufactured to perform. If the principal and predominant purpose was to act as a computer printer or scanner or as an input or output devise of the computer, the multi functional machine would qualify and fall under entry 41A clause XXIII. However, if the machine was designed and manufactured for some other primary purpose, then it would not be covered by Entry 41A clause XXIII. Mere description or the nomenclature given by the manufacturer or trader is not relevant and the assessee should justify and establish their claim. We have applied the doctrine/test of principal and dominant purpose, as it is the most appropriate and logical test. The said test was applied by the Supreme Court in the case of Xerox India Ltd. (supra) for the purpose of Customs Act. A multi functional printer or machine may be able to perform several functions, but an ancillary or incidental function would not be relevant. The relevant determining factor in such cases even for the period before 31st November, 2005, would be the dominant or main purpose. This would prevent misuse and mis- declaration by the seller, who may try and sell a photocopier and a duplicating machine as a computer peripheral when, in fact, the main purpose and object of the machine was is to make copies or duplicate documents.

19. With regard to the period after 30th November, 2005, we have to examine the relevant entries in 41A and compare them with the Entry No.4171 of the Central Excise Tariff Act, 1985. We have also to keep in mind the four notes, which we have interpreted above. As per the appellant, the multi functional machines/printers fall in the category of input/output units, which have been separately categorized at Sr. No.3 under column (2). It is not the case of the appellant that the aforesaid devices should be treated as an automatic data processing machines. It is claimed that they are input or output units. When we compare the entry input units and output units in column (2) with Entry No.8471.10.00, we find that the description is not identical. Words used in the notification are "input unit, (or) output unit". The word used in entry No. 8471.10.00 are input or output units, whether or not contain storage units in the same housing. There is no reference to or requirement of storage unit in column 2 of the notification. Multi functional machine it is stated can act as both an input unit and as an output unit. It combines both functions. Reference was made to Entry 8471.60, wherein words "combined input or output units" is used, but the same is a heading. This is clear as no rate of duty is prescribed/stipulated against the said heading. Rate of duty is prescribed against each sub-heading. Thereafter, sub-headings read, printer, line printer, dot matrix printer, letter quality daisy wheel printer, graphic printer, plotter, laser jet printer, inkjet jet printer and others. "Others" fall under the sub-heading 8471.60.29. The multi functional machines/printers will not fall under any of the specific sub- heading, but would fall under the residual sub-heading 8471.60.29 i.e. "others". This is also clear when we examine the bills of entry, which have been filed by Canon India Private Limited, who have filed a writ petition before us and has been heard alongwith this appeal. In the said bills of entry, machines have been cleared under tariff entry 8471.60.29 i.e. "others".

21. The next aspect, which has to be decided, is whether or not a multi functional printer/machine is an input or output unit under Entry 41A of the VAT Act. In order to decide this issue, we feel that the doctrine of dominant or principal purpose has to be applied. Note 1 read with the Rules of interpretation of Central Excise Tariff Act and Explanatory notes of Customs Cooperation Council support our ratio. Accordingly, it has to be determined in each case with reference to machines in question whether its principal or dominant purpose is to work as an input or output unit of the computer i.e. automatic data processing machines whether analogue, hybrid or electronic. While applying the aforesaid test, reference can be made to the rules of interpretation of the provisions of Central Excise Tariff Act, 1985 with the explanatory notes updated from time to time published by the Customs Cooperation Council, Brussels. These would include the relevant section and chapter notes. However, reference to the relevant chapter and section note must be made with caution. The chapter/section notes when general can be referred to and applied. But they can also specifically deal with and explain a particular entry, which may not be synonymous/identical or meet the description of the entry in the notification issued under the VAT Act. In such circumstances, to apply the Section or Chapter Notes not relating to general principles of interpretation, would lead to difficulties and incongruities. This caution is necessary in view of the Notes (2) to (4) of the notification, which have been interpreted above. Thus, with regard to the period after 30th November, 2005, the question of law mentioned above is answered holding, inter alia, that the doctrine of dominant purpose of the multi functional machine will determine/decide whether it is an input or output unit of an automatic data processing machine. In case the principal or dominant purpose is to act as input or output unit, then it would qualify and will be covered by Entry 41A at Sr. No.3. However, in case multi functional machine is a duplicator or a photocopying machine, which incidentally can be used as a printer or a scanner etc., the said machine would not qualify and cannot be treated and regarded as input or output unit of automatic data processing machine. Said machines would not qualify under Entry 41A and will be covered by the residuary tax rate. Question referred to above is accordingly answered.