The case of IFPDs: Is technology moving faster than customs regulations?

In the ever-evolving landscape of global trade, innovation often races ahead while regulation struggles to keep pace. Across the world, the governments are grappling with how to classify and regulate the trade of products that do not fit into the traditional classification nomenclature.

In this context, the Indian Customs law is no exception. With the rapid advancement of technology, many new electronic products are no longer able to fit neatly into the traditional bifurcation laid down under the Indian Customs law. This gap has led to growing confusion in classification and an increase in disputes over time. A classic example is the case of Interactive Flat Panel Displays (“IFPDs”), which are now being used widely as interactive whiteboards in education, business, and other sectors. These devices are not merely display monitors, they are capable of performing independent data processing functions on their own, much like a computer. However, the Indian Customs law has not fully caught up with this change.

It is therefore essential to recognize how innovations like IFPDs are challenging traditional classification nomenclatures and why there is a need for customs authorities to understand the technology behind such products to ensure fair, consistent, and legally sound application of the law.

The classification of IFPDs under Chapter Heading (“CTH”) 8471 has been supported by several judicial and quasi-judicial decisions. One of the key decisions in this regard is the ruling of the CESTAT, Mumbai in Cloudwalker Streaming Technologies Pvt. Ltd. vs. CC, Nhava Sheva 2022 (1) TMI 1078, where the Tribunal held that the ‘Cloudtouch Interactive Intelligent Panel’ did not qualify as a mere monitor and was rightly classifiable under CTH 8471 as an automatic data processing machine. A similar conclusion was drawn by CAAR New Delhi in In re: Supertron Electronics Pvt. Ltd. 2024 (3) TMI 505, where the ‘Optoma Creative Touch 5-series’ IFPD featured high-end computing hardware and an embedded Android OS. The device was just like a large-size tablet computer and was classified by the authorities under CTH 8471.

It is to be noted that both these cases involved products with independent processing capability and advanced technical features similar to IFPDs.

Despite these precedents, the classification of IFPDs continues to face uncertainty. The Department has challenged some of these rulings and preferred appeals before the Hon’ble High Court.

The Union Budget 2025 further complicated the issue by amending the tariff rate for Tariff Item 8528 59 00 increasing it from 10% to 20% while specifically excluding IFPDs from this rate change. This exclusion appeared to indicate the legislative recognition of the distinct nature of IFPDs.

Subsequently, the CBIC issued Circular No. 12/2025-Customs (“Circular 12”), which attempted to clarify the classification of monitors and IFPDs, but without addressing the essential distinction between simple display devices and multifunctional automatic data processing machines. Therefore, this Circular did not bring any substantial change and failed to resolve the underlying ambiguity resulting from the rate change.

This failure to consider the technical aspects was also evident in the recent ruling of CAAR Mumbai in In re: Netlink ICT Pvt. Ltd. CAAR / Mum / ARC / 03 / 2022, where the classification of an IFPD was decided solely on the basis of Circular 12, with no comparison with the monitors of CTH 8528. The authority did not conduct a technical evaluation of the product's technical features, such as its operating system, CPU, RAM, or ability to run programs independently. As a result, the ruling lacked persuasive value for the electronics industry.

The ambiguity surrounding products like IFPDs is owing to the rapid technological advancements not being adequately considered during classification deliberations. This issue is further compounded by divergent classification practices within the trade, leading to inconsistent treatment of similar products and an increase in litigation.

In light of the conflicting rulings and the lack of clarity in the current regulatory framework, there is a pressing need for the Customs Authorities to take a broader view across the electronics sector to ensure that classification practices evolve in step with innovation or for the CBIC to step-in and make suitable amendments to Circular 12. This would help bring uniformity in classification, reduce the scope for interpretational disputes, and will provide much-needed clarity and certainty to importers, manufacturers, and the other stakeholders.

About the authors: Rohini Mukherjee is a Partner and Aashna Sehgal is an Associate at Lakshmikumaran & Sridharan attorneys.

Disclaimer: The opinions expressed in this article are those of the author(s). The opinions presented do not necessarily reflect the views of Bar & Bench.

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