2002 (1) TMI 753 - AT - Central Excise

Summary

Issues:
Classification of Switch Mode Power Supply (SMPS) under sub-heading 84.71 as parts of a computer vs. sub-heading 8504.40; Interpretation of Chapter Note 5(B) of Chapter 84 regarding automatic data processing machines.

Analysis:
The Revenue appealed the Commissioner (Appeals) order classifying SMPS under sub-heading 84.71 as parts of a computer instead of sub-heading 85.04. The Revenue argued that the classification should not be based solely on design and use with other goods. They contended that SMPS functions to convert AC to DC power supply, not involving data processing like computers. They cited Chapter 84 Note 5(E) excluding machines performing functions other than data processing. The Revenue also referred to Explanatory Notes excluding Power Supply Units from heading 8471. However, the DR highlighted HSN Note at page 1450, including power supply units for machines under heading 84.71, supporting the Commissioner's decision.

The Respondent argued that SMPS is specifically designed for computers to convert AC to DC, satisfying Note 5(B) of Chapter 84. They presented technical literature showing SMPS's function in computers. The Respondent referenced the judgment in Wipro Infotech v. CCE, supporting their classification. The Respondent distinguished the item from the Luminous Electronics case involving UPS. The Tribunal analyzed the technical literature provided by the importer, indicating SMPS's exclusive use in computers for data processing. The Tribunal found the matter technical and remanded it to the original authority for reevaluation based on the technical evidence presented by the Respondent to determine if SMPS qualifies under Note 5(B) of Chapter 84, emphasizing the need for a thorough examination.

In conclusion, the Tribunal allowed the appeal by remanding the case to the original authority for a fresh assessment. The original authority must consider the technical aspects and the evidence presented by the Respondent to determine if the SMPS is solely a power supply unit for machines under heading 84.71 or if it qualifies as part of a computer under Note 5(B) of Chapter 84. The Tribunal emphasized the importance of a detailed examination to ascertain the correct classification based on the technical characteristics and use of the SMPS in computers.