1985 (1) TMI 315 - AT - Customs

Summary

Issues:
1. Rejection of application for registration of a contract related to the import of a computer for concessional rate of duty under Tariff Entry 84.66 of the Customs Tariff Act.
2. Interpretation of whether the imported computer qualifies as capital goods under Tariff Item 84.66.
3. Consideration of whether the imported computer is essential for the production operations of the appellant.
4. Examination of the relevance of certificates and approvals obtained by the appellant from government authorities for the import of the computer.
5. Assessment of whether the software produced by the imported computer is integral for testing the hardware produced by the appellant.

Detailed Analysis:

1. The appeal arose from the rejection of the appellant's application for registration of their project import contract involving the import of a computer for concessional duty under Tariff Entry 84.66 of the Customs Tariff Act. The Assistant Collector of Customs and the Appellate Collector of Customs both held that the imported computer did not qualify for the concessional rate of duty as it was not considered as machinery producing goods under the said tariff item.

2. The appellant contended that the imported computer was essential for the production of mini-computers, which was an expansion of their existing industrial unit. They provided details of approvals obtained from government authorities certifying their status as an industrial unit and the approval for the import of the computer as capital goods. The appellant argued that the imported computer was necessary for the software, which was crucial for the functioning of the mini-computers they intended to manufacture.

3. During the hearing, the appellant's counsel reiterated that the software produced by the imported computer was integral for the functioning of the mini-computers. They argued that the imported computer was required for testing the hardware produced by the appellant and that without the software, the end product would be unusable. The appellant also presented letters from authorities supporting their status as an existing industrial unit and the necessity of the imported computer for their manufacturing process.

4. The respondent's representative contended that the imported computer did not qualify as machinery producing goods under the project import provisions. They argued that the software produced by the computer was merely a program aiding data processing and did not contribute to the production of goods. The respondent relied on a previous judgment to support their argument that customs authorities have the discretion to determine the eligibility for project import benefits.

5. After considering the arguments presented, the Tribunal found that the appellant had established their status as an existing industrial unit and that the import of the computer was essential for the expansion of their manufacturing activities. The Tribunal held that if the appellant could demonstrate before the Collector of Customs that the imported computer was related to testing the hardware of the mini-computers, they would be eligible for registration under Tariff Item 84.66 and the associated duty concessions. The Tribunal remitted the matter back to the lower authorities for further examination based on the guidelines provided.