2015 (6) TMI 995 - AT - Central Excise

Classification - whether the ability to work together with a computer should be understood to be the ability to work only on the basis of a computer with the machine incapable of performing this function otherwise? - Held that - In the present case these machines are themselves computers inasmuch as they answer the description of an automatic data processing machine as mentioned in Chapter Note 5(a) of the Chapter 84. And therefore, it cannot be said that they are working on the basis of another computer. While, the notice states that these machines are compatible meaning able to co-exist or be used together without problems or conflict or consistent or in keeping (Concise Oxford Dictionary), it stops short of saying that the machines work on the basis of other computers. Further, the word conjunction means that these machines are to be connected and worked together in coordinated manner with another computer. It has been demonstrated amply that the machines can work independent of any other computer for performing its work. With regard to reproducing and displaying machines with calculating functions as stated in the HSN, electronic programmable calculators differ from automatic data processing machines in particular by the fact that they cannot execute without human intervention a processing programme which requires them to modify their execution by logical decision during processing run. It has been stated by the assessee that their machines can run and modify their execution by logical decision during the processing run without human intervention. This is also supported by the opinion of the experts. This would be the clincher to rule out the classification of the products under Ch. S.H. No. 8470.10. The notice also refers to these products as accounting machines and similar machines incorporating calculating devices. It is not clear of the three machine which were to be dealt as the accounting machines. However, the explanatory notes to the account machines also state that the structure of accounting machines is appreciably the same as that of calculating machines. In addition to manual input arrangements for variable data (e.g. Debit/Credit operations), like calculating machines, they may be fitted with devices for reading punched cards or tape, magnetic tape or cards, etc., to introduce recurrent data or preset data. Here also since it is similar to calculating machines, same logic that excludes these machines from calculating machines would exclude them from the accounting machines also.

Summary

Issues Involved: Classification of PC lite, Hand Held Data Recorder, and Intelligent Hand Held Computer under different Chapter sub-headings.

Detailed Analysis:

Issue 1: Classification of PC lite under Chapter sub-heading No. 8471.00.
- The PC lite is a DOS-based computer used for meter reading, capable of running diverse applications and making logical decisions without human intervention.
- Revenue argued that despite its features, the PC lite can execute only one program at a time, thus not multifunctional.
- Commissioner upheld the classification under Chapter sub-heading No. 8471.00 based on the machine's functions and expert opinions.
- Chapter Note 5(a) of Chapter 84 defines 'automatic data processing machine,' supporting the original classification.
- The machine's ability to work independently of another computer was a key factor in the classification decision.

Issue 2: Classification of Intelligent Hand Held Computer under Chapter sub-heading No. 8471.00.
- The Intelligent Hand Held Computer has multiple applications like ticket issuing, point of sale terminal, and wireless internet gadget, with diverse features and programmable capabilities.
- Revenue contended that despite its versatility, the machine does not have universal application usage.
- Commissioner's decision was based on the machine's functions, programming capabilities, and independence from external computers.
- The machine's ability to run diverse applications and make logical decisions without human intervention supported its classification under Chapter sub-heading No. 8471.00.

Issue 3: Classification of Hand Held Data Recorder under Chapter sub-heading No. 8471.00.
- The Hand Held Data Recorder is used for field data collection, with applications in inventory management and order processing.
- Revenue argued that despite its varied uses, the machine lacks universal application usage.
- Commissioner's decision considered the machine's functions, programming languages, and ability to run different applications simultaneously.
- The machine's independent data processing capacity and diverse application storage capabilities supported its classification under Chapter sub-heading No. 8471.00.

Conclusion: The appellate tribunal rejected the Revenue's appeal, upholding the original classification of all three products under Chapter sub-heading No. 8471.00 based on their functions, programmable features, and independent operation capabilities. The tribunal emphasized the machines' ability to run diverse applications and make logical decisions without human intervention as key factors in the classification decision.

This detailed analysis covers the issues involved in the legal judgment, providing a comprehensive overview of the classification decisions for each product based on their unique features and functionalities.