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2025 (2) TMI 256 - AT - Central ExciseClassification of goods - Add-on Cards - to be classified under Chapter sub-heading 8471.00 attracting Central Excise Duty @ 15% or under Chapter sub-heading 8473.00 attracting Central Excise Duty @20%? - HELD THAT - The issue regarding the classification of Add-on Cards is no more res integra in view of the decision passed by the Tribunal Mumbai in the case of Commissioner of Central Excise Mumbai-II Vs. Virtual Computers Pvt. Ltd. 2012 (7) TMI 232 - CESTAT MUMBAI holding that Mother Boards and Add-on Cards are classifiable under Chapter Heading 8473 of the Central Excise Tariff Act 1985. The Tribunal Mumbai has held that The add-on card and motherboard cannot be considered as automatic data processing machines. The same are parts and accessories suitable for use with the machine falling under Heading 84.71 of the Tariff. In view of the above as the goods in question are parts and accessories of the data processing machine falling under Heading 84.71 of the Tariff therefore being parts and accessories are classifiable under Heading 8473 of the Tariff. The appeal is rejected upholding the classification of Add-on Cards under Chapter Heading 8473 of the Central Excise Tariff Act 1985. As such demand of duty is confirmed. No interest is payable as the provision for payment of interest in terms of Section 11AB of the Central Excise Act 1944 is applicable from 28.09.1996. Conclusion - The classification of Add-on cars under Chapter Heading 8473 upheld. The appeal is rejected but for the modification to the extent of setting aside the penalty imposed.
ISSUES PRESENTED and CONSIDERED
The core legal issue considered in this appeal was the correct classification of 'Add-on Cards' under the Central Excise Tariff Act, 1985. Specifically, whether these products should be classified under Chapter sub-heading 8471.00, as claimed by the Appellant, or under Chapter sub-heading 8473.00, as argued by the Revenue. ISSUE-WISE DETAILED ANALYSIS Relevant Legal Framework and Precedents The case focused on the interpretation of the Central Excise Tariff Act, 1985, particularly the classification of goods under Chapter Headings 8471 and 8473. Chapter Heading 8471 pertains to "Automatic data processing machines and units thereof," while Chapter Heading 8473 covers "Parts and accessories suitable for use solely or principally with machines of heading Nos. 84.69 to 84.72." The Tribunal relied on previous decisions, notably the Tribunal Mumbai's decision in Commissioner of Central Excise, Mumbai-II Vs. Virtual Computers Pvt. Ltd., which classified motherboards and add-on cards under Chapter Heading 8473. Court's Interpretation and Reasoning The Tribunal found that add-on cards, which provide additional features to a computer by connecting to the motherboard, are not standalone automatic data processing machines. Instead, they are parts and accessories used with machines classified under Heading 84.71. Therefore, they fall under Heading 8473 as parts and accessories. Key Evidence and Findings The Tribunal noted the technical nature of add-on cards, which are designed to work with central processing units (CPUs) and other computer systems. The opinion of ET&T, which supported classification under Heading 84.71, was initially considered but later overturned by the Department's appeal, aligning with the Tribunal Mumbai's findings. Application of Law to Facts Applying the legal framework, the Tribunal concluded that add-on cards should be classified under Chapter Heading 8473. This decision was consistent with the reasoning that these items are parts and accessories of data processing machines, not standalone units. Treatment of Competing Arguments The Appellant argued for classification under Heading 8471, supported by an earlier decision and the opinion of ET&T. However, the Tribunal emphasized the binding nature of the Tribunal Mumbai's decision and the Supreme Court's remand, which directed reconsideration based on established precedents. Conclusions The Tribunal upheld the classification under Chapter Heading 8473, confirming the demand for differential duty. However, it rejected the imposition of interest on the duty, as the relevant interest provisions were not applicable during the period in question. SIGNIFICANT HOLDINGS Preserve verbatim quotes of crucial legal reasoning The Tribunal, quoting the Tribunal Mumbai's decision, stated: "The add-on card and motherboard cannot be considered as automatic data processing machines. The same are parts and accessories suitable for use with the machine falling under Heading 84.71 of the Tariff. In view of the above, as the goods in question are parts and accessories of the data processing machine falling under Heading 84.71 of the Tariff, therefore being parts and accessories are classifiable under Heading 8473 of the Tariff." Core Principles Established The Tribunal reinforced the principle that components like add-on cards, which enhance the functionality of a primary machine, are to be classified as parts and accessories rather than standalone units. This principle aligns with the broader interpretation of Chapter Headings 8471 and 8473. Final Determinations on Each Issue The appeal was rejected regarding the classification of add-on cards, affirming their classification under Chapter Heading 8473. The Tribunal set aside the penalty imposed under Rule 173Q of the Central Excise Rules, 1944, acknowledging the protracted litigation and the technical nature of the classification issue. The Tribunal's decision reflects adherence to judicial discipline, aligning with precedents and clarifying the classification of computer components under the Central Excise Tariff Act, 1985.
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