1997 (7) TMI 299 - AT - Central Excise

Summary

Issues:
Classification of goods under Tariff Heading 84.71 or 84.73.

Detailed Analysis:
The appeal concerns the classification of items previously categorized under Tariff Heading 84.73, with the appellants contending for classification under Tariff Heading 84.71. The goods in question, described as "add-on cards and Mother Boards," were the subject of debate between the parties.

The appellant argued that the lower authority failed to consider Chapter Note 5(b) of Chapter 84, which outlines the criteria for automatic data processing machines under Heading No. 84.71. According to Chapter Note 5(b), a system is formed by specific elements, and if these elements are present, the system falls under Tariff Heading 84.71.

The appellant emphasized that the cards in question play a functional role in enabling the individual units and machines to function effectively as a system. They asserted that these goods should be treated as individual units of the system and, therefore, classified under 84.71.

Contrarily, the JDR for the department argued that Tariff Heading 84.71 encompasses machines and combinations capable of receiving inputs, processing them, and producing desired outputs. They contended that the cards and Mother Boards alone cannot function independently to yield desired outputs and must be integrated into individual machines to play their role effectively.

Upon considering both arguments, the Tribunal examined the scope of Tariff Heading 84.71, which covers automatic data processing machines and their units. The Tribunal noted that the machines or units under this heading should be capable of storing processing programs, be freely programmable, perform arithmetic computations, and execute processing programs automatically.

The Tribunal concluded that the cards in question were not capable of independently performing the functions specified under Chapter Note 5(a) and, therefore, could not be classified as automatic data processing machines themselves. While acknowledging Chapter Note 5(b as an extension of 5(a, the Tribunal highlighted that Note 5(b) pertains to separate units that collectively form a data processing machine under 84.71.

Ultimately, the Tribunal upheld the lower authority's decision to classify the goods in question as parts of machines falling under Tariff Heading 84.71 rather than standalone machines. The appeal was dismissed, affirming the lower appellate authority's order.