1998 (5) TMI 145 - AT - Central Excise

Summary

Issues Involved:
Classification of product 'Unix Terminal Server or Terminal Server' under Chapter sub-heading No. 8473.00 of Central Excise Tariff Act, 1985.

Detailed Analysis:

1. Classification Dispute:
The appeal challenged the classification of the product 'Unix Terminal Server or Terminal Server' under Chapter sub-heading No. 8473.00 of the Central Excise Tariff Act, 1985. The Assistant Collector classified the product under Heading 84.73 as an accessory part of the computer, rejecting the appellant's claim for classification under Heading 84.71. The Commissioner of Central Excise (Appeals) upheld this classification, stating that the product is not an independent machine capable of data processing but functions only in conjunction with the main computer/data processing machine to transmit signals to specific computer terminals.

2. Interpretation of Chapter Note 5:
The appellant argued that the Terminal Server satisfies the conditions in Chapter Note 5(b) of Chapter 84, which defines automatic data processing machines and units thereof. The authorities contended that the product cannot function independently and can only perform tasks when connected to a computer or data processing system. The discussion revolved around whether the product qualifies as a unit of an automatic data processing machine under Chapter Note 5(b) and should be classified under Heading 84.71.

3. Relevance of Chapter Note 5(b):
Chapter Note 5(b) outlines the conditions for considering a unit as part of a complete system of automatic data processing machines. The Tribunal noted that the lower authorities failed to analyze whether the appellant's product met the criteria specified in Chapter Note 5(b. It was emphasized that the product's connectability to the central processing unit directly is a crucial factor in determining its classification under Heading 84.71.

4. Judicial Decision and Remand:
The Tribunal highlighted that the lower authorities did not adequately consider the conditions prescribed in Chapter Note 5(b) while determining the classification of the product. As a result, the impugned order was set aside, and the case was remanded to the adjudicating authority for a fresh assessment based on the correct perspective. The Tribunal allowed the appeal, emphasizing the need for a comprehensive evaluation of whether the product qualifies as a unit of a system of automatic data processing machines under Chapter Note 5(b).

In conclusion, the judgment focused on the proper interpretation of Chapter Note 5(b) to determine the classification of the product 'Unix Terminal Server or Terminal Server' under the Central Excise Tariff Act, emphasizing the importance of considering the product as a unit of an automatic data processing machine for accurate classification under Heading 84.71.