2000 (9) TMI 323 - AT - Central Excise

Summary

Issues: Classification of Data Acquisition and Control Systems under Central Excise Tariff - Heading 90.32 or Heading 84.71

In this appeal, the issue revolved around the classification of Data Acquisition and Control Systems manufactured by a company under the Central Excise Tariff. The main question was whether these systems should be classified under Heading 90.32 as confirmed by the Collector (Appeals) or under Heading 84.71 as claimed by the Revenue.

The Revenue argued that the exclusion clause to note 5(b) of chapter 84 did not apply in this case because the goods were not full-fledged machines but rather part of Automatic Data Processing machines. They contended that the goods were sub-assemblies connectable to computers and capable of various end uses, meeting the conditions specified in note 5(b) of chapter 84, thus should be classified under heading 84.71.

On the other hand, the respondents claimed that they were manufacturing complete machines that performed specific functions like measuring, controlling, and regulating parameters. They argued that their products were covered by heading 90.32 as they were incorporated with Automatic Data Processing control machines and performed specific functions, falling under the exclusion clause of note 5(b).

After considering both sides' submissions, the authorities found that the impugned machines had a well-defined function of automatic measuring and controlling parameters but were incapable of data processing. The Process Control Equipment, programmed with Process characterization data, was custom-made to suit specific industry requirements. Both the Assistant Collector and the Collector (Appeals) concluded that the exclusion clause under note 5(b) of chapter 84 applied to the goods, which should be classified based on their specific functions, falling under heading 90.32.

It was highlighted that heading 84.71 would not be applicable to machines incorporated with Automatic Data Processing Machines to perform specific functions, as per the exclusion clause. The Explanatory Note to HSN below heading 84.71 clarified that appliances like measuring instruments adapted to connect directly to data processing machines should be classified in their appropriate heading. Consequently, the appeal filed by the Revenue was rejected, upholding the classification of the Data Acquisition and Control Systems under heading 90.32.