2000 (12) TMI 394 - AT - Central Excise

Summary

Issues: Classification of Switch Mode Power Supply (SMPS) under Central Excise Tariff Act

Classification under Chapter 84.71:
The Assistant Collector classified SMPS under Heading 84.71, considering them essential to convert AC current to DC current for computers, as most computers operate solely on DC current. He relied on Chapter Note 5(b) to support this classification, emphasizing that SMPS designed for specific use as part of a system fall under Heading 84.71. He also referenced previous orders supporting this classification.

Appeal to Commissioner (Appeals):
The Commissioner challenged the Assistant Collector's classification, arguing that SMPS should be classified under sub-heading 85.04. The Commissioner contended that SMPS do not meet the conditions for classification under 84.71, as they do not provide continuous power supply when the main power source is disconnected and do not rely on computers to function. The Commissioner upheld the classification under 8504.

Arguments in Appeal:
During the appeal, the appellant's counsel presented arguments based on trading practices and Chapter Note 5(b). They referenced a previous decision and contended that SMPS, designed specifically for computers, should be classified under 84.71. They also highlighted that the previous classification under 84.71 was not contested.

Decision by the Tribunal:
The Tribunal considered the arguments and previous rulings, including the Larger Bench's decision on classification consistency. The Tribunal found that the Assistant Collector's classification under 84.71 was appropriate, as SMPS were crucial for converting AC to DC current for computers. The Tribunal noted that the Commissioner failed to acknowledge the specific design and exclusive use of SMPS in computers, supporting the classification under 84.71 as per Chapter Note 5(b. The Tribunal set aside the Commissioner (Appeals) order and allowed the appeal, affirming the classification under Heading 84.71.

Conclusion:
The Tribunal's decision upheld the classification of SMPS under Heading 84.71, emphasizing their essential role in converting current for computer use. The judgment highlighted the significance of Chapter Note 5(b) in determining the classification based on specific design and exclusive use in computers, ultimately setting aside the Commissioner (Appeals) order and ruling in favor of the appellant.