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TMI Blog1987 (5) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... e 2 appeals, in which M/s. Allied Computers are respectively respondent and appellant, the 2 parties are referred to for convenience as "the manufacturer" and "the Department". 3. On behalf of the Department, Shri H.L. Verma, S.D.R., submitted that the appropriate tariff item was No. 33DD. He pointed out that this item covered "Computers (including central processing units and peripheral devices), all sorts". The use of the words "all sorts" made this an inclusive definition, which would cover even computers meant only for training purposes. The item was not limited to computers for use by professionals. In support of his contention that the words "all sorts" would cover even goods whose inclusion was less obvious, Shri Verma cited the Tribunal's decision in the case of Shellya Industries v. Collector of Central Excise, Bangalore (1983 E.L.T. 1827). He also relied on the decision of the Bombay High Court in the case of Ravji Industrial Corporation v. Union of India [1981 E.L.T. 734 (Bombay)] to submit that the word "including" implied that the items named were not exhaustive but illustrative. 4. Shri Verma submitted that notifications could be used for interpret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commercial sense, and could not execute major processing of the nature which a computer normally performs. Shri Verma contested these reasons. He referred to the manufacturer's leaflet, which showed that the machine could perform the functions of a computer. It could execute programmes, as seen from the following sentence in the leaflet :- "It is intended to highlight various operations of MICROPROCESSORS while executing programmes down to machine cycle level. The programme can be executed at two speeds. ....". 10. Shri Verma accordingly submitted that the view expressed by the learned Member (Technical) Shri H.R. Syiem should be upheld. 11. On behalf of the manufacturer, Shri Lakshmi Kumaran submitted that the show cause notice issued by the Central Government under Section 36(2), as in force at the relevant time, was defective. Although it proposed to set aside the order of the Appellate Collector, it gave no reasons why this should be done. The show cause notice did not set out clearly what according to the revisional authority was a computer, and why the Trainer should be regarded as a computer. 12. The learned Member (Technical), in para 10 of his order, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturers were making similar Trainers. 16. Resuming his arguments, Shri Lakshmi Kumaran submitted that no doubt the manufacturer's brochure used the term "computer". However, it did not describe the Trainer as a computer. 17. Referring to the two letters from the Department of Electronics, Shri Lakshmi Kumaran submitted that they should be given due weight, as the Department of Electronics was the appropriate technical authority in this field. With reference to Shri Verma's submissions in this regard, particularly that the letter, dated 15-4-1980 was from a Cost Accounts Officer, Shri Lakshmi Kumaran submitted that the letter gave reasons for the view expressed. If the Department had any doubt in the matter, they could have asked for a clarification. Since they had not done so, the opinion should be treated as authoritative. 18. For these reasons Shri Lakshmi Kumaran submitted that the Trainer was not a commuter but only a training device. Therefore the view expressed by the learned judicial Member, namely that it was classifiable under TI 68, was the correct view and should be upheld. 19. Shri Verma has no further submissions to make in reply. 20. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine which could not be yoked so as to draw any load. The question then arises whether the Trainer actually performs the functions or operations which a normal computer does, but is only not designed to deliver the results: or whether its function is to represent (by flashing of lights in sequence) what a computer does, but without actually doing this. When this question was put to him, Shri Sastry frankly stated that this was not a case of a simulated display, but the operations did actually take place. 26. In arriving at my conclusions I have assumed that these statements made by Shri Sastry, the proprietor of the factory, who is himself a technocrat, are factually correct. (These statements were not controverted by Shri Verma, though in fairness to him it must be said that he was hardly in a position to do so, for lack of a sufficient factual and technical background). Shri Sastry stated that no such Trainers were manufactured by his factory after 1982. If the conclusions reached in this case are sought to be applied to other similar cases, they would be valid only if the factual position is similar to what has been stated by Shri Sastry. 27. It may be accepted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely removing the particular part (firing pin etc.) which would make the cartridge explode. These dummy rifles are excellent for purposes of training, because they handle exactly like ordinary rifles, and their mechanism, with a single important exception, is the same. They can be used to show how a rifle is to be cleaned, loaded, unloaded and fired. In fact, they have all the functions and capabilities of an ordinary rifle except that of actually firing a bullet. In other words they do everything except give an "output". Could one call such an article "a rifle" as ordinarily understood? 32. These analogies should be of some help in deciding on the question before us. The matter is no doubt highly debatable. In reaching a conclusion, two guiding principles are relevant. One is the normal understanding of persons in general and of those in particular who have to deal with such articles. The other is the general principle of classification of goods within a tariff entry. The first principle finds support from many Court pronouncements, including that by the Supreme Court in Dunlop India Ltd. & Madras Rubber Factory Ltd. v. Union of India & Others (1983 E.L.T. 1566 (S.C.). With ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion were fulfilled. But it does not prove that a computer-like article used for training purposes must be classified and assessed to duty as a computer. Thus, none of the above arguments is of service in classifying the Trainer as a computer. 35. One more aspect may be mentioned. Despite Shri Lakshmi Kumaran's submission (para 16) that the manufacturer's brochure did not describe the Trainer as a computer, it is a fact that in about 10 places in the brochure it has been referred to as a "computer". In the light of the submissions vehemently made by the manufacturers, they should have been aware that this was not a correct description. Their use of it was apparently "for sales promotion only", in the words of their reply, dated 27-10-1979 to the show cause notice, without being overly concerned with accuracy. Claims or statements made in catalogues or brochures would not, however, be conclusive for purposes of assessment, if the factual position is shown to be otherwise. 36. Accordingly, I would decide the present reference by holding that the Trainer which is the subject matter of these proceedings was classifiable under TI 68 and not under TI 33DD. 37. The ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ps like INPUT-READ and OUTPUT-WRITE, MEMORY READ and WRITE, WRITING SOFTWARE and VERIFYING RESULTS. It tells a programmer how he should prepare not only his programme, but how to feed it into the computer for executing it. But even though it does all this, model MCT-1 does not compute like a computer does and cannot be put to uses to which computers are put. 5. It is necessary to attach great weight to the opinion of experts like the Department of Electronics and they have unequivocally pronounced that model MCT-1 is not a computer assessable under Item 33DD. 6. The learned counsel for the department said that even though this is a computer trainer, it is a computer, and the manufacturers themselves in their illustrated booklet call it a microcomputer - a microprocessor-based microcomputer. She said she did not agree with the argument of the learned counsel that because the price was Rs. 18,000/- or so, it could not be a computer. She read from the KIRK-OTHMER ENCYCLOPAEDIA OF CHEMICAL TECHNOLOGY a passage which said that a microprocessor chip was sold in quantity for about $ 10 in 1978. She says that this would indicate that the price of microprocessor chips had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne only by limited numeric keys of the keyboard and, therefore, the programming will not be as wide in range as a programme fed in by an external unit; but this machine in spite of its limitations provides facilities for writing software, debugging, interrupt programmes; and entry of programmes is made through an ergonomically designed keyboard and controls, which act as an integrated input device through which programmes are entered, checked and executed. Evidently, since the model is to be used largely for training, it does not need high-value peripherals that frequently go with professional commercial and other computers such as card or paper tape reader or punch, magnetic tape handler or line printer, video screen reader floppy. But it is useful to remember that peripheral equipments are not the computer itself, and that the computer is distinct from its peripherals. The computer is the machine that does the work of receiving, computing, storing, processing, reading, logic application of information etc. etc. The peripherals are only aids to the people who use the computer to put in programmes and to obtain the result of the processing by the main or chief machine, the computer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases (modules) and cabinets. These obtain switching and communications components such as transistors, diodes, capacitors, resistors, and integrated circuits, all combined into various types of circuitry, together with memory systems, power supplies, delay lines, and various types of magnetic media such as tapes and wires for carrying and transforming data and information, as coded, into instructions and computations. 11. The figure reproduced above schematically shows what are the parts and units of a computer system. The heart of the system is the processing, arithmetic and logic and the storage; and the others are adjuncts and auxiliaries to the main frame. 12. There seems to have been some misunderstanding in the mind of the department that because this microcomputer is based on a microprocessor, it should be assessed under Item 33DD. A microprocessor is only the semi-conductor chip that carries the resistance, transistors, circuits and so on. Its greatest advantage is that because of its small size, the speed of operation is greatly accelerated since the distance required for the electrical pulse to travel is drastically reduced. The employment of this micropro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er with a limited range and application. 15. In their hard-hitting letter, dated 15-2-1982 in reply to the notice of review under Section 36(2) of the Central Excises and Salt Act issued by the Government of India, M/s. Allied Computers attack the department unsparingly. Unfortunately, the letter though well phrased does not throw much light on the problem. They do say that the MCT-1 cannot be operated by programmers, as it does not know any type or programming like any commercial computer; which may all be quite correct. But it is good enough for a trainer or a learner, and imparts to them the basic principles of a microprocessor. They say that the MCT-1 cannot be used for data acquisition or industrial automation which are the main applications of commercial computers; but the department did not say that the model was a commercial computer or that it was a business or scientific computer. Its limited range alone will not allow its application to these highly specialised fields; but it is good enough to teach microprocessor functions to a beginner and no machine can do that unless it is a computer. It is like a model internal combustion engine which though lacking in severa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is well known that to attract Central Excise Duty, the goods must be known as such in Trade parlance. When the Legislature has used the words "Computers all sorts", it is reasonable to conclude that the leviability of duty would be attracted only on such goods which are "computers" that come into the main stream of the trade. In this background, we have to find out whether the product in question could be considered as a computer. 20. The computer has been defined in the Dictionary of Electronics by S.W. Amous as follows :- "An equipment which accepts information, carries out specified mathematical and/or logical specifications upon it and supplies the required answer. Computers are sometimes called Data-Processing Equipment." McGraw Hills Dictionary defines as follows :- "Computer is a device that receives, processes and presents information." Micro Processor : Time Chart of Computer Technology, from 1945-1970 reveals that the technology has progressed from computer questions to Micro Processors. In 1970, a Micro Processor has been classified as 4 bit, 8 bit, 16 bit or bit sliced. The major components of Micro Processors are :- (i) Clock (ii) Control Unit compri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is machine. There is no facility of programming through disc. The Appellate Collector has also adverted to the definition of Electronics Computer and has stated that this machine is intended to highlight only some basic elements of arithmetic unit and control unit and it is mainly used to impart necessary training to the students seeking knowledge about a computer. 23. In my view, the machine cannot be considered to be a computer for the following reasons :- (i) It does not have peripheral facility for recording external/inter actions. The Key Board in the Micro Computer Trainer is very primitive and has limited functions; (ii) The machine operates on the principle of the Micro Processing. In other words, the operation of the machine is designed according to the coding in the chip. This operational limitation restricts the scope of the machine. In other words, it is only for purpose of imparting knowledge of the mechanism of a computer to a student; (iii) This machine cannot be used as a computer in the commercial sense. There is no Video for display or printing which could record the output; (iv) The machine cannot execute major processing like word processing, business ..... X X X X Extracts X X X X X X X X Extracts X X X X
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