1996(10)LCX0124

IN THE CEGAT, COURT NO. II, NEW DELHI

S/Shri S.L. Peeran, Member (J) and Shiben K. Dhar, Member (T)

JINDAL ALUMINIUM LTD.

Versus

COLLECTOR OF CUSTOMS, BANGALORE

Order No. C/1316/96-B, dated 28-10-1996 in Appeal No. C/2639/88-B2

Advocated By : Shri R. Parthasarthy, Advocate, for the Appellant.

Shri K.K. Jha, SDR, for the Respondents.

[Order per : Shiben K. Dhar, Member (T)]. - This appeal is directed against the Order-in-Appeal dated 29-6-1987 of Collector of Customs (Appeals), Madras.

2. The appellants imported spare parts for CNC Wire cut machine. These were populated printed circuit boards, Cassette Discs and Triac Assemblies among others. The dispute so far as this appeal relates is with regard to classification of populated printed circuit boards.

3. The appellants had earlier imported wire cutting machines. The imported printed circuit boards are claimed to be maintenance parts and accessories which are used in such a wire cutting machine. These printed circuit boards are claimed to be designed by the manufacturers to suit specifically the CNC wire-cut machine. These circuits are tailor-made for the requirements of a sequence of operations.

4. Arguing for the appellants, the learned Consultant submits that when the whole machine along with the Numerically controlled unit was imported, it was classified under CTH 84.45. He submits that on the same analogy these circuit boards too should be considered as parts of that machine and assessed under 84.66. He however does not press this classification and forcefully pleads for classification of the parts under 85.38 being parts of numerical panel classifiable under 85.37. In this connection he draws out attention to HSN notes under Heading 85.37 according to which numerical control panels with built-in automatic data processing machine, which are generally used to control machine tools, are included under Heading 85.37. He says that these circuit boards with certain components added are used in the panel where they are connected to other circuit boards to form a data processing unit. Since control panels even with in-built data processing machines are classifiable under 85.37 the imported goods ought to be classified as parts of such control panels under Heading 85.38. He also draws out attention to Tariff Advice issued by Madras Custom House under Public Notice No. 77/1991 appearing at T 61 volume 52 ELT, according to which PCB of CNC system of forge press are parts of goods falling under Heading 85.37 (85.27 it was pointed out was a typographical error) and therefore, these are classifiable under Heading 98.06 of CTA, 1975.

5. Appearing on behalf of the Revenue, the learned DR submits that Heading 85.37 relates to boards, panels, consoles, desks, cabinets and other bases equipped with two or more apparatus of Heading 85.35 or 85.36 for electrical control or distribution of electricity. A plain reading of this heading would indicate that the items covered here are basically such control panels as are equipped with apparatus for controlling and distributing electricity. The goods imported are basically parts of data processing unit and cannot be considered as parts of a numerical control panels. They would have been classified under 85.37 if a control panel with in built data processing system had been imported. This is not the case here. What is presented for assessment is a plain populated circuit board which when connected to other parts of a data processing unit is intended to serve the functions relating to a data processing unit only and, therefore, cannot by any strech of imagination be considered as a part of numerical control panels such as are envisaged under Heading 85.37.

6. We have heard both sides.

7. We extract below Heading 85.37 :

“85.37 Boards, panels, consoles, desks, cabinets and other bases, equipped with two or more apparatus of Heading No. 85.35 or 85.36, for electric control or the distribution of electricity, including those incorporating instruments or apparatus of Chapter 90, and numerical control apparatus, other than switching apparatus of Heading No. 85.17.”

8. A plain look at this heading would indicate that it covers basically such panels or boards which are equipped with apparatus of two or more headings of 85.35 or 85.36 for electrical control or distribution of electricity. Overwhelming emphasis in this heading is on the function of controlling and distributing electricity. Admittedly the impugned goods are intended when connected to other similar goods on a control panel to function as a data processing machine. What Explanatory Notes envisage by including numerical control panels under Heading 85.37 is only that when such units are imported, even though they may have a built-in automatic data processing machine, would nevertheless continue to remain covered under 85.37. In other words, such units would not be classifiable as a data processing machine but as numerical control panels. Support for this interpretation can be drived from HSN notes at Page 1297 under Heading 84.71. According to the HSN notes machine, instruments or apparatus incorporating or working with an automatic data processing machine and performing a specific function is excluded from the purview of the Chapter 84.71 and have to be classified in the heading appropriate to their respective functions. In this view of the matter, numerical control panels with built-in automatic data processing unit would correctly be classified under Heading 85.37.

9. Classification as parts of machinery under 84.66 on the argument that machine together with control panel was classifiable under 84.45 is also ruled out. The machine as such when imported with built-in control panel could be classifiable under 84.66 on the basis of being a composite machine to be classifiable as if consisting of that component or being that machine which performs the principal function. A part of the data processing system, however, when imported separately and presented as such for assessment would have to be given a different treatment, i.e. it would have to find its placement only under the specific heading which covers the machine of which it is a part or part as such. Admittedly this PCB with other components added was presented for assessment as such and after clearance was intended to be fitted or connected to other numerical control units already imported. In other words, it was to function as a part of an automatic data processing unit already imported even though when it was originally imported as a part of the machine.

10. Chapter Note 5(a) of Chapter 84 relates to automatic data processing machine. Chapter Note 5(b) indicates that automatic data processing machine may be nevertheless systems consisting of a variable number of separate units. A unit is to be regarded as being a part of a complete system if it meets all the following conditions :-

(a) It is connectable to the Central Processing Unit either directly or through one or more other units; or

(b) It is able to accept or deliver data in a form (codes or signals) which can be used by the system.

Chapter note further indicates that such units presented separately are also to be classified under 84.71. This description would appear to cover the impugned goods under examination. Apart from this Section Note 2(a) of Section XVI indicates that parts which are goods included in any of the Headings of Chapter 84 or 85 (other than Heading 84.85, 85.48) are all cases to be classified in their respective headings. Section Note 2(b) indicates that other parts if solely or principally used with a particular kind of machine are to be classified with machine of that kind. Section 2(a) will clearly take precedence over Section Note 2(b).

11. Considering therefore, that the impugned goods presented separately are to be connected to a system which is indeed an automatic data processing unit then are correctly classifiable as parts of data processing unit under 84.73 being parts of goods classifiable under 84.71. These cannot be classified as parts of machine incorporating or working in conjuction with an automatic data processing machine and performing a specific function to merit exclusion under 84.71.

12. For the reasons mentioned herein before we therefore uphold the impugned order and reject the appeal.

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Equivalent 1997 (90) ELT 312 (Tribunal)