1998(03)LCX0143
IN THE CEGAT, COURT NO. II, NEW DELHI
Shri S.K. Bhatnagar, Vice President and Ms. Jyoti Balasundaram, Member (J)
COLLECTOR OF CUSTOMS, NEW DELHI
Versus
ARNOLD HEINMANN
Final Order No. C/131/98-B2, dated 2-3-1998 in Appeal No. C/1588/89-B2
CASE CITED
Wipro Products Ltd. v. U.O.I. — 1986(07)LCX0035 Eq 1986 (025) ELT 0485 (Bom.) — Relied on [Paras 7, 8]
Advocated By : Shri K.K. Jha, SDR, for the Appellant.
None, for the Respondent.
[Order per : S.K. Bhatnagar, Vice President]. - This is an appeal filed by the department against the order of Collector of Customs (Appeals), New Delhi dated 22-2-1989.
2. Ld. DR stated that the respondent had imported the Floppy Diskettes vide Bill of Entry No. 30752, dated 5-7-1985 and classified the said goods under chapter heading No. 84.51/55(1) of the erstwhile Customs Tariff and paid the duty at the rate applicable to the said goods at the time of clearance. The respondent filed the refund claim vide their letter dated 3-10-1985 stating that the floppy diskettes are classified in other Customs Houses under BTM No. 92.01/13 at 100%. Basic duty plus 40% auxiliary duty and 12% CVD, whereas Delhi Customs has passed the consignment under BTM No. 84.51/55(1) and assessed @ 200% (Refunds), New Delhi.
3. The A.C. (Refunds) vide its order No. 828/85, dated 29-7-1986 had rejected the claim on the grounds as mentioned and reproduced below :
“The items imported in this case is floppy diskettes. They are used with computers. These are computers software. The party vide their letter dated 12-8-1985 have also confirmed that the diskettes are meant for computer. The classification under 84.51/55(1) is correct, the items being software, the claim is rejected.”
4. The Collector of Customs, New Delhi vide letter No. VIII(1)/ 20/828/85, dated 25-8-1986 has intimated the respondent, upholding the decision of the Asstt. Collector of Customs upholding the decision of the A.C. (Refunds) and also advised to avail the opportunity of going in for appeal. The decision of the Collector of Customs, New Delhi is reproduced below :
“I have seen the papers and I find that the order passed by the Asstt. Collector of Customs (Refund) is correct on merits. That the assessment in respect of M/s. ET & T Ltd. has been done under Chapter 92 is most unfortunate. You would no doubt realise that what you have imported were diskettes for the purpose of recording which were rightly classified under Chapter 84.51/55. It is only prepared media for sound or similar recording, sound recorded or similar media which would fall under Chapter 92.01. However, if you are still aggrieved by the order of the Asstt. Collector of Customs (Refunds) you may avail the opportunity of going in for appeal.”
5. The respondents had themselves vide B/E No. 30752, dated 5-7-1985 classified floppy diskettes under heading No. 8451/55 under the erstwhile Customs Tariff. Because the floppy diskettes are parts/accessories of computers, therefore, would more appropriately be classifiable under heading No. 84.51/55 instead of 92.01/13. For the sake of ready reference the relevant portion of the headings are reproduced below :
“Heading No. 84.51/55 - Automatic data processing machine and units thereof, ... parts and accessories suitable for use solely or principally, with the machines falling within this sub-heading.”
“Heading No. 92.01/13 - Musical instruments, instruments and appliances for recording or reproducing sounds or both; ... parts and accessories of the above recording; should recorded or similar media.”
Because the Heading 92.01/13 covers only musical instruments and parts including prepared media sound or similar recording; sound recorded or similar media. In other words, only sound recorded cassettes or diskettes may be covered under this heading.
Because the floppy, diskettes imported by the respondent were admittedly unrecorded, therefore, these cannot be covered under heading No. 92.01/13.
Because the floppy diskettes cannot be considered as parts/accessories of musical instruments under heading No. 92.01/13 and it would be more appropriate to consider them as parts or accessories suitable for use solely or principally with the automatic data processing machine i.e. computers under Heading 84.51/55.
6. We have considered the above submissions and also taken note of the Respondent’s submissions made before the Collector. We observe that the main ground for their seeking re-classification before the Collector was on account of the fact that the same were being imported by other parties both at Delhi and Bombay and were being allowed clearance under Chapter 92.
7. This by itself was however, not sufficient justification for re-classification and the Executive Collector has also expressed his views in the matter. The classification of an item is required to be decided on merits. In this connection we find that Heading 84.51/55 includes automatic data processing machines and units thereof as well as parts and accessories suitable for use solely or principally with the machines falling within this sub-heading. A similar issue regarding classification of diskettes had earlier come before Hon’ble Bombay High Court in the case of Wipro Products - 1986 (025) ELT 485 and the rival entries were 49.04/06 and 84.51/55. The Hon’ble High Court had observed, inter alia, that Heading 84.51/55 refers to machinery or mechanical appliance and the diskettes by no stretch of imagination can be said to be machines or mechanical appliances. It was also observed therein that the diskettes are like the cassettes which are used in a video cassette recorder by obtaining an image on the screen and by no stretch of imagination it could be even suggested that such cassettes are parts or accessories of a video cassette recorder. In other words such diskettes are not an accessory or a part of a machine. In view of the above position and the language of the heading No. 49.04/06 the Hon’ble Court had held that the diskettes should have been classified under T.I. 49.04/06.
8. The ratio of the above judgment covers the present case to the extent that the floppy diskettes cannot be considered as classifiable under 84.51/55 in view of the above observations and findings of the Hon’ble High Court. Only other heading pleaded by the respondent before the Collector was 92.01/03; and out of the two rival entries mentioned before us, in the above circumstance, only the latter is left for consideration. The ld. Collector has not given any reasons for classifying the item under this heading except to say that it will be more appropriate to do so as it has been done in other cases.
9. Further we do not agree with the department’s contention that the floppy disks were in the nature of computer software. Actually, “software comes on a disk, but the disk itself isn’t the software. The software is the information stored on the disk”. “Disks are considered hardware. The software is the programme or the information stored on the disks. The disk itself is not software” (vide PCs for Dummies by Dan Gookin and Andy Rathbone). Moreover classification under 84.51/55(1) covering, inter alia, automatic data processing machines and parts and accessories thereof has already been ruled out as above. Furthermore the blank floppy disks have been compared to blank cassettes which are prepared media for sound and similar recording and there a question arises whether such floppy disks would come in the category of similar media? This question has remained unanswered by either side and ld. Collector’s order is virtually a non-speaking one. The material before us is also not sufficient to allow further probe into the matter.
10. Moreover since no other heading has been pleaded before us by either side we do not propose to enter into any such exercise; And we hold that in the facts and circumstances of this case, one of the rival entries having been ruled out only the other survives. Therefore, in the above circumstances we are constrained to confine ourself to rejection of department’s plea for classification under 84.51/55(1).
11. It is ordered accordingly, as already announced in the open court.
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Equivalent 1998 (102) ELT 341 (Tribunal)
Equivalent 1998 (027) RLT 0016