1999(05)LCX0180

IN THE CEGAT, COURT NO. II, NEW DELHI

S/Shri A.C.C. Unni, Member (J) and C.N.B. Nair, Member (T)

MODI XEROX LTD.

Versus

COMMISSIONER OF CUSTOMS, BOMBAY

Final Order No. 108/99-B2, dated 13-5-1999 in Appeal No. C/523/98-B2

Advocated By : Shri V. Lakshmikumaran, Advocate for the Appellant.

Shri Panchatcharam, JDR, for the Respondent.

[Order per : C.N.B. Nair, Member (T)]. - The issue involved in this appeal is the classification of the following imported items :-

(a) 4 Pieces of Fiery XJ + 300 System

(b) 4 Pieces of Fiery XJ + 170 System

The impugned order has confirmed classification of the items under Tariff Sub-heading 8543.89 as “electrical machines and apparatus having individual functions not specified or included elsewhere in this Chapter” as against the appellans’ cltaim for classification under Chapter Heading 84.71 as “automatic data processing machines and units thereof”.

2. Arguing the appeal, learned Advocate Shri V. Lakshmikumaran explained that the items in question are servers and they function in conjunction with digital photo copiers and computers. Their functioning is that documents scanned in the photo copier are transferred to the computer by the server. Similarly, materials composed in the computer are transferred for digital colour printing on the photo copier. On the one hand the servers receive data from network of computers or stand-alone computer, process such data with the help of MIPS and RIP transfer chips/micro processors and transfer the processed data for printing out through a colour digital copier and on the other hand store and transmit scanned documents to the computer. He also explained with representative sample of the server that computer and the copier are connected to the server through external cables. He submitted that Heading 84.71 covers data processing machines and units thereof and submitted that the Fiery System under consideration falls in the category of unit. He submitted that the Fiery System satisfies all the requirements under Chapter Note 5 of Heading 84.71. He referred to Note 5(B), (C) and (D) and submitted that separate units are also to be classified under Heading 84.71 in terms of this Note. He also submitted that in terms of Note 5(D)(iv) control and adaptor units such as those to effect interconnection of the central processing unit to other digital data processing machine or to groups of input or output units which may comprise visual display units, remote terminals, etc. are also to be included as separately presented units and classified under 8471. Shri Lakshmikumaran further submitted that the Revenue Authorities have also accepted that these are servers, but have held that they are not to be classified as data processing machine since they are not solely or principally used in an automatic data processing machine in view of their use with photo copier machine. They have held that its function is to convert the photo copier machine into a printer and not to assist the functioning of an automatic data processing system. He submitted that these findings are contrary to facts. The servers receive and store composed material and data from the computers and release them to the photo copier for the purpose of printing out copies according to a predetermined sequence. Similarly, they store and transmit materials scanned in the photo copier and transmit them to the computer. These functions make them a link in the data processing system. Further, there is no justification in classifying them under Tariff Heading 8543 as they are not electrical machine and apparatus having individual functions. They can function only as servers in conjunction with computers and photo copiers and not alone. Therefore, they are not individually and separately functional.

3. Heard Shri Panchatcharam, learned JDR for the Revenue. He reiterated the findings in the impugned order.

4. We have perused the records and have considered the rival submissions. We find that Fiery XJ System works as servers in a data processing system involving computers and photo copiers. They receive and store data and transmit them from computers to photo copiers and vice-vera according to the sequence as per the computer programme. Such machines are units in automatic data processing system. Chapter Note 5(B), (C) and (D) clarify that they have to be classified under Heading 84.71 when separately presented also. Accordingly, we hold that the correct classification of Fiery XJ + 300 System and Fiery XJ + 170 is under Heading 84.71 and not under sub-heading 8543.89 as electrical machine and apparatus. The appeal is accordingly allowed’ with consequential relief to the appellants and the impugned order is set aside.

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Equivalent 1999 (111) ELT 369 (Tribunal)

Equivalent 1999 (033) RLT 0248