Customs, Excise and Gold Tribunal - Delhi
A.B. Controls Limited vs Collector Of Customs on 21 July, 1989
Equivalent citations: 1989(25)ECR164(TRI.-DELHI), 1989(44)ELT525(TRI-DEL)
ORDER Jyoti Balasundaram, Member (J)
1. The questions that arise for consideration in the present appeal are:
(a) whether the Colour Graphic Display Terminal imported by the appellants is a "terminal" so as to be covered by Serial No. 8 of Notification No. 186/87-Cus., dated 29-4-87 as amended, attracting basic Customs duty of 60% ad valorem;
(b) alternatively, whether the item imported is a computer entitled to exemption under Notfn. No. 282/84-Cus., dated 9-11-84 as amended (rate of duty being 60% ad valorem)
2. The appellants herein filed Bill of Entry No. 206528: dated 19-9-87 for clearance of goods described as Colour Graphic Display Terminal and claimed the benefit of Notfn. No. 186/87-Cus., dated 29-4-87. The items imported consisted of systems like central processing unit, display memory board, trend memory monitor, disk drive, key board, DS software, video generator board, etc.
3. The matter was referred to the Department of Electronics for clarification as to whether the whole of the imported equipment may be considered as Graphic Display Terminal falling under Notification No. 186/87. In reply, the Department of Electronics stated that "the equipment is an intelligent graphic display station for interaction with the plant and serves as a console terminal to the programmable logic controller. The intelligent graphic terminals do incorporate dedicated CPU and memory. The Graphic System under consideration is more nearer to the computer. This range of computer configuration is presently not being manufactured indigenously and would attract a duty rate as is applicable under Notfn. No. 282/84-Cus. At present the goods under the Notfn. No. 282/84-Cus., as well as No. 186/87-Cus., attract the same duty, a liberal view could be taken in the case".
4. The Joint Director of Department of Electronics issued a NMI Certificate for Computer Imports on 15-1-88, recommending exemption under Notfn. No. 282/84.
5. The Additional Collector of Customs by the impugned order of 20-1-1988 has denied the benefit of Notfn. No. 186/87 on the ground that the item imported is more than a terminal, while the Notification envisages only a terminal used to present graphical information to a computer user. He has also denied the benefit of Notfn. No. 282/84 relying upon the clarification of the Department of Electronics dated 10-1-1987 that the imported item is more nearer to a computer and he has, therefore, held that the intelligent terminal is distinct from a computer. Hence this appeal.
6. We have heard the submissions of Shri V. Lakshmikumaran, learned Counsel for the appellants and Shri K.D. Tayal, learned SDR for the respondent and caretully considered the arguments of both sides and the plethora of technical literature placed before us.
7. The appellants manufacture 'programmable logic controls' which are control panels in process industries. "Programmable logic controls" have been defined at page 463 of the Encyclopedia of Industrial Automation by Glenn A Graham as follows :-
"Programmable Logic Controller. Programmable logic controllers or PLCs are industrial controllers. They were originally developed as a less expensive programmable replacement for limit switch control logic. PLCs are now solidstate, user programmable units with memory used to implement predetermined actions. The first programmable controller was made by Modicon (now the Programmable Control division of Gould Electronics) and sold to General / Motor's Hydra-Matic Division. Since the beginning, companies such as Allen-Bradley, General Electric, Westinghouse and many other domestic and foreign companies have developed and marketed programmable logic controllers. PLC is a term used to genetically describe the category of device known as a programmable controller. Allen-Bradley began to use the term PLC since their competitor Medicon was already using the acronym PC. But since the advent of the personal computer or PC, the programmable controllers are now mostly referred to as PLCs to distinguish them from the personal computers. PLCs execute programs which have the task of solving some logical activity and therefore are named as such."
Learned Counsel for the appellants submitted that the programs on a computer are fixed according to the position in a factory and when corrective action is to be taken, it comes to the programmable logic control. Controls are given through the terminal and all processing is done by the Central Processing Unit and then fed to the terminal. He submits that in the latest systems, terminals at various stations are also given intelligence in a form of a small Central Processing Unit. The main computer fixes the parameters of decisions. He contends that the terminal imported is known as smart or intelligent because, in addition to displaying the output of the main computer, it does data processing within the parameters fixed by it.
8. Shri Lakshmikumaran next referred us to the appellant's letter dated 27-10-1987 to the Assistant Collector of Customs giving a technical write-up of the Colour Graphic Display Terminal. The annexures to the letter contain the definition of terminal as found in the Penguin Dictionary of Computers and Penguin Dictionary of Electronics.
9. Learned Counsel next referred to the write-up on Programmable Logic Controllers in Mikell P. Groover's "Automation, Production Systems and Computer Integrated Manufacturing" and drew our attention to page 665 thereof, containing a diagram of the appellants' programming device used for a programmable logic controller. Our attention was then drawn to the definitions of terminal and intelligent terminal found at pages 548 and 319 respectively of Glenn A Graham's Encyclopedia of Industrial Automation for the purpose of showing that an intelligent terminal is still a terminal. He further referred to the definition of graphic display terminal at page 209 of the Penguin Dictionary of Computers.
10. The final submission of the learned Counsel is that his contention that the item imported is a terminal is fortified by the letter of 10-12-1987 of the Department of Electronics in which it is clarified that the imported item is an intelligent terminal. The thrust of his argument is that a terminal may be dumb or intelligent and both are species of the same genus "terminal". He cites the decision reported in Western India Plywoods v. C.C.E., Cochin [1985 (19) E.L.T. 590] for the proposition that economy of words is one of the canons of legislative drafting and in fiscal legislation, a general item used for describing any commodity covers that commodity in all its forms and varieties.
11. Shri K.D. Tayal, appearing for the Department reiterates the reasoning given in the impugned order and seeks to distinguish between a terminal and intelligent terminal relying upon the difference between the two found in the Macmillan Dictionary of Micro-computer by Charles J. Sipp and the definition of graphic display at p 127 of the same dictionary as a "communication terminal linked to a computer that displays data in shapes and drawings on a television like screen, usually a cathode ray tube". He would argue that a normal terminal is 'dumb'.
12. We have gone through the wealth of technical literature placed before us.. The word 'terminal' has been defined at p 524 of the New Penguin Dictionary of Electronics as 'a device that provides input/output facilities to a computer, often from a remote location. It may be used interactively and usually contains a keyboard and/or visual display unit. An intelligent terminal contains some local storage and processing ability and can perform simple tasks independently of the main computer". From this it is clear that an intelligent terminal is a terminal. From the definition of terminal found at page 450 of the Penguin Dictionary of Computers as "a device at which data may be input to or output from a data communications system and visual display units are often known as terminals", it is clear that the imported item is a terminal.
13. The definition of terminal in the Encyclopedia of Industrial Automation at page 548 is as follows :-
"Terminal. A terminal is usually an operator interface which is physically located at an end-point of a communication line. A terminal or DTE (Data Terminal Equipment) device is a data input/output device. Some terminals are "receive only" such as monitors without key-boards or printers. Some terminals are "send/receive" such as the typical CRT terminal with key-board or a printer with key-board. Most terminals are capable of several basic functions such as being able to translate the data which is received and convert it into viewable form if the terminal has a monitor, or drive a printing mechanism if the terminal is a printer. Other functions such as answer-back identification are standard functions necessary to communicate over modem lines. Terminals are referred to as dumb and smart, dumb terminals providing the basics of input and ouput with direct control by the host. Smart terminals have capabilities to do such things as maintain more than one screen's amount of data, provide horizontal and vertical scrolling without interacting with the host, generate graphics locally, perform editing, drive a printer with an integral printer port, display in split screen mode, and provide dual session connectivity."
An intelligent terminal is defined at p 319 of the same book as :-
"Intelligent Terminal. An intelligent terminal is a terminal that can execute certain fixed or variable programs for its user without continuous intervention by the user during their execution. An intelligent terminal may offer such capabilities as dual session, which is the ability to maintain a communications link with two host computers simultaneously, and allowing the operator to toggle between the two sessions on the screen, or allowing the user to configure a split-screen, with both sessions viewed concurrently. An intelligent terminal may also offer capabilities such as a printer port, integral modem, or a device input port. Other features of intelligent terminals are horizontal scrolling, software setup, and multiscreen memory. Some more sohpisticated controllers offer integral text editors and memory for local activities. Some terminals have various integral fonts for quicker display of text in various styles."
From these definitions it is very clear that an intelligent terminal is the same as a terminal. The same conclusion is reached from the definition of intelligent terminal at page 504 of Sams Modern Dictionary of Electronics which reads as follows:-
"Intelligent terminal-1. An input/output device in which a number of computer processing characteristics are physically built into, or attached to, the terminal unit. 2. Programmable control terminal that drives other terminals, peripherals, floppy disks, machines, program counters, etc. 3. A programmable data service, usually remote from the main computer, which unburdens the host computer by performing preliminary data processing such as formatting, verification, or validation. 4. A terminal that has editing and block-transmission capabilities, which allow manipulation of data in the terminal before transmission to the host computer. Some intelligent terminals can also perform checks on entered data. An intelligent terminal's programmability is restricted to formatting data on its screen. These formats can be called up through the keyboard and can have protected fields that allow entering of data (numeric, alphabetic, or alphanumeric) in the prescribed format. User programmability distinguishes the intelligent terminal from its less intelligent relatives. In addition to this programmability, an intelligent terminal has editing functions similar to those of a smart terminal. 5. An input/output device with built in intelligence in the form of a microprocessor, and able to perform functions that would otherwise require the central computer's processing power, sometimes called a stand along terminal. 6. A terminal with local processing power whose characteristics can be changed under program control."
14. A perusal of the impugned order shows that the Additional Collector, while observing that nothing other than a terminal is entitled to the benefit of Notification No. 186/87, has not appreciated the true scope and meaning of the word 'terminal'. The Department of Electronics has specifically stated that the goods imported by the appellants serve as a terminal to the programmable logic controller. The Customs authorities are duty bound to act upon the clarification issued by the DOE which is the highest authority of the Government of India dealing with computers. It has been held by the Bombay High Court in 1982 (10) ELT 171 [Bombay Chemicals (P) Ltd. v. Union of India] that Customs authorities are bound by certificate issued by the D.G.T.D. and cannot ignore or bypass it on the ground of mistake or misrepresentation (there is, however, no such allegation in this appeal).
15. Notification No. 186/87-Cus., dated 29-4-1987 uses the expression "graphic display terminal" at Sl. No. 8. It does not distinguish between 'dumb' and 'intelligent' terminal and thus both types of terminals will be covered by the Notification.
16. The Additional Collector's observation that the exemption is available only to a terminal used to present graphical information to a computer user, is not warranted as no such restriction or limitation appears in Notification No. 186/87.
17. We observe that even in the Macmillan Dictionary of Micro-computing by Charles V Sipp differentiating between a terminal and an intelligent terminal, there is nothing to warrant the conclusion that an intelligent terminal is not a terminal. 'Terminal' is defined as :-
"The computer peripheral that forms the primary interface between a computer and its users. The standard terminal consists of three parts a key-board, a video screen and & physical interface to the computer system. The key-board al-lows the user to send information (data, commands, etc.) to the computer. The video screen provides a means for the computer to send out-put to the user in a readable format. The physical interface typically, consists of either a serial or parallel part and appropriate cabling. On many single-user micro computer, the terminal is integrated into the system. On multi-user systems, terminals may be made by other manufacturer and may be different from one another according to application."
and 'Intelligent Terminal' as:-
"The heart of any intelligent terminal, its micro-processor, allows the terminal two basic operations that were previously impossible at the terminal level, the ability to make decisions based on specific guidelines and the ability to perform calculations. The micro-processor allows the intelligent terminal to achieve a combination of rapid response and simplicity in design that was heretofore impossible. The units' modularity allows it to meet a variety of user's requirements including control of other terminals and a buffering capability for communication interface with the host computer. In other words, mere and more of the communication functions can be performed inside the terminal rather than by the CPU. Micro processors are now being used in all functional areas of intelligent terminal design, including print machanisms, carriage control, interface control and maintenance testing. The more intelligence placed in the terminal, the less is required of the host computer."
It clarifies that the heart of any intelligent terminal, its micro-processor, allows the terminal two basic operations previously impossible at the terminal level.
17. In the light of the foregoing discussion, we hold that the item imported by the appellants is a 'graphic visual display terminal' enumerated at Serial No. 8 of the Table annexed to Notification No. 186/87-Cus., dated 29-4-1987 and, therefore, entitled to the benefit of exemption under that notification with the consequential relief of refund of excess duty paid.
18. The appeal is accordingly allowed.