Customs, Excise and Gold Tribunal - Mumbai
V.V. Belvalkar And Co. vs Cc on 11 June, 1997
Equivalent citations: 1997(71)ECR787(TRI.-MUMBAI)
ORDER Jyoti Balasundaram, Member (J)
1. The above appeal arises against the order of the Collector of Customs (Appeals), Bombay upholding the order of the Assistant Collector of Customs classifying the Mini Diskettes and Fonts Mini Diskettes imported by the appellants herein alongwith Photo-type setting system under heading 84.51/55(2) of the Customs Tariff Act, 1975 as parts of Automatic Data Processing system and rejecting the appellant's claim for refund on the ground of short-shipment of chemical replenishment unit.
2. The brief facts of the case are that in September, 1982, the appellants imported from USA a consignment of 3 packages containing:
(i) Phototypesetting Systems complete with:
(ii) Fonts on Mini Diskettes and blank diskettes
(iii) Extra Output Cassette
(iv) R/C Processor for Typesetting Film/Paper
(v) Manuals and Technical Documents and claimed their assessment as under:
Items (ii) and (iii) under heading 84.34 read with Notification No.
114/80
Item (iv) under heading 90.10 read with Notification No. 11/77
The appellants filed an application for refund of duty on the ground that
one item namely Chemical Replenishment Unit was short shipped. Instead the goods were assessed to duty as under:
Items (ii) and (iii) under heading 84.51/55(2) and without the benefit of
Notification No. 114/80 on the ground that the items
in question were Computer parts
Item (iv) classification declared was accepted but benefit under
the Notification No. 11/77 was denied on the ground
that Film Processor could also process paper.
The refund claim was also rejected on the ground of lack of documentary evidence to substantiate both their claim of short shipment as well as total duty payment. The Collector of Customs (Appeals), Bombay confirmed the classification adopted by the Assistant Collector in respect of items (ii) and (iii) holding that heading 84.34 covers machinery, apparatus and accessories for type forming and type setting machinery etc. and the goods imported by the appellants would not be covered under that heading and they are parts of computers meriting classification under heading 84.51/55(2) of Customs Tariff Act. However, he accepted the appellants' claim regarding classification of item(iv). The claim of refund on the ground of short shipment was again, rejected on the ground of non-submission of documentary evidence. Hence this appeal.
3. We have heard Shri L.P. Asthana, learned Counsel who argues that the Fonts Mini Diskettes are parts of Phototypesetting system and also contends that the claim of short shipment has been established in view of the foreign supplier confirming that the chemical replenishment unit for P.D.-24 RC Automatic Processor was not supplied at the time of shipping of the consignment in dispute, due to its non-availability and staring that the unit would be shipped to the appellants after obtaining their confirmation (letter dated 10th December, 1992).
4. Shri Mohd. Ali, learned DR submits that the classification either under heading 84.34 claimed by the appellants or under the Tariff heading confirmed by the department on the Fonts Mini Diskettes i.e. heading 84.51/55(2) is not appropriate as the item would be correctly classifiable under heading 92.12 of the Customs Tariff Act, 1975 because Fonts Mini diskettes are magnetic disks for recording and hence would be covered under heading 92.12 in view of the Explanatory Notes to Chapter 92 of the CCCN.
5. We have carefully considered the submissions of both the sides and perused the materials on record including the Operation manual for C.R. Tronic 150/200.
5.1. A floppy disc is a circular piece of mylar coated with metallic oxide film that retains magnetic impulses. The disc is sealed in a plastic envelope lined with non-abrasive material designed to permit free rotation of the disc inside the envelope and also remove dirt and dust which might collect on the surface. There is an elongated slot on the envelope through which recording/reading can be done on the disc. Once recorded on a particular typesetter, the disc cannot be read on any other typesetter different from the one first used. The CR Tronic Operation Manual defines fonts as 'complete assortment of characters in a particular face. A Format is 'a combination of commands that can be stored in memory and recalled e.g. point size, line length. A format is normally used to quickly recall a set of parameters for repetitive use, for example, the specifications for a one-column newspaper story.
6. The CR Tronic is supplied with two Program Diskettes (System and Utility) and a System Text Files Diskette and one or more Master Font diskettes would be required.
6.1. The Program Diskettes contain special information that must be 'read' into the computer memory in order for the machine to perform its functions. Certain machine functions can only be performed after the System Program has been loaded into memory and other functions only after the Utility Program has been loaded into memory. Some functions can be performed with either Program.
6.2. The System Program Diskette is your working Program diskette and is loaded when key boarding and typesetting. The Utility Program Diskette is used for special functions such as initialization of a diskette, various Font Handling procedures, modification of Soft Keyfiles, creation of Macro-Characters and UDFs etc. Disk drive O (right hand) is always used for loading programs into computer memory.
6.3. A Master font diskette is the diskette supplied by Mergenthaler containing the fonts (type faces) that have been ordered. A maximum of 8 fonts can be supplied on each of these diskettes. Special information related to the characteristics of each font to be used in a job must be transferred from the Font Diskette to the System program diskette before starting the job. This enables the system to perform the necessary calculation for justification of the text prior to actual typesetting. The Font Diskette is a ways inserted in drive O during the typesetting operation.
6.4. The System Text Files Diskettes contains special source files that have been provided by Mergenthaler Linotype to enable an operator to customize the operation of the CR Tronic in accordance with special needs and requirements (for example, modifying the Exception Word Dictionary, reprogramming the Soft Keys, assigning special characters to the keyboard). For user convenience, certain essential source files have already been transferred to the Program Diskettes (standard keyboard layout. Exemption Word Dictionary, Standard Soft Key Programming and Operator Messages).
6.5. The CR Tronic is supplied with the following standard accessories:
1) System Program Diskette (contains System Program/Version 1. Rev. 2 or later)
2) Utility Program Diskette (contains Utility Program/Version 1, Rev. 2 of later)
3) System Text Files Diskette (contains special files for Soft Keys. Exception Word Dictionary, Keyboard Layouts, User-Defined Formats, Macro-characters, etc./Version 1, Rev. 1 or later).
4) Output Cassette
5) Cleaning diskette, for use in cleaning disc drives.
In addition to the above, pre-formatted blank diskettes are required (for storing of text, fonts, etc.) plus at least one Font Diskette with your choice of Fonts (upto eight fonts can be stored on one Font Diskette).
7) The extracts from the 150/200 Operational Manual are reproduced below:
CR Tronic 150/200Operation Manual FLOPPY DISC ORGANISATION The storage on diskette (diskette : mini floppy disc) takes place according to routines fixed in the system program. A side of the diskette is divided into 35 tracks with 18 sectors, each of 256 characters. Thus, one side of the diskette has a storage capacity of more than 160,000 characters.
The CR Tronic 150 uses single sided diskettes only. However, the CE Tronic 200 can accept double sided diskettes, giving a capacity of over 320,000 characters.
When recording a text on diskette the program allocates a text number each time. It maintains on each diskette a look-up table (directory) which shows where free text numbers are or where a job sought by the operator is stored. The table contains the text numbers and code words of the stored texts up to 314 (CR Tronic 150) or 638 (CR Tronic 200) different text numbers can be allocated.
The allocation of text numbers on blank diskettes starts with number 1 and continues in ascending sequence. By copying onto blank diskette existing text numbers can be reorganised.
Diskettes can be write-protected by sticking an adhesive tape patch over the notch in the sleeve. A write-protected diskette can be read and displayed on the screen, but cannot be corrected or cleared. It is recommended that important texts be safeguarded with this facility. In the case of system diskettes, write-protection is often not worthwhile because the system diskette must be rewritten each time when changing the font, user defined formats or other storage. The system diskette should in any case be available in several copies to avoid the risk, in case of mis-operation of clearing the diskette (See DUMP Section 2) FONT DISC Separate font discs unique to an individual user are supplied with each CR Tronic tailored to the user's font requirements. Up to eight (CR Tronic 150) or sixteen (CR Tronic 200) digitised fonts are stored on each disc and are used to control the shape of characters on the typesetter. Drive O is used for the font disc during typesetting. A utility program is available to enable tailoring of font discs to user requirements-see Utility Section.
Fig. 1.5: Disc Layout (not reproduced) Section 4 UTILITY PROGRAM GENERAL A Utility Program Disc is supplied with each CR Tronic. The Utility Program is used to 'dress' or customise the System Program for national language and individual users requirements, thus greatly enhancing the flexibility of the CR Tronic software.
The main functions of the program are to:
Initialise discs to accept text, font or hyphenation data (INIT) Transfer the font number table from the Dressing Disc to the Front-end System Disc (CFN) Construct working Font Discs from master Font Discs (COFO, TFN and COFON, TFN). Transfer width information from Font Discs to the Front-end System Disc (COFO, (F)(B)(S). Transfer 'softkey' coding from the Dressing Disc to the System Disc (COSY).
Transfer keyboard dressing for national and Macro Character assignment from the Dressing Disc to the System Disc (CUK, CSK, CTK). Create a working hyphenaton language disc from master discs, and select a hyphenation language from the working disc and transfer it to the Front-end System Disc (COHY and SEH). Transfer the font accent table from the Dressing Disc to the Front-end System Disc (CAT). Copy printer width tables from Dressing Disc to the System Disc (CPT). Transfer exception dictionary Dressing Disc to System Disc (CEX). Transfer Message text from Dressing Disc to System Disc (CMT).
Transfer Command Names text from Dressing Disc to Front-end System Disc (CCN).
Clean a floppy disc drive (CLEAN).
NOTE: Those functions marked will not normally be required to be performed by a user since each System Disc is customised to a standard national layout. If it is felt necessary to make changes with these commands, users are requested to consult their Linotype supplier first. The Utility Program is always loaded from drive O and the disc may then be removed. The Front-end System Disc is then inserted into drive O and the Dressing Disc in drive 1. After completion of a Utility function,, the System Program may be loaded simply by pushing the RESET button. Dressing of the System Disc may be verified with the foreground commands: GMT : Message Text GFDR : Font Dressing Correct dressing of the Font Disc after COFO or COFON may be verified with the GFDI. DN command. INITIALISE-INIT (d)(f)(h) Before a new disc can be written to it must be initialised, i.e. the directory is formatted with all files set to zero. This also puts on the security number of the machine. Non-initialised discs cannot be used for text storage. Recorded Text discs can be completely cleared by INIT. Beware not to use INIT in error. Do not select a drive since INIT always automatically selects drive O. The letter following INIT signifies the use to which the disc will be put.
d : Date disc (Program or Text).
f : Font disc.
h : Hyphenation disc.
NOTE: Existing texts are cleared by INIT. INIT is automatically executed on drive O. The disc to be initialised must be placed on drive O before Start command. Only Linotype discs may be used.
Procedure
1. Load in Utility program then remove disc.
2. Put disc to be initialised into O.
3. B INIT.d - for Text disc.
4. B INIT.f-for Font disc.
5. B INIT.h - for Hyphenation disc.
6. Start CLEAN The special disc supplied with the unit may be used with the CLEAN command to remove dirt accumulated on the disc read/write head which may cause disc error.
Procedure
1. Load Utility program
2. Insert Cleaning disc in drive O
3. B CLEAN. O and Start
4. Insert Cleaning disc in drive 1
5. B CLEAN. 1 and Start The frequency that the cleaning routine is required will depend upon the environment in which the unit is installed and the amount of use it receives. Consult the Service Department for further advice.
PREPARATORY OPERATIONS The following operations must be carried out before beginning actual typesetting work. Reference should be made to the appropriate sections of this manual where full details of the commands described are to be found.
FLOPPY DISCS A number of floppy discs are supplied with each unit. These should be treated as master discs and working copies of them made for day-to-day use.
The following discs are supplied:
Front and Back-end System Discs These discs contain the System Program which may require dressing to the user's requirements.
Utility Disc.
The Utility Program contained on this disc is used to initialise text and font discs and to dress the System Program (i.e. transfer user definable parameters) from the Dressing Disc.
Dressing Disc In format the dressing disc is an ordinary text disc on which are stored dressing texts such as User formats. Font numbers table. Macro characters. Keyboard layout etc. Font Discs One or more font discs will be supplied depending upon customer's requirements. Each disc may store up to sixteen fonts (eight on the CR Tronic 150) which because of inbuilt security may only be used on the unit for which they are supplied.
Hyphenation Language Disc The customer's national language and any additional hyphenation languages ordered will be stored on this disc, which also contains a security code. It is normally necessary to use this disc as the Utility and System Discs come ready dressed with the customer's national language.
Cleaning Disc This is a special disc to be used with the CLEAN command.
Blank Discs These discs after initialisation (INIT command) may be used to store text, fonts or copies of System and Utility Programs.
PROGRAM LOADING System Program The System Program is provided on two discs known as the Front-end and Back-end System Programs respectively. The Front-end System disc is identified with an 'F followed by the revision number (e.g. Fl) on a green label. The Back-end System disc is marked 'B' with the revision number (e.g. B2) on a red label.
1. Switch on the unit with the power-on switch (Fig. 1.1)- Fig 1.1 not reproduced., the green indicator lamp flashes.
2. Insert Front-end System disc in drive O (right-hand) with label upwards and towards operator. Close drive door.
3. Press the 'Reset' button to initiate program load, red indicator on drive is lit as the program loads. Following initial power on, Front-end Program loading takes approximately 35 seconds. When the program has loaded the BACK GROUND display line indicates WAITING.
4. Remove Front-end System disc and insert Back-end System disc in drive O.
5. Press the Start key (STA) in Shift state to initiate loading of the Backend Program BACKGROUND display line indicates BUSY until the program load is complete, whereupon the indication changes to IDLE.
NOTE 1: Following power on BUSY remains for approximately one and one-fourth minutes after Back-end Program has loaded while self-testing is carried out.
2. It typesetting and output to the printer are not required it is not essential for the Back-end Program to be loaded. In this case, when the Front-end program has loaded press Stop Key (STOP) in Shift state.
Utility Program The Utility Program is provided on a single disc identified by a 'U' on the label.
1. Insert Utility disc in drive O (right-hand)
2. Press 'Reset' button to initiate program load. Utility loading takes approximately 20 seconds. When loaded the Utility Program may be distinguished from the System Program by a dotted line separating the command and text areas.
DISC INITIALISATION (See INIT command, Section 4) Before a disc can be written to it must be initialised i.e. an empty directory must be written by the program onto the disc. Disc may be initialised to accept text, program or font information. Only Linotype format discs may be initialised.
This initialisation process must be performed with every new text disc before the first recording of text. It may also be used to erase complete floppy discs when the contents are no longer needed. For initialisation, the write protection of the disc must be removed (i.e. the notch in the outer disc edge must be open).
Procedure
1. Load Utility Program from drive O, then remove disc.
2. Insert blank disc in drive O.
3. Key Softkey 10 in supershift (INIT. D) and Start to initialise text discs. Softkey 11 in supershift (INIT.F) for font discs or Softkey 12 in super-shift (INIT.H) for hyphenation discs. INIT command appears in the background command line.
4. Key Start in shiftthe background shows the BUSY message.
5. Initialisation is complete when the background message IDLE is displayed.
DUPLICATING SYSTEM AND UTILITY DISCS Copies of Systems and Utility discs maybe produced by using the DUMP routine to copy information from the Master disc onto an initialised disc.
Procedure
1. Load Utility Program
2. Initialise a blank disc with INIT.d
3. Insert the Master Disc to be copies in drive 1
4. Insert the initialised disc in drive O
5. Use Softkey 18 in shift (DUMP) and Start to copy the information.
Copying is completed when the Background becomes IDLE.
CREATING THE FONT NUMBERS TABLE A table must be compiled assigning Logical Font Numbers (i.e. the numbers selected by the >Fn< instruction) to the Typeface Numbers (Catalogue Numbers) for each font to be used. When completed the table is stored on a text disc (usually the Dressing Disc) and transferred to the Front-end System Disc using the command CFN. Full details of the construction of the table and transfer to the System Program are given in the Utility Program Section 4.
CREATING WORKING FONT DISCS (See COFO, COFON) The Master Font Discs should be kept as a backup in case of loss or damage to working discs. The working discs may be tailored to provide a group of fonts needed for a particular job. Thus fonts from several Master discs may be merged onto one working disc.
8. From the above, it is seen that on the CR Tronic system, all blank discs used must be pre-formatted by Linotype. A pre-formatted blank disc is then initialled on CR Tronic by using appropriate programme to be able to accept recording or retrieval of information. The blank Minifloppy diskettes imported are pre-formatted by linotype for application on CR Tronic Photo-typesetter only and they cannot be used on any other system or computer for any other application. CR Tronic will not accept any other floppy disc for its typesetting application other than those which have been imported specially for this purpose. Further we note that initialization of these blank diskettes is an exclusive feature of CR Tronic system only and such initialization for CE Tronic application cannot be done on any other system/computer. They cannot be compared with ordinary blank floppy diskettes. In the phototypesetting field, a font is a master set of Matrices on which graphic characters i.e. alphabets namely A to Z, 1-0, punctuation marks are stored. A phototypesetting machine composes these characters which are stored on a font. Even though all phototypesetters are micro processor based (as in the case of computers or data processors), they perform only those functions which are required in the printing industry namely.
a) Text Processing/Editing: This deals with key boarding, storage and retrieval of text. This function is identical with those of a computer or a data-processor and to perform this, phototypesetting machine does not need a font.
b) Typesetting: This deals with printing or composing the keyboarded text in the desired style of alphabets by making use of a set of matrices viz. a Font via an optical system. This feature/function is never to be found in any computer/data processing system. If at all a computer/data processor is to be compared with a phototypesetter, it can be seen among other things that:
a) A computer/data processor must have different programs to do different types of jobs viz. programmes and software ind Bad, Basic, Cobol, Fortran, Pascal, DOS etc. A Phototypesetter does not need any of these, since its purpose is confined to processing text only.
b) Thus a computer is user programmable and can be used for a variety of jobs using various programmes/softwares. A Phototypesetter is not user programmable since its use and purpose is confined and restricted to processing text only in the printing industry.
9. The Explanatory Notes to the Harmonised Coding system and Coding System description to Heading 84.42 states that the heading also includes photo-typesetting and Composing machines which compose by successively photographing characters mounted on revolving disc or the characters face of special matrices or characters created on a cathode ray tube by a matrix of very small overlapping dots. The heading also includes composing machines using a laser beam projected on to photographic film.
9.1. Fonts on which alphabetical characters are slotted in the form of very small dots are nothing but a set of matrices used for phototypesetting system.
10. From the above, it is clear that fonts mini-diskettes are different from font diskettes used in computers and data processing machines and hence, we agree with the learned Counsel that they would not fall for classification as parts of computers under heading 84.51/55(2).
11. Having ruled out classification of Fonts Mini Diskettes under Heading 84.51/55(2), let us see whether heading 84.34 or heading 92.01/13 would be more appropriate. No doubt, heading 92.01/13 has been obtained by merging heading 92.01 to 92.13 of the CCCN/BTN. However, it is a broad based merger and all the contents of the merged headings did not automatically become a part of the Tariff heading in the Customs Tariff Act. Heading 92.01/13 covers musical system records, decoy calls and sound/signalling instruments. The goods in question are none of the above. There is nothing to show that all the contents of heading 92.12 have been incorporated in heading 92.10/13 of the tariff. There is no reference in the Tariff heading to 'Matrices for the production of records/prepared record blanks/prepared tapes/wires/strips and like articles of a kind commonly used for sound or similar recording'. While we agree with the learned DR that the BTN/CCCN can be looked into for the purpose of arriving at correct classification under our Tariff, they cannot be applied automatically if the terms of the Tariff heading and the terms of the BTN and CCCN are not part materia. Most emphatically, the BTN/CCCN cannot be applied in such a way as to extend or expand the scope of headings under the Customs Tariff Act, 1975. Heading 92.12 of the BTN/CCCN covers only those articles which are of a kind commonly used for sound or similar recording. Fonts are not used for the above purpose but for photo composing i.e. for printing purposes. They are specialised for printing industry and are not general purpose or a kind envisaged in heading 92.12 of the BTN/CCCN and hence are not covered by heading 92.01/13 of the Customs Tariff Act, 1975. They are parts of phototypesetting machines classifiable under heading 84.34 of the Customs Tariff Act, 1975. The benefit of Notification No. 114/80 dated 19.6.1980 is not available to the Fonts Mini Diskettes as the Notification covers only 'Photo Composing Machines with key boards' and hence would exclude from its purview parts of photo-composing or phototypesetting machines. We are unable to accede to the contention of the learned Counsel that since the photo-composing machine is incomplete without the master fonts, they should be assessed along with photo-composing machine and not separately.
12. On the issue of short shipment, in the absence of Examination report and joint survey conducted by the Customs authorities along with the importers, we are not satisfied that the claim for refund on this score has been substantiated and the documents relied upon by the appellants namely letter dated 10th December, 1982 from the foreign supplier confirming short shipment of the chemical replenishment unit is not legally acceptable substitute. Hence the claim for refund on ground of short shipment is rejected. In the result, we uphold the classification of Fonts Mini Diskettes under heading 84.34 of the Customs Tariff Act, 1975 without the benefit of Notification No. 114/80 and the refund claim for chemical replenishment unit is rejected as unsubstantiated. The appeal is disposed of in the above terms.
Sd/-
(Jyoti Balasundaram) Member (J) Per S.K. Bhatnagar, Vice-President-
With due respects to Hon. Member (J), my views and orders in the matter are as follows:
13. I consider that the basic question which we have to consider is as to whether the items are essential parts/components or accessories of CR Tronic Phototypesetting system falling under heading 84.34 (which specifically covers, inter alia, machinery, apparatus and accessories for type-founding or typesetting) or of a data processing machine classifiable under heading 84.51/55 or are classifiable independently on their own merits.
14. In this respect the fact that modern phototypesetting systems utilise electronic devices and methods and materials similar to or compatible with automatic data processing machines or computers etc. deserves due consideration in the light of the technological developments in this regard; And we see that McGraw Hill Encyclopedia of Science and Technology (Vol. 10) mentions, inter alia, as follows:
Evolution of Modern Printing. The present day industry reached its current status primarily as the result of five major developments.... The fifth major development has been the application of electronics and computers."
"Typesetting and Page Makeup. "Machine composition was a major advance in typesetting".... "Machine-set type can be produced on any of several machines" including "linotype...."
"Photographic typesetting. Phototypesetters vary in electronic sophistication, automation, imaging speed, and typographic versatility and produce composition from simple straight matter to full-page, multicolumn formats combining text and display, on photographic paper, film, or paper plates." ....
"Phototypesetting systems have evolved through three generations of changes ...". "First generation units were adapted from machine typesetting."... "Second-generation units use electromechanical principles."..."Third-generation units are totally electronic, utilizing cathode-ray tube (CRT) or laser technology. Also known as digitized typesetting, the process utilizes characters produced on the screen of a high-resolution cathode-ray tube by a series of minute dots or lines, from which the resultant image is transferred to a photographic material..."
All phototypesetters have master character sets which include all of the characters and symbols for a particular type style which must be stored in some form. Some units use disks, and some use film strips or grids, or film segments mounted on a drum. In most phototypesetters the master character image is enlarged by individual lenses or by a zoom lens to achieve the final type size."
"In using a second-generation phototypesetter, characters are selected by referencing certain marks son the photomatrix...."
"Third-generation phototypesetters are capable of greatly increased speeds (over 1000 1pm) and in some cases can also create complete pages of text and headline material in position. Characters are stored as either master images or digital information which is coverted into dot images on the CRT screen. In operation, patterns of the required characters are called out of memory and are imaged on the CRT in correct size at their precise locations in the page or format. This finished composition is then beamed from the tube to the photopaper or film."
Input. "Two types of input devices are used. In direct input a keyboard is an integral part of the typesetting device. Off-line keyboard devices produce a record of the information keyed on perforated paper tape or magnetic tape...."
"Optical character recognition (OCR) has the ability to scan typewritten sheets and produce a record on a memory medium, such as tape...."
"Video display terminals (VDT) are the most important accessories introduced in typesetting...."
"The VDT was introduced as an editing device, but rapid changes in technology have made it one of the most useful tools in modern typesetting.".... "Because of the volume of information that passed through this cluster system, a memory storage element had to be added. The first of these was magnetic tape. Next came random access, which refers to disk recording. There are two types of disks. Floppy disks are made of flexible mylar coated with a metallic oxide and can store 250,000 to 600,000 characters. Rigid or hard disks can store from a million to several million characters and can rotate faster than floppy disks, thus permitting more rapid access time. Bubble memories have been introduced which can store up to ten times as much information as disks in the same space.
The addition of memory modules required the cluster systems to develop means of storing and retrieving information called data or file management.... All typesetting input consists of the characters that are seen on output and the commands that determine how they are seen....
15. Therefore, what is required to be seen is whether the imported items are basically data/information recording and retrieving devices (a diskette or floppy being a medium for recording software) are specifically designed for use as components of phototypesetting system only or are of a type which could be interchangeably used in or with the electronic equipment such as automatic data processing machines or computers or work processors etc. working in conjunction with other devices. In this respect it is seen from the CR Tronic Manual that separate font-discs unique to an individual user are supplied with each CR Tronic, tailored to the user's font requirement and a utility program is available to enable tailoring of font discs to user's requirements. However, the blank discs have to be distinguished from other formated discs and if it could be shown that they can be used only with a phototypesetting machine and none else then and then only these can be treated as accessories of a phototypesetting system.
16. During the course of hearing the Ld. Counsel had drawn attention towards the Bill of Entry and other documents submitted at the time of assessment and stated that out of the items mentioned in the Bill of Entry the main classification dispute is only with respect to item No. 2 which covers 'Mini Diskettes' and 'Fonts Mini Diskettes'. It was his submission that they had claimed classification under heading 84.34 (read with notification No. 114/80) but the departmental officers had not accepted this proposal and classified them, instead, under 84.51/55(2) and the refund claim by them had been rejected.
17. It was their submission that in this consignment they had imported CR Tronic Phototypesetting system complete as evident from the invoice and the above diskettes were supplied along with this system. They have filed copies of the relevant pages of the operation manual in support of their plea that these are exclusively meant for use with the imported phototypesetting system and are not general purpose type or interchangeable type. These diskettes include font disks, utility programme disk and blank disks. The operation manual shows that font disks are meant to be used only on the unit for which they are supplied. The utility disk contains the utility programme used to initialize text and font disks and to dress the systems program. Whereas the blank disks after initialisation may be used to store text, fonts or copies of system and utility programs.
18. I consider that the above submissions are factually correct as evident from the copies of the operation manual but the details of the product description regarding CR Tronic software is also a part of the operation manual and shows "that CR Tronic is supplied with two program disks (system and utility) and a system text files diskette one or more master font disks ('with your choice of fonts') will be required.
19. The Program Diskettes contain special information that must be "read" into the computer memory in order for the machine to perform its functions. Certain machine functions can only be performed after the System Program has been loaded into memory, and other functions only after the Utility Program has been loaded into memory. Some functions can be performed with either Program.
20. The System Program Diskette is 'your working Program Diskette' and is loaded when keyboarding and typesetting. The Utility Program Diskette is used for special functions such as initialization of a diskette, various Font Handling procedures, modification of Soft Key files, creation of Macro-Characters and UDFs, etc; And disk drive 0 (right hand) is always used for loading Programs into computer memory.
21. A Master Font Diskette is the diskette supplied by Mergenthaler containing the fonts (typefaces) that have been ordered. A maximum of 8 fonts can be supplied on each of these diskettes. Special information related to the characteristics of each font to be used in a job must be transferred from the Font Diskette to the System Program Diskette before starting the job. This enables the system to perform the necessary calculations for justification of the text prior to actual typesetting. The Font Diskette is always inserted in drive 0 during the typesetting operation.
22. The System Text Files Diskette contains special source files that have been provided by Mergenthaler Linotype to enable an operator to customize the operation of the CR Tronic in accordance with special needs and requirements (for e.g. modifying the Exception Word Dictionary, reprogramming the Soft keys, assigning special characters to the keyboard). For user convenience, certain essential source files have already been transferred to the Program Diskettes (standard keyboard layout, Exception Word Dictionary, Standard Soft Key Programming and Operation Messages).
23. I, therefore, consider that the program diskettes and master font diskettes are required to be considered as accessories of CR Tronic phototypesetting system. In fact the operation manual itself lists them as 'standard accessories' along with system text file diskettes and output cassettes.
24. I, therefore, hold that they were required to be classified as such accessories along with the main system as items meant to be primarily and principally used with the system and therefore, classifiable under the same heading namely 84.34 and entitled to the benefit of Notification No. 114/80.
25. However, insofar as blank diskettes are concerned, the situation is not exactly the same. The fact that they are pre-formatted and initialized does not detract from the fact that they are basically blank floppies on which the required data/information could be recorded according to user requirement and these can be used with the computers integrated with or functioning as part of electronic phototypesetting systems as well as with the compatibles and the material produced is by itself not sufficient to show that they are exclusive for CR Tronic system alone and cannot be used with other compatible equipments (including automatic data processing machines etc. such computers designed for such specialised purposes). Therefore, these are not classifiable under 84.34.
26. They in fact constitute a medium for recording data/information and therefore in view of their product description reproduced in para 7 are required to be considered classifiable under Chapter 85 of HSN which specifically mentions that this heading includes "Media for magnetic recording, e.g., discs or cards (of plastics or paper), tapes, strips or films (of plastics of metal) or metal wire, either capable of being magnetised or so rendered by coating with a laquer containing dispersions of magnetic powder or by electrolytic deposit of a ferromagnetic coating (e.g. for magnetic wire)" and further mentions that "Unrecorded media for sound recording or similar recording, whether or not presented together with the apparatus for which they are intended or assembled with constituent parts of machines of headings 84.69 to 84.72 (e.g., disc packs), are in all cases to be classified in this heading." Therefore, the assessing officers was required to check up and consider application or otherwise of the corresponding entries in the Customs Tariff as it stood during the relevant period. This aspect has however not received due attention but is a relevant factor in determining correct classification and the authorities below are required to take them into account for considering classification under correct heading in the Customs Tariff.
27. Insofar as item No. 3 "extra output cassette" mentioned in the bill of entry is concerned, the Ld. Counsel has stated that there is no classification dispute in this regard and the only issue is regarding its short shipment. However, the order-in-original does not indicate or include a claim that it was short-shipped. On the other hand in the memorandum of appeal the appellants have claimed that it is the 'chemical replenishment unit suitable for PD24 Auto Processor' which was short-shipped. Therefore, no further orders are required to be passed w.r.t. the output cassette. Insofar as the CRU is concerned, since the order-in-original refers to it and appeal memorandum mentions that the packing list attested by the customs authorities also shouted that this unit was not there in the packages imported and this fart was brought to the notice of the suppliers through their letter dated 10.10.1982 and the suppliers also confirmed this position vide their letter dated 10.12.1982 and consequentially issued credit invoice dated 25.1.1983 for US $ 650.00 and the Bank of Maharashtra through whom the imports have routed, have confirmed vide their certificates dated 24.2.1986 receipt of the said amount, the A.C. and the authorities should have taken these submissions duly into account but they did not appear to have done so. It is surprising that the A.C. has rejected the claim as unsubstantiated in the face of the appellants submissions that the packing list was attested by the customs authorities.
28. The appellants have at this stage produced copy of correspondence exchanged with the suppliers, the invoice and credit note but it would require, inter-alia further verification with the packing list etc.
29. In view of the above discussion, the appeal is accepted by way of remand with the direction to the A.C. to classify font-diskettes under heading 84.34 and re-examine the matter of classification of blank floppy disks and the issue of short shipment of the CRU and pass appropriate orders after giving the appellants an opportunity of being heard in the matter.
Sd/-
(S.K. Bhatnagar) Vice-President Dt. 4.6.1997
30. Due to difference of opinion between Hon. Member (J) and the Vice-President the matter is submitted to Hon. President for reference to a third Member:
1. Whether Blank Mini Diskettes /Floppies were classifiable under heading 84.34 as parts of CR Tronic Phototypesetting system or the matter was required to be remanded for reconsideration in the light of observations of the Vice-President?
2. Whether there was no short-shipment of the CRU and therefore the appeal on this ground was required to be rejected or the matter was required to be remanded for reconsideration in the light of the observations of the Vice-President?