Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs Analogic Techomatics Pvt Ltd on 1 June, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/444/2007-DB [Arising out of Order-in-Original No.9/2006-C. Ex. dated 29/12/2006 passed by the Commissioner of Customs & Central Excise, Hyderabad-II Commissionerate.] For approval and signature: HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3 Whether Their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes Commissioner of Central Excise, Customs and Service Tax HYDERABAD-II L.B STADIUM ROAD, BASHEERBAGH, HYDERABAD 500 004. ANDHRA PRADESH Appellant(s) Versus ANALOGIC TECHOMATICS PVT LTD PLOT.NO.9/10, ROAD NO.6,NACHARAM INDL ESTATE, NACHARAM, HYDERABAD Respondent(s)
Appearance:
Mr. Mohd. Yusuf, Addl. Commissioner (AR) For the Appellant Mr. G. Shivadass, Advocate V. LAKSHMIKUMARAN & V. SRIDHARAN WORLD TRADE CENTRE NO.404-406, 4TH FLOOR, SOUTH WING BRIGADE GATEWAY CAMPUS NO.26/1, DR. RAJKUMAR ROAD, MALLESWARAM, BANGALORE - 560 055 KARNATAKA For the Respondent Date of Hearing: 24/03/2015 Date of Decision:
CORAM:
HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER Final Order No. 21105 / 2015 Per : B.S.V.MURTHY The respondent M/s. Analogic Technomatics Pvt. Ltd. (ATL) is a manufacturer of PC lite, Hand Held Data Recorder and Intelligent Hand Held Computer. ATL had classified these products under Chapter subheading No.8470.00, 8473.20 and 8470.00 up to 31.3.2004 and paying duty at the rate of 16% advolerem. From April 2004 onwards, ATL changed the classification of all these products to Chapter subheading No.8471.00, as computers and cleared them on payment of duty at the rate of 8% advolerem up to 8.7.2004 and at nil rate of duty thereafter availing exemption in terms of Sl.No.265 of Notification No.6/2002 CE dated 1.3.2002.
2. In the impugned order, the Commissioner took a view that the classification adopted by the ATL was correct and dropped the demand and proposal for reclassification. Revenue is in appeal.
2.1 The first item PC lite is a DOS based computer for meter reading.
This machine is exclusively used for Meter Reading. The machine is DOS based consisting of Intel 80286 microprocessor with 2 MB flash memory for programmes and 2 MB RAM for execution of the programmes and the DOS operating system supports high level of programming languages namely C, Basics, Cobal. The operating system, BIOs (Firmware) is loaded inside the flash disk and flash disk can be upgraded with the latest version. This is user programmable and the application software can be developed by the user in any high level languages. The machine can store more than 10 diversified and different application programmes at any given time and it can run any of the applications loaded into it. It is also capable of taking logical decisions during the execution of the programme without any human intervention. It offers applications development services to GEM partners and in collection of meter readings of electricity consumption of State Electricity Departments.
2.2 The third item is Intelligent Hand Held Computer.
This machine has usage in different application areas like (i) ticket issuing (ii) spot billing / meter reading (iii) point of sale terminal (iv) stores inventory (v) order processing (vi) field data collection (vii) wireless internet gadget. This machine also has the features like built-in printer with BARCODE printing option and optional features like built in-Modems (PSTN/GSM/CDMA), smart card reader, TCP/IP, BARCODE reader, etc. This machine is windows based with Intel 8 Bit processor. The input device is 30 key pad and output device is a 80 character LCD with built in printer. The programming/application language namely C is supported by Micro C operating system. In the, flash disk, BIOS and the operating system are loaded. Application software can be developed by the user in any high level langue like C and the product is thus user programmable. Diversified and different application programmes (5 to 8) can be stored in this machine. It has independent automatic data processing capacity. It is capable of taking logical decisions during the execution of programmes without human intervention.
In respect of both these items, it has been contended by the Revenue that even though these machines can store many diverse applications at any given point of time, they can execute only one programme. Therefore even though machines have diverse features they cannot be considered has having multifunctional copies.
2.3 The second item under dispute is Hand Held Data Recorder for field data collection.
This machine has the usage in different application areas like (i) Stores inventory (ii) Order processing (iii) Field data collection (iv) Man Machine Interface (v) Medical instrumentation. The product is based on micro C operating system and runs with an 8 bit processor. The input and output devices are 30 keys keypad and 80 character LCD display and built-in printer. Micro C operating system supports the programming/application languages namely high level language C and it has one serial port and can have 2 serial ports. The application software can be stored in 256 KB (Optional 512 KB) flash memory available for storing the programmes. The programme execution is through SRAM, which has a capacity of 4 KB, which can be expanded to 32 KB. This machine can store about to 5 to 8 diversified and different applications and can run any of the applications loaded into it.
In respect of this item, it has been contended by the Revenue that even though this can store diverse applications and uses, it cannot be considered as having an universal application usage.
3. From the above, it can be seen that where a machine can perform only one function at a given point of time, Revenue contends that it can perform only one function at a time even though it has got diverse software. Where the machine can perform diverse functions, it is the submission of the Revenue that even though it is capable of diverse applications, it cannot be considered as having a universal application usage.
Moreover, as per the Chapter Notes of Chapter 84 according to Chapter Note 5(a), the expression automatic data processing machine means;
(i) Digital machines, capable of (1) storing the processing programme or programmes and at least the date immediately necessary for the execution of the programme; (2) being freely programmed in accordance with the requirements of the user; (3) performing arithmetical computations specified by the user; and (4) executing, without human intervention, a processing programme which requires them to modify their execution, by logical decision during the processing run;
(ii) Analogue machines capable of simulating mathematical models and comprising at least: analogue elements, control elements and programming elements;
(iii) Hybrid machines consisting of either a digital machine with analogue elements or an analogue machine with digital elements.
It is the claim of the Revenue that Chapter Note 5(e) would be applicable to the machines and therefore the original classification was correct. Clause 5(e) is as under:
(e) Machines performing a specific function other than data processing and incorporating or working in conjunction with an automatic data processing machine are to be classified in the headings appropriate to their respective functions or, failing that, in residual headings.
4. We find that the Commissioners observations after considering the functions of the machines, expert opinion and the submissions are relevant and we find ourselves in agreement with the same. Therefore, we consider it appropriate that the same are reproduced instead of giving our own views which are same as that of Commissioner.
16. It is stated by the notice that since from the catalogues it was observed that the products are designed to access services provided by operating system programmable with personal computer, this would mean that these products are compatible with a personal computer. The notice on this basis states that these machines are working in conjunction with the computers. The assessee contends that all it means is that the programmes are transferable from a personal computer to these machines and vice versa. The question is whether the ability to work together with a computer should be understood to be the ability to wrok only on the basis of a computer with the machine incapable of performing this function otherwise. In the present case these machines are themselves computers inasmuch as they answer the description of an automatic data processing machine as mentioned in Chapter Note 5(a) of the Chapter 84. And therefore, it cannot be said that they are working on the basis of another computer. While, the notice states that these machines are compatible meaning able to co-exist or be used together without problems or conflict or consistent or in keeping (Concise Oxford Dictionary), it stops short of saying that the machines work on the basis of other computers. Further, the word conjunction means that these machines are to be connected and worked together in coordinated manner with another computer. It has been demonstrated amply that the machines can work independent of any other computer for performing its work.
17. The notice proposes to classify these goods under Chapter 8470.10 as reproducing and displaying machines with calculation functions/accounting machines and similar machines incorporating calculating devices. With regard to reproducing and displaying machines with calculating functions as stated in the HSN, electronic programmable calculators differ from automatic data processing machines in particular by the fact that they cannot execute without human intervention a processing programme which requires them to modify their execution by logical decision during processing run. It has been stated by the assessee that their machines can run and modify their execution by logical decision during the processing run without human intervention. This is also supported by the opinion of the experts. This would be the clincher to rule out the classification of the products under Ch. S. H. No.8470.10. The notice also refers to these products as accounting machines and similar machines incorporating calculating devices. It is not clear of the three which machine were to be dealt as the accounting machines. However, the explanatory notes to the account machines also state that the structure of accounting machines is appreciably the same as that of calculating machines. In addition to manual input arrangements for variable data (e.g. Debit/Credit operations), like calculating machines, they may be fitted with devices for reading punched cards or tape, magnetic tape or cards, etc., to introduce recurrent data or pre-set data. Here also since it is similar to calculating machines, same logic that excludes these machines from calculating machines would exclude them from the accounting machines also.
5. In our opinion, taking note of the Chapter Notes, functions of the machines and the observations of the Commissioner, the appeal filed by the Revenue had no merits and deserves to be rejected and accordingly is rejected.
(Order pronounced in open court on ) B.S.V.MURTHY TECHNICAL MEMBER ARCHANA WADHWA JUDICIAL MEMBER rv 2