1986 (7) TMI 92 - HC - Customs

Summary

Issues:
1. Classification of goods under Tariff Item No. 49.04/06 or Tariff Item No. 84.51/55 for the purpose of levying duty.

Detailed Analysis:
The petitioner, a company manufacturing microprocessor-based systems, imported designs and drawings on diskettes from a foreign supplier. The goods were classified under Tariff Item No. 49.04/06 by the petitioner, seeking duty exemption. However, the Collector of Customs reclassified the goods under Tariff Item No. 84.51/55, leading to the petitioner paying duty under protest. Subsequent appeals to the Central Board of Excise and Customs resulted in dismissal, prompting the filing of the present petition challenging the classification.

The central question before the court was whether the diskettes containing designs and drawings should be classified under Tariff Item No. 49.04/06 (related to plans and drawings for various purposes) or Tariff Item No. 84.51/55 (pertaining to automatic data processing machines and related parts). The petitioner argued that technological advancements have shifted the supply of designs from manuscript form to storage on diskettes, making them fall under the former tariff item exempt from duty.

The court analyzed the definitions and scope of both tariff items. It noted that Tariff Item No. 49.04/06 specifically covers plans and drawings for industrial, architectural, engineering, or similar purposes, exempting them from duty. In contrast, Tariff Item No. 84.51/55 relates to machinery and mechanical appliances, including automatic data processing machines. The court emphasized that diskettes are not machines or mechanical appliances but rather storage media, akin to cassettes in a video recorder, which do not qualify as parts or accessories of a machine. The court deemed the classification under Tariff Item No. 84.51/55 as erroneous and upheld the petitioner's contention that the diskettes should be classified under Tariff Item No. 49.04/06.

Consequently, the court allowed the petition, directing the refund of the duty paid by the petitioner within four weeks. The court rejected the petitioner's claim for interest and did not award costs in the case.