TMI Blog1999 (12) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... pre-deposit of penalty of Rs. 4.00 lakhs levied on the appellants in the impugned order. 3. The appellants imported six sets of data processing machine consisting of Computer, Monitors, Key Boards, Printers. They separately also imported one Colour Printer and one Server. These goods were classified under Heading 84.71 by the importers. One of the computer systems contained Software recorded on a Hard-disk assembled as a part inside the system. The classification for this was separately claimed under Heading 85.24 and clearance under exemption Notification No. 23/98-Cus. (Sr. No. 206) was claimed. The proposed classification was challenged by the Customs. After issue of show cause notice and after hearing the importers, the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were distinct and separate entities. The court accepted their interdependence, but ruled that the two being distinct articles, the value of software could not be added to the value of the hardware. In holding thus a specific reference was made by the Supreme Court to the fact that what was in dispute was not software etched-in or burnt-in . When these citations were made before the ld. Commissioner, he remarked that the decision did not deal with the classification of the software and that the ratio thereof was not applicable. We shall first examine the discussion on classification made by the ld. Commissioner. When the assessees argued that in terms of the explanatory note to Heading 85.24 of the HSN, such software even assembled into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. This sub-note is reflected in the Chapter Note 6 under Chapter 85 which is worded as below :- Records, tapes and other media of Heading No. 85.23 or 85.24 remain classified in those headings, whether or not they are cleared with the apparatus for which they are intended. The same wording occurs in Chapter 85 in the HSN also. It is truth under Chapter 85 covered the situation, the recorded media is assembled into apparatus, but then this additional key to the classification is available in the sub-notes under the HSN. 8. The value of the HSN as guide to classification under the CTA has been discussed in a number of judgments. The Delhi High Court in their judgment in the case of Manisha Pharma Plasto Pvt. Ltd. v. Union of India [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is at all times a part of system falling under Heading 84.71. It is only when something is recorded thereupon that the classification would charge. We see no conflict in the same physical goods being Classified differently, in the same tariff after the operation of recording of software thereupon has been undertaken. 11. Shri Deepak Kumar here submits that there is possibility of conflict inasmuch as sub-heading 85.23 covers prepared unrecorded media for sound recording or similar recording, and therefore it could be held that the unrecorded hard disk may also merit classification thereunder, thereby nullifying the effect of Chapter Note 5 to Chapter 84 whereby the entire heading may become redundant as far as storage units are concerne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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