Tariff classification of a hybrid process control machine turned on whether the HSN exclusion covered user-modifiable digital systems.

Classification of an imported VST Controls machine turned on whether it fell under Heading 84.71 or Heading 85.37 of the Central Excise Tariff Act. The machine was described as a process control unit used to monitor dimensional requirements and the quality of moulded parts, with speed and revolution control, and was treated as a hybrid machine with analogue and digital systems. The HSN exclusion for digitally controlled machines was read as confined to digital machines whose programmes could not be modified by the user, not to the hybrid machine in question. On that basis, Heading 85.37 did not apply and the assessee's classification was accepted.

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Issues: Whether the imported VST Controls machine was correctly classifiable under Heading 84.71 or under Heading 85.37 of the Central Excise Tariff Act, and whether the exclusion in the HSN notes for digitally controlled machines displaced classification under Heading 84.71.

Analysis: Heading 85.37 applies to apparatus used for control or distribution of electricity, whereas the imported machine was found to be essentially a process control machine used to monitor dimensional requirements and the quality of moulded parts, with capability for speed control and revolution control. It was treated as a hybrid machine with both analogue and digital systems. The exclusion relied upon was read as limiting only digital machines whose programmes could not be modified by the user, and not hybrid machines of the kind in question.

Conclusion: The machine was not correctly classifiable under Heading 85.37, and the departmental classification was held to be ; the appeal was allowed in favour of the assessee.

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