Customs classification of an assembled processor under Chapter 84 upheld, while confiscation failed in a bona fide dispute.

An imported Intel Celeron processor assembled on a printed circuit board with a heat sink, fan and other components was treated as the central processing unit of a computer and not as a hybrid integrated circuit under Heading 85.42. The material was found insufficient to establish classification under Heading 85.42, while Note 5(b) of Chapter 84 supported treatment as a separately presented unit of an automatic data processing machine under Chapter 84, including Heading 84.73. Confiscation was not justified because the dispute reflected a bona fide classification controversy, so confiscation was set aside.

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Issues: (i) whether the imported Intel Celeron processor, as assembled and presented, was classifiable under Heading 85.42 or under Heading 84.71 / 84.73 of the Customs Tariff; (ii) whether confiscation of the goods was justified.

Issue (i): whether the imported Intel Celeron processor, as assembled and presented, was classifiable under Heading 85.42 or under Heading 84.71 / 84.73 of the Customs Tariff.

Analysis: The imported item was not merely a microprocessor chip, but a complex assembly mounted on a printed circuit board with additional components, including a heat sink and cooling fan. The material on record was insufficient to establish that it answered the description of a hybrid integrated circuit under Heading 85.42. The goods, in the manner imported, formed the central processing unit of a computer and satisfied Note 5(b) of Chapter 84 as a separately presented unit of an automatic data processing machine. The departmental classification in Heading 84.73 was therefore upheld.

Conclusion: The classification under Heading 85.42 was rejected and the classification under Chapter 84 was sustained, against the assessee on this issue.

Issue (ii): whether confiscation of the goods was justified.

Analysis: The fact that similar goods had been classified differently in some other instances did not support the substantive classification claim, but it did show that the dispute was not such as to justify confiscation in the circumstances.

Conclusion: Confiscation was set aside, in favour of the assessee.

Final Conclusion: The appeal failed on classification but succeeded on the confiscation aspect, resulting in only partial relief to the assessee.

Ratio Decidendi: An assembled processor imported as a complete central processing unit, with supporting circuit components and ancillary fittings, may be treated as a separately presented unit of an automatic data processing machine under Chapter 84 rather than as a hybrid integrated circuit under Heading 85.42; confiscation is not warranted where the dispute is confined to a bona fide classification controversy.

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