Appeal granted on CPU classification under CTH 847150.00.

The Tribunal allowed the appeal, granting relief to the appellants based on the interpretation of CPU, main storage, and classification under CTH 847150.00. The judgment emphasized the importance of RAM as main storage, the core role of CPU in a computer, and the practicality of high-end machines with external storage units.

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Issues:
Classification of imported goods under CTH 847150.00 for exemption under Central Excise Notification No. 6/2002 and Additional Duty under Section 3(3) of CTA.

Analysis:
The appeal was filed against the Order-in-Appeal denying classification under CTH 847150.00 for imported goods described as 'Server and parts of Computer'. The appellants claimed exemption under Central Excise Notification No. 6/2002 and Additional Duty under Section 3(3) of CTA. The Revenue contended that the goods cannot be classified under CTH 847150.00 since the server lacked a main storage unit, essential for it to be considered a CPU. The Commissioner (Appeals) upheld this decision, leading the appellants to appeal to the Tribunal.

The learned Advocate argued that the main storage, as per HSN Explanatory Notes, should be directly accessible for program execution, indicating RAM as the main storage inside the housing, not the hard disk outside. The draft Circular by the Central Board of Excise & Customs supported this view, stating that CPU need not contain a hard disk. The Tribunal agreed, emphasizing that CPU is the computer's core and can function without a hard disk. RAM, a main storage component, is crucial for program execution, making the imported servers eligible for the Notification No. 6/2002 benefit.

Regarding the classification under CTH 847150.00, the Department contended that all units (storage, input, output) must be in the same housing, which the appellants disputed for high-end machines requiring external storage like multiple hard disks. The Tribunal agreed with the appellants, stating that even with external storage like a hard disk array, the server could be classified under CTH 847150.00. The presence of external storage does not disqualify it from being considered a Digital Processing Unit or a computer, making it eligible for the Notification No. 6/2002 benefit.

In conclusion, the Tribunal allowed the appeal, granting relief to the appellants based on the interpretation of CPU, main storage, and classification under CTH 847150.00. The judgment emphasized the importance of RAM as main storage, the core role of CPU in a computer, and the practicality of high-end machines with external storage units.

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