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Issues: Whether an operating system preloaded on a laptop hard disk drive is classifiable as a separate recorded medium under Heading 85.24 of the Customs Tariff or as an integral part of the laptop under Heading 84.71.
Analysis: The operative system recorded on the hard disk was not treated as a stand-alone accessory for classification purposes when imported as part of a laptop unit. The Court drew a distinction between packaged software imported separately and software preloaded on the hard disk of a laptop, holding that the latter controls the working of the computer and forms an integral part of the imported unit. On that basis, the laptop was assessed as a single automatic data processing machine under Heading 84.71, while separately imported packaged software remained classifiable under Heading 85.24.
Conclusion: The preloaded operating system on the laptop hard disk was not separately classifiable under Heading 85.24 and the imported laptops were rightly classified under Heading 84.71; the appeal succeeded for the Revenue.
Final Conclusion: The decision affirms that software preloaded on a laptop hard disk, when imported with the laptop as a unit, is absorbed into the classification of the laptop itself, while separately imported software may still fall under Heading 85.24.
Ratio Decidendi: Where software is preloaded on the hard disk of a laptop and is necessary for the laptop to function as imported, it is an integral component of the laptop for tariff classification purposes and is not a separately classifiable recorded medium.
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