1986 (12) TMI 176 - AT - Income Tax

Tribunal Upholds Classification of Sound Recorder Machine, Rejects Appeal on Duty

The Tribunal classified the 'Soni Cassette Duplicating Machine' under Heading 92.01/13 of the Customs Tariff Act, considering its primary function as a ... CLASSIFICATION Issues Involved:1. Classification of the imported 'Soni Cassette Duplicating Machine' under the appropriate heading of the Customs Tariff Act.2. Applicability of countervailing duty under the Central Excise Tariff.Detailed Analysis:1. Classification of the Imported 'Soni Cassette Duplicating Machine'The primary issue revolves around the correct classification of the imported 'Soni Cassette Duplicating Machine' under the Customs Tariff Act (CTA). The appellant, M/s. Electronics Devices, argued that the machine should be classified under Heading 84.59(2) of the CTA, which pertains to machinery for the production of commodities. They contended that the machine does not record or reproduce sound but merely copies magnetic impulses from one cassette to another at high speed. The machine lacks a speaker and thus, according to the appellant, does not fall under Heading 92.01/13, which covers sound recorders and reproducers.In contrast, the Assistant Collector initially classified the machine under Heading 92.01/13, asserting that the machine's principal function is similar to that of a sound recorder, as it transfers sound waves from a master cassette to another tape. The Appellate Collector, however, reclassified the machine under Heading 85.18(27)(1), considering it an electrical appliance with an individual function, and applied a concessional rate of duty.The Tribunal, after examining the arguments and the nature of the machine, concluded that the machine's primary function is indeed the recording of sound, albeit in the form of electromagnetic waves. It emphasized that the absence of sound reproduction capability (i.e., speakers) does not negate the machine's fundamental function of sound recording. The Tribunal upheld the classification under Heading 92.01/13, interpreting the word 'and' in the heading as 'or,' thus including sound recorders even if they do not reproduce sound.2. Applicability of Countervailing DutyThe second issue pertains to the applicability of countervailing duty under the Central Excise Tariff. The appellant argued that the machine should not attract countervailing duty under Item 37AA of the Central Excise Tariff, which applies to cassette recorders, as the machine does not record or reproduce sound. The Appellate Collector accepted this contention, ruling that the machine does not qualify as a tape recorder and thus should be assessed under Item 68 of the Central Excise Tariff, which was more appropriate.The Tribunal, while agreeing with the Appellate Collector's decision on countervailing duty, noted that the Revenue had not issued any review show cause notice to challenge this aspect. Consequently, the Tribunal directed that the benefit already granted by the Appellate Collector should not be withdrawn.Conclusion:The Tribunal concluded that the 'Soni Cassette Duplicating Machine' should be classified under Heading 92.01/13 of the Customs Tariff Act, as it primarily functions as a sound recorder. The Tribunal also upheld the Appellate Collector's decision regarding the applicability of countervailing duty under Item 68 of the Central Excise Tariff, ensuring that the benefit granted by the Appellate Collector remains intact due to the absence of a review show cause notice from the Revenue. The appeal was ultimately rejected, affirming the Appellate Collector's assessment with the noted adjustments.