Functional exemption for floppy disc drives upheld where the equipment transcribed coded data onto media as described in the notification.

Floppy disc drives satisfied the functional description in Notification No. 237/83-Cus. as machines for transcribing data on to data media in coded form. The tribunal treated the drives as devices that receive data, convert it into code, and record it on the floppy disc, and rejected the argument that they could not transcribe data independently. Following earlier tribunal rulings, it held that actual operation, not the fact that the equipment formed part of a larger system, determined eligibility. The exemption was therefore available and the Revenue's appeals were rejected.

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Issues: Whether floppy disc drives were entitled to exemption under Notification No. 237/83-Cus., dated 18-8-1983, on the footing that they are machines for transcribing data on to data media in coded form.

Analysis: The notification covered machines for transcribing data on to data media in coded form. The goods were held to be machines whose function was to receive data, convert it into code, and record it on the floppy disc. The reasoning treated the floppy disc drive as a device that performs the writing and transcribing function contemplated by the notification. Earlier Tribunal orders taking the same view were followed, and the contention that the drive could not transcribe data by itself was rejected.

Conclusion: The floppy disc drive fell within the scope of the exemption notification and the claim for benefit of Notification No. 237/83-Cus. was upheld.

Final Conclusion: The impugned order was affirmed and the Revenue's appeals were rejected, leaving the exemption available to the goods.

Ratio Decidendi: Where the functional description in an exemption notification is satisfied by the actual operation of the imported equipment, the goods are entitled to the exemption even if they operate as part of a larger system.

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