Terminal Server classification under Chapter Note 5(b) required reconsideration of ADP system unit criteria and factual fit.

Terminal Server classification under Chapter Heading 84.71 depended on whether it satisfied Chapter Note 5(b) as a unit of an automatic data processing system, including being connectable to the central processing unit, specially designed as part of that system, and capable of accepting or delivering usable data. The lower authorities had not examined the product against that correct test, and the Tribunal noted that the factual material needed for that assessment was incomplete. The classification was therefore not finally determined and the matter required reconsideration by the jurisdictional adjudicating authority.

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Issues: Whether the product 'Terminal Server' was classifiable under Chapter Heading 84.71 of the Central Excise Tariff Act, 1985 as a unit of an automatic data processing system under Chapter Note 5(b).

Analysis: Chapter Note 5(b) governs units forming part of a system of automatic data processing machines and requires consideration of whether the unit is connectable to the central processing unit and specifically designed as part of such a system, including its ability to accept or deliver usable data. The lower authorities proceeded on the footing that the product was not an independent machine, but they did not examine the matter from the correct perspective of whether it satisfied the conditions of Chapter Note 5(b). The necessary factual material for deciding those conditions was also not before the Tribunal.

Conclusion: The classification issue was not finally determined and the matter had to be reconsidered by the jurisdictional adjudicating authority.

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