Customs classification of hard disk drives with loaded software upheld under Heading 8471, not Heading 8524.

Imported hard disk drives loaded with software were treated as storage units of an automatic data processing system and classifiable under Heading 8471 of the Customs Tariff Act, 1975. Chapter 84 Notes 5(A) and 5(B) support classification of such units under Heading 8471 when presented separately. The software installed from recorded media for executing commands was regarded as integral to the drive, not as a separately classifiable article under Heading 8524. The software-value principle in PSI Data Systems was considered inapplicable because it concerned excise valuation of computers, not customs classification of imported goods. The classification under Heading 8471 was sustained.

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Issues: Whether imported hard disk drive loaded with software was classifiable under Heading 8471 of the Customs Tariff Act, 1975 or under Heading 8524, and whether the benefit of Notification No. 59/95-Cus was available.

Analysis: The imported goods were admitted to be hard disk drives, i.e. storage units of an automatic data processing system. Note 5(A) and 5(B) of Chapter 84 treats such units, when presented separately, as classifiable under Heading 8471. The software was installed on the hard disk drive from recorded media for the purpose of execution of commands, and was therefore treated as forming an integral part of the drive rather than as a separately classifiable article under Heading 8524. The reliance on the software-value principle in PSI Data Systems was held to be inapplicable because that case concerned excise valuation of computers, not customs classification of imported goods.

Conclusion: The hard disk drive with loaded software was classifiable under Heading 8471 and not under Heading 8524, and the Revenue's classification was sustained.

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