CESTAT Chennai: External Hard Disc Drives Eligible for Customs Duty Exemption

Court Name : CESTAT Chennai

Parties : Commissioner of Customs Vs Neotric Informatique Ltd.

Decision Date : 21/07/2023

Judgement ref : Customs Appeal No. 42117 of 2013

Imagine you're Neotric Informatique Ltd., and you've imported a batch of external hard disc drives. You claim a customs duty exemption under Notification No. 12/2012-CE, but the Department disputes this, arguing that the goods should be classified under a different tariff heading, which would render them ineligible for the exemption.

This was the crux of a case that went before the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Chennai. The key point of contention was whether the hard disc drives were to be considered "removable or exchangeable disk drives," affecting their eligibility for the exemption.

The Tribunal examined the technical specifications and samples of the imported goods, ultimately agreeing with the Commissioner (Appeals) that the goods fell under CTH 84717020 and were eligible for the concessional rate of customs duty as per the notification. They were considered portable hard disc drives meant for external use with computers or laptops as plug-in devices.

So, if you're ever in a similar situation, remember this ruling. It underscores the importance of accurate classification of goods for customs duty exemption. Always ensure your actions are well-documented and can withstand scrutiny. And remember, external hard disc drives are eligible for customs duty exemption under Notification No. 12/2012-CE.

FINAL ORDER No. 40604/2023

Order : Per Ms. SULEKHA BEEVI C.S.

Brief facts are that the respondent imported

„External Hard Disc Drives‟ under the cover of Bills of

Entry and claimed the benefit of Notification No. 12/2012-

CE dated 01.03.2012 by classifying the goods under CTH

84717020. Based on the reference from the DRI,

Mumbai, these Bills of Entry were assessed on merits by

classifying the goods under CTH 84717030 and denying

the benefit of the notification. The respondent disputed

the assessment and paid the duty under protest. After

due process of law, the original authority held that as per

the Central Excise Tariff Act, Hard Disc Drives and

removable or exchangeable Disc Drives are different

items and to be classified under CTH 84717020 and

85471730 respectively. The impugned goods which are

external hard disks drives which are removable is not

eligible for the benefit of the Notification No. 12/2012-CE

dated 01.03.2012 at Sl. No. 255. The

respondent / importer filed an appeal before the

Commissioner (Appeals) who vide order impugned herein

set aside the order and held that the goods are rightly

classifiable under CTH 84717020 and that the appellant is

eligible for the notification benefit. Aggrieved, the

Department is now before the Tribunal.

2. The Ld. Authorised Representative Shri Harendra

Singh Pal argued for the Department. It is submitted that

the external hard disc drives are essentially presented

and marketed as „portable drives‟. In addition to the

features of portability, these external hard disc drives are

different from internal hard disc drives in as much, as

these external drives also encapsulate additional

electronic circuits and connection interfaces that render

them usable as a „removable disc drive‟. These goods are

different from normal hard disc drives. It is submitted

that the Commissioner (Appeals) has erred in setting

aside the order passed by the adjudicating authority and

holding that the importer / respondent is eligible for the

benefit of Notification No. 12/2012-CE dated 01.03.2012.

3. The Ld. counsel Shri L. Gokulraj appeared and

argued for the appellant. It is submitted that the issue

stands covered by the decision of the Tribunal in the case

of Commissioner of Customs, New Delhi Vs. Supertron

Electronics P. Ltd. [2017 (357) ELT 401 (Tri. Del.)] which

has been affirmed by the Hon‟ble Apex Court as reported

in [2018 (360) ELT A325 (S.C.)]. The Ld. counsel

submitted that the Tribunal while passing the decision has

taken note of the clarification issued by Ministry of

Communications and Information Technology, vide Office

Memorandum dated 05.06.2013. The said decision was

followed by CESTAT Mumbai in the case of Lenovo India

Pvt. Ltd. Vs. Principal Commissioner of Customs (Imports)

vide Final Order No. A/86055-86056/2022 dated

09.11.2022. The Ld. counsel prayed that the appeal may

be dismissed.

4. Heard both sides.

5.1 The issue is with regard to the classification of the

hard disc drives and the eligibility of Notification No.

12/2012-CE dated 01.03.2012 Sl. No. 255. The relevant

part of the Notification is reproduced as under:-

5.2 It can be seen from the above Notification that

hard disc drive would be eligible for the benefit of

exemption. It is not stated whether the said hard disc are

to be removable or exchangeable. Further, in column 2

the tariff heading is shown up to six digits only and does

not specify up to eight digits.

6. The Tribunal in the case of Commissioner of

Customs, New Delhi Vs. Supertron Electronics P. Ltd.

(supra) had considered the very same issue held that

external hard disc drive is classifiable under CTH

84717020 and is eligible for concessional rate CV duty as

per the Notification. The relevant paragraph reads as

under:-

“The Revenue is in appeal against Order-inAppeal dated 29-4-2014. The brief facts of the case are that the respondent had imported

“External Hard Disk Drive” and claimed

exemption from CV duty under Notification No.

6/2006-C.E., dated 1-3-2006 and later,

Notification No. 12/2012-C.E., dated 17-3-2012.

The dispute in the present appeal is relating to

classification of imported hard disk drive and its

eligibility for concessional rate of CV duty.

Original assessing authority has assessed the

goods under Tariff Heading 8471 70 30 with

effective CV duty of 12% denying the benefit of

Notification No. 12/2012-C.E., dated 17-3-2012

(Serial No. 255). On appeal, Commissioner

(Appeals), vide impugned order, allowed the

appeal and set aside the assessment orders. The

impugned order held that external hard disk

drives are correctly classifiable under Tariff

Heading 8471 70 20 of the First Schedule of the

Customs Tariff Act.

2. In the grounds of appeal, the Revenue

contended that the Commissioner (Appeals)

erred in holding the external hard disk drives are

eligible for CV duty concession. It is submitted

that these external hard disk drives are correctly

classifiable under “removable or exchangeable

disk drives” under Tariff Item 8471 70 30. The

Revenue relied on certain references from

internet to emphasize that removal or

exchangeable disk drives are synonymous with

portable or external disk drives. It is also

submitted that external hard disk drives have

additional circuits for this purpose. Removal or

interchangeable are correctly referred to

“external or portable type of drives”. The

background of exemption at the six digit level

was also explained in the grounds of appeal and

it was submitted that exemption notification

should be strictly interpreted.

4. We have heard both sides and perused the

appeal records. We have also examined the

samples of impugned goods as well as sample of

removable or exchangeable disk drive during the

course of hearing. We note that the classification

of external hard disk drive assumes significance

because of concessional rate of duty available to

only hard disk drive not to removable or

exchangeable disk drives. The Revenue

considers the imported items under 8471 70 30

whereas the impugned order by the

Commissioner (Appeals) held the product under

Heading 8471 70 20. The latter entry is eligible

for concessional CV duty. We have examined the

impugned order and grounds of appeal, closely.

First of all, we note that the exemption

notification specifies tariff heading up to six

digits only, 8471 70, which covers both, hard

disk drive and removable or exchangeable disk

drives. Further, the next column of the table for

description explain the goods only as hard disk

drive among many other items. On careful

consideration of the technical specification

furnished, and the sample of imported items

along with tariff entries and the exemption

notification, we are in agreement with the

findings in the impugned order. The terms hard

disk drive used in the notification has not been

amplified either by adding “external” or

“internal”. On this simple premise alone,

exemption to the said item cannot be denied.

Admittedly, the imported items are hard disk

drive and are meant for external use with

computer or lap-top as plug-in device. They are

portable hard disk drive. The contention of the

Revenue that they are only removable or

exchangeable disk drive, is not factually or

technically correct. We have perused sample of

such removal or exchangeable disk drives. They

have full drive mechanism in which storage

media is inserted and along with such media can

be removed and inserted in computer for usage.

We have also perused the technical literature of

the manufacturer of the impugned goods.

Further, the technical opinion given by the

Ministry of Communication and Information

Technology, is directly on the issue. We find that

in the appeal, the Revenue contested the factual

findings in the impugned order. Guided by the

expert opinion of the concerned Ministry and

facts recorded in the impugned order, we do not

find it fit to interfere with the impugned order”

(emphasis supplied)

7. The said decision of the Tribunal was affirmed by

the Hon‟ble Apex Court. We are therefore of the view

that the impugned order does not call for any

interference. The appeal filed by the Department is

dismissed.

(Order pronounced in open court on 21.07.2023)

Sd/- Sd/-

(VASA SESHAGIRI RAO) (SULEKHA BEEVI C.S.)

MEMBER (TECHNICAL) MEMBER (JUDICIAL)

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IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL

CHENNAI

REGIONAL BENCH – COURT NO. III

Customs Appeal No. 42117 of 2013

(Arising out of Order-in-Appeal C.Cus. No. 1068/2013 dated 31.07.2013 passed by Commissioner

of Customs (Appeals), 60, Rajaji Salai, Custom House, Chennai – 600 001.)

Commissioner of Customs (Air), ...Appellant

New Custom House,

Meenambakkam,

Chennai – 600 027..

Versus

M/s. Neotric Informatique Ltd., ...Respondent

Kumaran Rice Mills Compound,

Survey No.91 & 92/2, Tiruvallur High Road,

Vellavedu,

Chennai – 602 107.

APPEARANCE:

For the Appellant : Shri Harendra Singh Pal, Assistant Commissioner / A.R.

For the Respondent : Shri L. Gokulraj, Advocate

CORAM:

HON’BLE MS. SULEKHA BEEVI C.S., MEMBER (JUDICIAL)

HON’BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL)

DATE OF HEARING : 19.07.2023

DATE OF DECISION : 21.07.2023