Per S.S. Kang :

The appellants filed this appeal against the order-in-original dated the 25.3.96 passed by the Commissioner of Customs, Delhi.

2. Brief facts of the case are that the appellants made import of the goods described in the Bill of Entry as Global Sprint Fax (GSF) software and claimed classification under sub heading 8524 of the Customs Tariff Act, 1975 and also claimed the benefit of Notification No. 59/95 as applicable to the software.

3. On examination of the goods, it was found that, in fact, the goods described as GSF software was hard disk drive, which is a storage unit of automatic data processing machine. Therefore, a show cause notice was issued to classify the goods under heading 8471.93 of the Customs Tariff. In the impugned order, the Commissioner held that the goods were classifiable under sub-heading 8471 of the Customs Tariff and allowed the benefit of Notification No. 59/95-Cus as applicable to hard disk drive.

4. Ld. Counsel, appearing on behalf of the appellants, submitted that the hard disk drive is a storage unit of automatic data processing machine, on which data can be stored and in the present case software was loaded on the hard disk drive. He submitted that the price of hard disk drive is less than the price of the software loaded on the hard disk drive. If the goods, in question, are taken to be combination of two items, the value of software being more, the goods shall be classifiable under heading of software. He submits that Note 6 to Chapter 85 provides that records, tapes and other recorded media of Heading 85.23 or 85.24 are classifiable under this heading whether or not presented with the apparatus. Hence, the goods are classifiable under Chapter 85 of the Customs Tariff. He also submits that if the hard disk drive is classifiable under heading 84.71 of the Customs Tariff then hard disk drive and soft ware are two different goods as the hard disk drive, having magnetic media fitted inside the disk and for functioning of the machine, software programmes are loaded on the hard disk drive. He submits that in this case the magnetic media was fitted inside the drive on which software was loaded, therefore, software and the hard disk drive are to be classifiable under different heading. For this proposition, he relied upon the decision of the Hon'ble Supreme Court in the case of PSI Data Systems Ltd. Vs. C.C.E. reported in 1997 (89) E.L.T. 3 (S.C.). He, therefore, prays that the appeal be allowed.

5. Ld. J.D.R., appearing on behalf of the Revenue, submits that the appellants are admitting the fact that they had imported hard disk drive on which the software was loaded. He submits that the classification is to be decided in terms of Rules of interpretation to the tariff and in terms of heading read with relevant chapter and not on the basis of the value of the goods. He submits that hard disk drive is a peripheral device of automatic data processing machine being storage unit, therefore, are classifiable under sub-heading 8471 of the customs tariff. He, further, submitted that the issue before the Hon'ble Supreme Court in the case of PSI Data System Ltd. (supra), relied upon by the appellants, is different. He submits that in that case the assessee was manufacturing computers and the assessee was selling the software alongwith computer and the Hon'ble Supreme Court held that the value of software, sold with the computer, is not to be included in the assessable value of the computer. He submits that in this case, the hard disk drive was imported and the same was assessed under the Customs Tariff for the purpose of customs duty. He, therefore, prays that the appeal be allowed.

6. Heard both sides.

7. In this case, the appellants made import of hard disk drive on which the software was loaded. It is admitted by the appellants that the hard disk drive is a storage unit of data processing machine. Note 5A and B of chapter 84 reads as under :

"5 (A) For the purposes of heading No. 84.71, the expres