Collector of Customs Vs. Anant Engineering Works - Court Judgment

Excerpt:
1. in this appeal filed by the revenue the matter relates to the classification of the goods imported which were described in the invoice as under : 2. the importers m/s. anant engineering works, classified the sensors in the bill of entry under sub-heading no. 8302.60 of the customs tariff which covered automatic door closers of base metal. chapter 83 related to miscel-laneous articles of base metal. the heading no.8302.60 was changed at the stage of the assessment to sub-heading no.8536.50 of the customs tariff which covered electrical apparatus for switching or protecting electrical circuits or for making connections to or in electrical circuits. the goods were cleared out of customs charge and thereafter the importers filed a refund claim which was rejected by the asstt. collector of customs. in the refund claim they had claimed assessment under heading no. 90.32, sub-heading no. 9032.89 which covered other instruments and apparatus other than hydraulic or penumetic. on appeal the collector of customs (appeals) agreed with the revised classification convassed by the importers in their refund claim and observed that the sensor and the door opening mechanism were different entities, the goods imported could be considered as a functional unit and that they were correctly classifiable under sub-heading no. 9032.89.3. the appellants authority had also discussed the eligibility of notification no. 69/86-cus., dated 17-2-1986 and notification no.112/87-cus., dated 1-3-1987. the respondents before us had filed separate appeal against this order challenging the findings with regard to the eligibility of exemption notification. that appeal had already been dismissed by the tribunal and in this proceeding we are not concerned with the applicability or non-applicability of the above exemption notification.4. we have heard shri s.n. ojha, jdr for the appellants revenue and shri n.c. sogani, consultant for the respondent m/s. anant engineering works.5. we have gone through the material on record. we have also gone through the relevant explanatory notes under the harmonized commodity description and coding system (hsn).6. we find that the classification originally claimed by the respondents under sub-heading no. 8302.60 is ruled out. the goods as described are not the articles of base metal. the sensors imported were not the automatic door closers.7. the asstt. collector, customs had classified the goods in question under sub-heading no. 8536.50. heading no. 85.36 covers electrical circuits or for making connections to or in electrical circuits. the function of the sensor was to sent the microwaves in the pre-determined radius. when any object entered in the filed (sic) of pre-determined radius microwaves emitting from the sensor will strike the object and will activate the door opening mechanism. the door mechanism was a separate entity. as heading no. 85.36 is for making connections to or in electrical circuits we consider that the classification under sub-heading no. 8536.50 relates to other switches. as per the explanatory notes to hsn at page 1390 the apparatus under heading no.85.36 was usale (sic) to connect together the various parts of an electrical circuit. the apparatus for switching electrical circuits also as per the explanatory notes consisted essential of devices for making or breaking one or more circuits in which they are connected or for switching from one circuit to another. the switches of this heading included switches for use in radio apparatus, electrical instruments etc., switches of a kind used in domestic electrical wiring and switches for industrial application. it had been mentioned that switches operated by the opening or closing of a door and automatic thermo electric switches (starters) for starting flourescent lamps are also classified therein. the product description as in the records do not make the goods classifiable under this heading.8. the ld. collector, customs (appeals) had agreed with the appellants (respondents before us) as per their submissions in the refund claim that the goods were classifiable under sub-heading no. 9032.89. the scope of heading no. 90.32 had been explained in the chapter notes under chapter 90 of tariff as under: "2. subject to note 1 above, parts and accessories for machines, apparatus, instruments or articles of this chapter are to be classified according to the following rules: (a) parts and accessories which are goods included in any of the headings of this chapter or of chapter 84,85 or 91 (other than heading no. 84.85, 85.48 or 90.33) are in all cases to be classified in their respective headings; (b) other parts and accessories, if suitable for use solely or principally with a particular kind of machine, instrument or apparatus, or with a number of machines, instruments or apparatus of the same heading (including a machine, instrument or apparatus of heading no. 90,10, 90.13 or 90.31) are to be classified with the machines, instruments or apparatus of that kind; (c) all other parts and accessories are to be classified in heading no. 90.33. 3. the provisions of note 4 to section xvi apply also to this chapter." 9. heading no. 90.32 covered the automatic regulating or controlling instruments and apparatus. it has been explained in the explanatory notes of the hsn that the automatic regulators of this heading are intended for use in complete automatic control systems which are designed to bring a quantity, electrical or non-electrical to and maintain it at a desired value, stabilized against any disturbances by constantly measuring its actual value. it had further explained that they consisted essentially of the following devices, (a) a measuring device (sensing device, converter resistance probe thermo couple etc.) which determines the actual value of the variable to the controlled and converts it into proportional electrical signal, (b) an electrical control device which compares the measured value with the desired value and gives a signal (generally in the form of a modulated current), (c) a starting, stopping or operating device which supplies current to an actuator in accordance with the signal received from the control device.it is seen that the purpose of the sensor as imported in this case was not to regulate or to control but to transmit the microwaves to the separate door opening mechanism. the appellate authority had considered it as a functional unit after observing that the sensor and the door opening mechanism were two different entities. the description of functional unit as given at page 1457 and page 1458 in volume 4 of the hsn explanatory notes is extracted below :- (i) a primary detector (transducer, transmitter, analogue-digital converter, etc.) which transforms the quantity to be measured, whatever its nature, into a proportional current, voltage or digital signal, (ii) a measurement amplifier, transmitter and receiver basic unit which (if necessary) boosts this current, voltage or digital signal to the level required by the pulse or frequency-modulated transmitter. (iii) a pulse or frequency-modulated transmitter which transmits an analogue or digital signal to another station. (i) a pulse, frequency-modulated or digital signal receiver which converts the transmitted information into an analogue or digital signal. (ii) a measurement amplifier or converter which, if necessary, amplifies the analogue or digital signal. (iii) indicating or recording instruments calibrated in terms of the primary quantity and equipped with a mechanical pointer or opto-electronic display." 10. we find that the sensor was neither in the nature of a primary detector (transducer transmitter analogue digital covertor etc.) nor a measurement amplifier, transmitter and receiver basic unit. it is also not in the nature of a pulse or frequency modulated transmitter which transmits an analogue or digital signal to another station.11. both the sides had referred to the alphabatical index under the hsn where the sensor has been shown classified under heading no. 90.31.heading no. 90.31 covered measuring or checking instruments, appliances and machines not specified or included elsewhere in that chapter; profile projector. sub-heading no. 9031.80 covered other instruments, appliances and machines under heading no. 90.31. the goods under this heading among others covered apparatus for measuring or machine bridges dams etc. a number of other instruments and appliances which are covered by this heading have been listed at pages 1529,1530,1531 and 1532 of volume iv of the hsn explanatory notes. in the refund claim the respondents had referred to this heading but had ruled out classification therein on the ground that the sensors could not be considered as a measuring device. no arguments were advanced at any stage whether it could considered as a checking device. the product which the respondents had filed before the adjudicating/appellants authorities is not before us. some other literature had been produced according to which the goods had been referred to as the microwave door actuator/sensor for auto door application. it is mentioned therein that the detection pattern and hold time were adjustable. from this literature it appears that the sensor could be considered as a checking instrument or appliance. the classification under heading no. 90.31 was, however, not argued before the lower authorities and there is no finding with regard to the classification under this heading. the product literature filed before the appellate authority is also not before us.12. taking all the facts and considerations into account while we consider that the goods were not classifiable as switches as held by the asstt. collector of customs under heading no. 85.36, we also feel that the classification under sub-heading no. 9032.89 may not be appropriate.13. we have referred to the product description and the hsn explanatory notes; however, in view of the difficulties as indicated above, we are not in a position to decide the classification finally and in the facts and circumstances of the case remand the matter to the jurisdictional commissioner of customs, for de novo consideration in the light of our above observations, who should re-decide the matter after affording an opportunity to the importers to present their case and then pass speaking appealable orders as per law.

Judgment:
1. In this appeal filed by the Revenue the matter relates to the classification of the goods imported which were described in the invoice as under : 2. The importers M/s. Anant Engineering Works, classified the sensors in the Bill of Entry under sub-heading No. 8302.60 of the Customs Tariff which covered automatic door closers of base metal. Chapter 83 related to miscel-laneous articles of base metal. The Heading No.8302.60 was changed at the stage of the assessment to sub-heading No.8536.50 of the Customs Tariff which covered electrical apparatus for switching or protecting electrical circuits or for making connections to or in electrical circuits. The goods were cleared out of customs charge and thereafter the importers filed a refund claim which was rejected by the Asstt. Collector of Customs. In the refund claim they had claimed assessment under Heading No. 90.32, sub-heading No. 9032.89 which covered other instruments and apparatus other than hydraulic or penumetic. On appeal the Collector of Customs (Appeals) agreed with the revised classification convassed by the importers in their refund claim and observed that the sensor and the door opening mechanism were different entities, the goods imported could be considered as a functional unit and that they were correctly classifiable under sub-heading No. 9032.89.

3. The appellants Authority had also discussed the eligibility of Notification No. 69/86-Cus., dated 17-2-1986 and Notification No.112/87-Cus., dated 1-3-1987. The respondents before us had filed separate appeal against this order challenging the findings with regard to the eligibility of exemption notification. That appeal had already been dismissed by the Tribunal and in this proceeding we are not concerned with the applicability or non-applicability of the above exemption notification.

4. We have heard Shri S.N. Ojha, JDR for the appellants Revenue and Shri N.C. Sogani, Consultant for the respondent M/s. Anant Engineering Works.

5. We have gone through the material on record. We have also gone through the relevant explanatory notes under the harmonized commodity description and coding system (HSN).

6. We find that the classification originally claimed by the respondents Under sub-heading No. 8302.60 is ruled out. The goods as described are not the articles of base metal. The sensors imported were not the automatic door closers.

7. The Asstt. Collector, Customs had classified the goods in question under sub-heading No. 8536.50. Heading No. 85.36 covers electrical circuits or for making connections to or in electrical circuits. The function of the sensor was to sent the microwaves in the pre-determined radius. When any object entered in the filed (sic) of pre-determined radius microwaves emitting from the sensor will strike the object and will activate the door opening mechanism. The door mechanism was a separate entity. As Heading No. 85.36 is for making connections to or in electrical circuits we consider that the classification under sub-heading No. 8536.50 relates to other switches. As per the explanatory notes to HSN at Page 1390 the apparatus under Heading No.85.36 was usale (sic) to connect together the various parts of an electrical circuit. The apparatus for switching electrical circuits also as per the explanatory notes consisted essential of devices for making or breaking one or more circuits in which they are connected or for switching from one circuit to another. The switches of this heading included switches for use in radio apparatus, electrical instruments etc., switches of a kind used in domestic electrical wiring and switches for industrial application. It had been mentioned that switches operated by the opening or closing of a door and automatic thermo electric switches (starters) for starting flourescent lamps are also classified therein. The product description as in the records do not make the goods classifiable under this heading.

8. The ld. Collector, Customs (Appeals) had agreed with the appellants (respondents before us) as per their submissions in the refund claim that the goods were classifiable under sub-heading No. 9032.89. The scope of Heading No. 90.32 had been explained in the Chapter Notes under Chapter 90 of Tariff as under: "2. Subject to Note 1 above, parts and accessories for machines, apparatus, instruments or articles of this Chapter are to be classified according to the following rules: (a) Parts and accessories which are goods included in any of the headings of this Chapter or of Chapter 84,85 or 91 (other than Heading No. 84.85, 85.48 or 90.33) are in all cases to be classified in their respective headings; (b) Other parts and accessories, if suitable for use solely or principally with a particular kind of machine, instrument or apparatus, or with a number of machines, instruments or apparatus of the same heading (including a machine, instrument or apparatus of Heading No. 90,10, 90.13 or 90.31) are to be classified with the machines, instruments or apparatus of that kind; (c) All other parts and accessories are to be classified in Heading No. 90.33.

3. The provisions of Note 4 to Section XVI apply also to this Chapter." 9. Heading No. 90.32 covered the automatic regulating or controlling instruments and apparatus. It has been explained in the explanatory notes of the HSN that the automatic regulators of this heading are intended for use in complete automatic control systems which are designed to bring a quantity, electrical or non-electrical to and maintain it at a desired value, stabilized against any disturbances by constantly measuring its actual value. It had further explained that they consisted essentially of the following devices, (a) A measuring device (sensing device, converter resistance probe thermo couple etc.) which determines the actual value of the variable to the controlled and converts it into proportional electrical signal, (b) An electrical control device which compares the measured value with the desired value and gives a signal (generally in the form of a modulated current), (c) A starting, stopping or operating device which supplies current to an actuator in accordance with the signal received from the control device.

It is seen that the purpose of the sensor as imported in this case was not to regulate or to control but to transmit the microwaves to the separate door opening mechanism. The Appellate Authority had considered it as a functional unit after observing that the sensor and the door opening mechanism were two different entities. The description of functional unit as given at page 1457 and page 1458 in Volume 4 of the HSN explanatory notes is extracted below :- (i) A primary detector (transducer, transmitter, analogue-digital converter, etc.) which transforms the quantity to be measured, whatever its nature, into a proportional current, voltage or digital signal, (ii) A measurement amplifier, transmitter and receiver basic unit which (if necessary) boosts this current, voltage or digital signal to the level required by the pulse or frequency-modulated transmitter.

(iii) A pulse or frequency-modulated transmitter which transmits an analogue or digital signal to another station.

(i) A pulse, frequency-modulated or digital signal receiver which converts the transmitted information into an analogue or digital signal.

(ii) A measurement amplifier or converter which, if necessary, amplifies the analogue or digital signal.

(iii) Indicating or recording instruments calibrated in terms of the primary quantity and equipped with a mechanical pointer or opto-electronic display." 10. We find that the sensor was neither in the nature of a primary detector (transducer transmitter analogue digital covertor etc.) nor a measurement amplifier, transmitter and receiver basic unit. It is also not in the nature of a pulse or frequency modulated transmitter which transmits an analogue or digital signal to another station.

11. Both the sides had referred to the alphabatical index under the HSN where the sensor has been shown classified under Heading No. 90.31.

Heading No. 90.31 covered measuring or checking instruments, appliances and machines not specified or included elsewhere in that chapter; profile projector. Sub-heading No. 9031.80 covered other instruments, appliances and machines under Heading No. 90.31. The goods under this heading among others covered apparatus for measuring or machine bridges dams etc. A number of other instruments and appliances which are covered by this heading have been listed at pages 1529,1530,1531 and 1532 of Volume IV of the HSN explanatory notes. In the refund claim the respondents had referred to this heading but had ruled out classification therein on the ground that the sensors could not be considered as a measuring device. No arguments were advanced at any stage whether it could considered as a checking device. The product which the respondents had filed before the adjudicating/Appellants Authorities is not before us. Some other literature had been produced according to which the goods had been referred to as the microwave door actuator/sensor for auto door application. It is mentioned therein that the detection pattern and hold time were adjustable. From this literature it appears that the sensor could be considered as a checking instrument or appliance. The classification under Heading No. 90.31 was, however, not argued before the lower authorities and there is no finding with regard to the classification under this heading. The product literature filed before the Appellate Authority is also not before us.

12. Taking all the facts and considerations into account while we consider that the goods were not classifiable as switches as held by the Asstt. Collector of Customs under Heading No. 85.36, we also feel that the classification under sub-heading No. 9032.89 may not be appropriate.

13. We have referred to the product description and the HSN explanatory notes; however, in view of the difficulties as indicated above, we are not in a position to decide the classification finally and in the facts and circumstances of the case remand the matter to the Jurisdictional Commissioner of Customs, for de novo consideration in the light of our above observations, who should re-decide the matter after affording an opportunity to the importers to present their case and then pass speaking appealable orders as per law.