Custom, Excise & Service Tax Tribunal
Molex India Pvt. Ltd vs Commissioner Of Central Excise, ... on 9 February, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: C/22445/2014-DB [Arising out of Order-in-Appeal No. 06/2014 dated 16/04/2014 passed by the Commissioner of Customs, Bangalore-I (Appeals)] For approval and signature: HON'BLE SMT ARCHANA WADHWA, JUDICIAL MEMBER HON'BLE SHRI ASHOK K. ARYA, TECHNICAL MEMBER 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3 Whether Their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes Molex India Pvt. Ltd. Plot No.2A/2, Sy.No.35, Dyavasandra I Phase Industrial Area, Dyavasandra Village, KR Puram Hobli, Mahadevapura Bangalore Appellant(s) Versus Commissioner of Central Excise, Customs and Service Tax Bangalore-I Post Box No. 5400, CR Buildings, Bangalore 560 001 Karnataka Respondent(s)
Appearance:
Shri Pulak Saha & Shri Shailendra Sukhlecha, Authorized Rep. For the Appellant Shri Pakshi Rajan, AR For the Respondent Date of Hearing: 09/02/2016 Date of Decision: 09/02/2016 CORAM:
HON'BLE SMT ARCHANA WADHWA, JUDICIAL MEMBER HON'BLE SHRI ASHOK K. ARYA, TECHNICAL MEMBER Final Order No. 20229 / 2016 Per: ASHOK K. ARYA The matter concerns with the classification of goods namely Photo Sensors imported by the appellants. Appellants claim that initially goods were cleared by Customs under Chapter Heading 8541 40 till January 2011. Thereafter since February 2011 till April 2011 Customs classified and cleared the said goods under Chapter 9033 of Customs Tariff and since May 2011 Customs are clearing these goods under Chapter Heading 90.31. The appellants were not convinced with the classification under Chapter Headings 9033 or 9031, therefore, they went in appeal before Commissioner (Appeals), who passed an order dated 30.09.2011 (issued on 30.10.2011), wherein he set aside the assessment orders as not maintainable and directed the lower authority to pass speaking order under Section 17(5) of Customs Act 1962.
1.1. Thereafter Deputy Commissioner, Group 5A, Bangalore Air Cargo Complex passed an order-in-original No. 761/2013 dated 31.08.2013 (issued on 24.09.2013) inter alia holding that the Photo Sensor imported earlier by M/s. Molex India Pvt. Ltd., Bangalore under various bills of entry are rightly classifiable under CTH 9031.8000.
1.2. The appellants were aggrieved by this order dated 31.08.2013 passed by Deputy Commissioner in case of classification of Photo Sensors which were ordered to be classified under 9031.8000. Thereafter against this order the appellants namely M/s. Molex India Pvt. Ltd. went in appeal before Commissioner (Appeals), who vide the Order No. 06/2014 dated 16.04.2014 rejected the appeal of the appellants.
1.3. M/s. Molex India Pvt. Ltd. are now before this Tribunal challenging the order of Commissioner (Appeals), who sustained the Deputy Commissioners Order inter alia holding Photo Sensor to be classified under Chapter 9031.8000.
2. Appellants today during hearing have shown the item also, which they are calling as Photo Sensors and they are referring to one letter dated 1st August 2011 issued by Associate Professor, M.K. Gunasekaran of Centre for Electronics Design and Technology, Indian Institute of Science, Bangalore wherein he inter alia says as below:
The products enclosed are Sensors which are nothing but photo sensitive semi conductor devices. This sensor assembly performs the function of sensing by emitting and receiving lights between LED and Phototransistor which are placed at a distance on a plastic housing. A photo sensor is an electronic component that detects the presence of visible light and infrared transmission. These photo sensors consist of semi conductor having property photo conductivity. These are semi-conductor devices as they can function within 24V.
Considering the above functionality, these are nothing but a photo sensitive semi-conductor device.
2.1. The appellants further say that their product is Photo Sensor and it is not a kind of measuring and checking instruments covered under Chapter Heading 9031 of Customs Tariff. They state that item in question is not a measuring or checking instrument, appliance and machine, which are covered as inclusion in the Chapter Heading 9031 of Customs Tariffs Explanatory Notes 1(A) 7 where it says as below:
(I) Measuring or Checking Instruments, Appliances and Machines (A) These include:
(1).
(2).
(3).
(4).
(5).
(6).
(7) Dial indicating comparators, micrometric devices, electronic, opto-electronic and pneumatic sensors, whether or not automatic, as well as all devices or instruments for measuring length, angles or other geometrical quantities using such sensors. The heading also includes recording comparators, and comparators fitted with a mechanical device which conveys mass produced parts to the comparator and eliminates defective parts.
However, this heading does not include the dial type comparators for use in the hand described in Item (4) of Part (D) of the Explanatory Notes to heading 90.17. By referring to above HSN Notes to Chapter Heading 90.31 the appellants state that the product in question cannot be classified under Chapter Heading 90.31 of Customs Tariff.
2.2. Appellants have also produced a ruling titled as Cross Ruling HQ 088341 dated February 26, 1991, which has been issued by John Durant, Director Commercial Rulings Division, and communicated to one Mr W.J. Dolbeer, Manager Contracts, AVEX Electronics, 4807 Bradford Drive Huntsville, Alabama 35805, USA, wherein the issue has been mentioned as below:
Whether the photo sensor is properly classifiable within heading 8541, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for photosensitive semiconductor devices; or classifiable within heading 8536, HTSUSA, which provides for electrical apparatus for switching electrical circuits. This Ruling issued by Director Rulings Division holds that Photo Sensor at issue is properly classifiable within subheading 8541.40.80, HTSUVA, which provides for optical couples isolators.
2.3. Appellants are also referring to HSN Notes with reference to Heading 8541 and its Section (B) mentions Photosensitive Semiconductor Devices. The appellants here refer to special categories of photovoltaic cells, which are mentioned as photocouples and photorelays; they state that their item is photosensitive semiconductor devices in the category of photocouples and photorelays consisting of electroluminescent diodes combined with photodiodes, phototransistors or photothyristors. Let us here quote the said HSN Explanatory Notes to Chapter Heading 85.41.
2.3.1. HSN Explanatory Notes to Chapter Heading 85.41 in its Section (B) on Photosensitive Semiconductor Devices inter alia explain as below. Firstly we are quoting Tariff Heading Entries/Description.
3. Revenue represented by learned AR Shri Pakshi Rajan inter alia argues that item is rightly covered under Chapter 9031. He refers to order-in-original issued by Deputy Commissioner wherein the Honble Supreme Courts decision reported in 2010 (258) ELT 321 (SC) LML Ltd. Vs. Commissioner of Customs has been quoted saying that HSN Explanatory Notes are dependable guide for interpretation of Customs Tariff.
3.1. He also says that conclusion arrived at by the Deputy Commissioner in order-in-original is that subject item in simple terms receive light emitted by Light Emitting Diodes (LED) and there is hardly any scope for disputing the classification of sensor under CTH 9031. He says that order-in-original mentions that classification under Chapter Heading 90.31 is further strengthened by the data downloaded from the NIDB as per which generally all types of sensors are classified under CTH 9031/9032 in major customs houses like Mumbai and Chennai and by other importers in Banaglore.
4. The facts on record and the submissions of both sides have been carefully considered.
4.1. Revenue has mainly argued that based on HSN Notes the classification for the goods in question would be 9031.8000. However their reasoning for this classification does not match with their conclusion. Revenue in the order-in-original refers to Explanatory Notes to HSN concerning Customs Tariff Heading 9031. Chapter Heading 9031 entries are as below:
90.31 Measuring or checking instruments, appliances and machines, not specified or included elsewhere in this Chapter; profile projectors (+).
9031.10 Machines for balancing mechanical parts 9031.20 Test benches
- Other optical instruments and appliances:
9031.41 For inspecting semiconductor wafers or devices or for inspecting photomasks or reticles used in manufacturing semiconductor devices 9031.49 Other 9031.80 Other instruments, appliances and machines 9031.90 Parts and accessories In addition to profile projectors, this heading covers measuring or checking instruments, appliances and machines, whether or not optical.
4.1.1. Further impugned order-in-appeal dated 16.04.2014 in para 6 quoting Explanatory Notes to HSN to CTH 9031 (I)(A)(7) writes as below:
Dial indicating comparators, micrometric devices, electronic, opto-electronic and pneumatic sensors, whether or not automatic, as well as all devices or instruments for measuring length, angles or other geometrical quantities using such sensors. The heading also includes recording comparators, and comparators fitted with a mechanical device which conveys mass produced parts to the comparator and eliminates defective parts.
However, this heading does not include the dial type comparators for use in the hand described in Item (4) of Part (D) of the Explanatory Notes to heading 90.17 (see exclusion (d) above).
Commissioner (Appeals) in this Order-in-Appeal further in para 6 writes as below:
As HSN includes sensors under CTH 9031, the appellants contention of disputing the classification of sensor under CTH 9031 and contending to classify under CTH 8548 is not legally sustainable. The appellants contention that the device is only a semiconductor device meriting classification under Heading 8541 4090 is not acceptable as the device is in fact a sensor specifically covered under HSN Note 9031 (I)(A)(7), indicating sensors classification under Heading 9031 8000. Though the subject item are not measuring, regulating or controlling instrument they are performing specific function as sensors and are classifiable under CTH 9031. Reliance is place on HSN Explanatory Notes which is held by the Honble Supreme Court in case reported in [2010 (258) ELT 321 (SC)].
4.2. We find that in the Order-in-Appeal as quoted above Revenue completely fails to indicate or prove that what kind of measurement or checking this particular item was doing. The Order-in-Original as well as Order-in-Appeal mentions Honble Supreme Courts decision in the case of LML Ltd. Vs. Commissioner of Customs (supra) but this decision of Honble Supreme Court only says that HSN Explanatory Notes are dependable guide for interpretation of Customs Tariff. However HSN Explanatory Notes have to be used by applying proper reasoning and after considering whether they are rightly applicable or not for the subject item in hand. The Explanatory Notes to HSN Tariff Heading 9031 are not covering the item in hand though the subject item could be sensor but it is not being used as a measuring or checking instrument/appliance or machine; therefore the item in question cannot be called to be included here and which is not the right conclusion arrived at by the Order-in-Original and Order-in-Appeal referred above.
4.3. The learned DR says that Order-in-Original mentions that its conclusion is strengthened by the data downloaded by the NIDB saying that all types of sensors are classified under CTH 9031/9032 in major customs houses like Mumbai and Chennai and by other importers in Bangalore does not give any support, when there are no details given of the specific clearances of such classifications adopted by other Custom houses or by any other importer in Bangalore. This kind of statement without any specific documentary evidence serves no purpose and cannot lend any credence to the statement mentioned in the order-in-original dated 31.08.2013. Further a classification approved by any other customs house or any other agency cannot become an evidence unless we find specific merits in the said classification.
4.4. The learned AR appearing for the Revenue also refers to the decision of CESTAT, New Delhi in the case of Denso Haryana Pvt. Ltd. Vs. CC (I&G), New Delhi [2015 (325) E.L.T. 179 (Tri.-Del.)] saying that the said decision of CESTAT, New Delhi held that oxygen sensors are to be classified under Chapter Heading 9031 and not under Chapter 90.27 of the Customs Tariff. It is to be noted that in this decision of CESTAT, Delhi the subject item was oxygen sensor and not the impugned item which is a photo sensor. In that decision the dispute was whether the item deserves classification under Chapter Heading 9027 or 9031. There was no reference to the Chapter Heading 8541. Therefore, this decision of CESTAT, New Delhi is not relevant for the present facts.
4.5. The appellants have shown the item physically to the Bench. The appellants have presented the Explanation on the item by an expert Associate Professor of Centre for Electronics Design and Technology, Indian Institute of Science, Bangalore, who says that it is a photo sensitive semi conductor device. He has further certified as below:
The products enclosed are Sensors which are nothing but photo sensitive semi conductor devices. This sensor assembly performs the function of sensing by emitting and receiving lights between LED and Phototransistor which are placed at a distance on a plastic housing. A photo sensor is an electronic component that detects the presence of visible light and infrared transmission. These photo sensors consist of semi conductor having property photo conductivity. These are semi-conductor devices as they can function within 24V.
Considering the above functionality, these are nothing but a photo sensitive semi-conductor device. 4.5.1. There is no dispute on that fact that the item imported is a photo sensitive sensor, which works on the principle of light passing through the LED (Light Emitting Diode) and received by phototransistor. Thus these are two main parts in the item which are LED and phototransistor. The appellants state that they are using this item for manufacturing connector harness machines which they supply to ATM manufacturing companies.
5. We reiterate that the main issue here is whether the item deserves classification under CTH 8541.40 or 9031.8000. The appellants stand is that item deserves classification under 8541.40 which was the classification whereunder customs were clearing these goods till January 2011. Revenues current stand is that correct classification for the goods is 9031.8000, whereunder the customs has been assessing and clearing the goods since May 2011.
5.1. Here our main basis for classification is HSN Explanatory Notes to Chapter Headings 9031 and 8541. Descriptive Entries given for Chapter 8541 in Customs Tariff are given below:
The main entry of 8541 inter alia has the description photosensitive semiconductors devices including photovoltaic cells whether or not assembled in modules or made up into panels, light emitting diodes; mounted piezo-electric crystals. Further HSN Notes on 85.41 in its Section (B) PHOTOSENSITIVE SEMICONDUCTOR DEVICES state that special categories of photovoltaic cells are covered in this Chapter 85.41 and at B(iii) describes certain special categories of photovoltaic cells covered therein. Said Section B (iii) is given below:
(iii) photocouples and photorelays consisting of electroluminescent diodes combined with photodiodes, phototransistors or photothyristors.
Photosensitive semiconductor devices fall in this heading whether presented mounted, packaged or unmounted. 5.1.1. The item in question is photocouples means it is a combination of LED (Light Emitting Diodes) and phototransistors. The impugned item is specifically mentioned under the name of photocouples saying that it consists of electroluminescent diodes combined with Photodiodes, Phototransistors or Photothyristors. Here item consists of LED (Light Emitting Diode, which is nothing but electroluminescent diode as mentioned in the Explanatory Notes quoted above) and phototransistor. In this device, light passes through LED and phototransistor receives the light. In this way the item gives a signal, whenever light is obstructed, when some other substance or a thing comes in between. In this way whenever there is obstruction and there is no signal received by phototransistor, the outcome again will be a kind of signal and that is used in signal receiving machines/instrument to know that how many times there is restriction/obstruction in receiving light. In this way this item is being used by the appellants for manufacturing harness connectors which are then supplied to ATM manufacturing companies.
5.2. Revenues argument is that the item in question is covered under Chapter Heading 9031.8000 saying that it is a measuring and checking instrument, which is the specific description for Chapter Heading Entry 9031. Here Revenue refers to Explanatory Notes under Section (I)(A) and Entry 7 further saying it is an opto-electronic and pneumatic sensor. However Revenue has completely failed to indicate/prove that how the item in question is a measuring or checking instrument to be covered under CTH 9031.8000. Their reference to Honble Supreme Courts decision in the case of LML Ltd. Vs. Commissioner of Customs (supra) cannot support their case at all, which only says that HSN Explanatory Notes are a dependable guide for deciding the classification of any item. For making use of HSN Explanatory Notes as a guide we have to read the Notes specifically with regard to the contents and characteristics of the item in hand.
5.3. Here we also refer to Cross Ruling 088341 dated February 26, 1991 referred earlier submitted by the appellants. The Ruling inter alia states as below:
ISSUE:
Whether the photosensor is properly classifiable within heading 8541, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for photosensitive semiconductor devices; or classifiable within heading 8536, HTSUSA, which provides for electrical apparatus for switching electrical circuits.
The Ruling held as below:
HOLDING:
The photosensor at issue is properly classifiable within subheading 8541.40.80, HTSUSA, which provides for optical coupled isolators, currently dutiable at the rate of 4.2 percent ad valorem.
5.4. We also would like to refer to certificate dated 01.08.2011 signed by Associate Professor, M.K. Gunasekaran of Centre for Electronics Design and Technology, Indian Institute of Science, Bangalore submitted by the appellants. It has been reproduced below:
5.5. Further we refer to Chapter Note 8 to Chapter 85 which inter alia says as below:
8. For the purposes of headings 8541 and 8542:
(a) Diodes, transistors and similar semi-conductor devices are semi-conductor devices the operation of which depends on variations in resistivity on the application of an electric field;
(b) Electronic integrated circuits are:
.
For the classification of the articles defined in this Note, headings 8541 and 8542 shall take precedence over any other heading in this Schedule, except in the case of heading 8523, which might cover them by reference to, in particular, their function. 5.6. Further Entry description of Chapter Heading 8541.40 reads as under:
8541.40 Photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels; light emitting diodes 5.6.1. Explanatory Notes to Chapter 84.41 as referred to earlier in Section (B) Photosensitive Semiconductor Devices says -
This group comprises photosensitive semiconductor devices in which the action of visible rays, infra-red rays or ultra-violet rays causes variations in resistivity or generates an electromotive force, by the internal photoelectric effect.. and this Section (B) later mentions special categories of photovoltaic cells which are covered in 2(iii) as follows:
(iii) Photocouples and photorelays consisting of electroluminescent diodes combined with photodiodes, phototransistors or photothyristors.
6. Based on above discussions and analyses, it is clear that the subject item is covered by 8541.40 and it cannot be covered under the Chapter Heading 9031.8000. The appeal is decided in above terms with the consequential relief, if any.
(Order pronounced and dictated in open court) (ASHOK K. ARYA) TECHNICAL MEMBER (ARCHANA WADHWA) JUDICIAL MEMBER iss