Customs, Excise and Gold Tribunal - Delhi
L And T Gould Ltd. vs Collector Of Central Excise on 30 March, 1994
Equivalent citations: 1994ECR21(TRI.-DELHI), 1994(71)ELT613(TRI-DEL)
ORDER S.L. Peeran, Member (J)
1. The appellants are aggrieved with the order-in-original dt. 12-3-1992 passed by the Collector of Central Excise, Bangalore.
2. The question that arises for our consideration is the correct classification of the product "Signal Conditioning Amplifiers". The ld. Collector has held the same to be classifiable under chapter sub-heading 85.18 of Central Excise Tariff, 1985 attracting duty of 20% ad valorem and has rejected the prayer for clsssification under chapter sub-heading 90.30 of the said Act.
3. The appellants were issued with a show-cause notice dt.10-10-1991 alleging mis-declaration of the said item as an "Apparatus for measuring or checking Electrical Quantities", when the said goods appeared to be nothing but audio frequency electric amplifiers specifically covered under chapter subheading No. 8518 of the Central Excise Tariff Act, 1985, thereby paid lesser duty of 5% instead of 20%, for the period from 1988-89 to 1990-91. The differential duty of Rs. 9,31,453.60 BED and Rs. 46,572.67 SED was demanded for the said period.
4. The department had sought the opinion of M/s. BHEL by their letter dt. 20-3-1991. Paras 3,4 & 5 of the said letter to M/s. BHEL read as follows :
"3. The view of the department is that since these signal conditioning amplifiers, are not in themselves measuring or recording apparatus for electrical quantities, the same may not be covered under 90.30. And, they should be preferably covered by Chapter Heading 85.18, as they are specifically mentioned here.
4. Kindly enlighten us as to our contention that these amplifiers cannot be called as apparatus for measuring or checking electrical quantities, and, those range need not necessarily be used for amplificaton of sound and its perception by the human ear.
5. I will be grateful if you can give your expert opinion on the matter and also please identify the various types of amplifiers either with Chapter Heading 8518 or 85.43".
5. Shri S.N. Agarwal, Dy. General Manager (Projects), Automation Systems by his opinion dt. 4-4-1991. The same is reproduced herein below :
"I refer to the discussions you had with us and your subsequent letter Ref. IV/6/260/90/HPU dt.19-3-1991.1 wish to reply you as under :
Para 3 : Your contention is correct. The amplifiers in themselves are not measuring instrument/recording apparatus for electrical quantities, and do not fall under category 90.30. Para 4 : Your contention is correct. The amplifier within audio frequency range need not be necessarily related with perception of sound. Para 5 : Enclosed please find amplifiers classified under chapter 85.18 and 85.43.
The above is our opinion only and is not binding".
6. It is the grievance of the appellants before us that both the above documents were not furnished to them. We had called upon the department to produce the same. A copy was furnished to the appellants and they have countered the same by filing their affidavits. The appellants, however, had seriously contested the department's contention by filing a detailed reply to the show cause notice. They have stated inter alia, as follows :
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7. The ld. Collector rejected the contentions of the appellants, however held the issue of limitation in their favour and hence did not impose any penalty. The ld. Collector's finding given in paras 17.1 to 22 are reproduced herein below:
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8. We have heard Shri N. Venkataraman, ld. Advocate for the appellants and Shri S.K. Sharma, ld. JDR for the Revenue.
9. The ld. Advocate submitted that the item in question is optional one to be used alongwith the Oscilloscope. He explained the technical features of this item and also distinguished it from the Amplifier. The technical details presented by the ld. Advocate were as those already brought out in the reply to the show-cause notice recorded above. The ld. Advocate also referred to the certificates and opinions given by the expert organisations in support of the appellants' claim. The main crux of his arguments is that, even if this item is considered as an accessory, even then by virtue of Section note 2(b) of Section XVIII, the goods are to be classified along with the oscilloscope. In this context, he pointed out that most of the findings given by the ld. Collector were in the favour of the assessee. He pointed out that the ld. Collector had not decided the case as per the Section Note and Chapter Note, and its which application would make the goods fall under sub-heading 90.30 and thus, it is required to be classified alongwith the oscilloscope as the item in question does not have any independent functioning at all. He also referred to the principles of classification dealing with the aspect of similar items being placed in the same category and also the mental association of the item. In this context, he relied on the doctrine of Noscitur a Sociis. He also submitted that Section Note 2(a) of the Chapter 90 also does not come into play, as the item is not an accessory included in the heading of Chapter 90 or Chapter 84, 85 or 91 (other than Heading Nos. 84.85, 85,48 or 90.33). As only item specifically mentioned in these headings are classified therein, in terms of Section Note 2(a). As 2(a) is not coming into play, Note 2(b) of the Chapter 90 has to be applied, which clearly states that the parts and accessories suitable for use solely and principally with the particular kind of machine, instruments or apparatus are to be classified, with the said machine, instruments or apparatus of that kind. In view of the clear position that the item in question is solely and principally used alongwith oscilloscope, the classification, therefore, has to be done alongwith the classification of oscilloscope, which falls under sub-heading 90.30. The ld. Advocate also submitted that the BHEL opinion has not been given correctly as the question 4 posed to them pertains to audio frequency range, while the sub-heading 90.30 does not deal with such an item, but dealt with Audio Electric Amplifier. He pointed out that the item in question is not Audio Frequency Amplifier but it only amplifies the electric signals. He pointed out that the amplification of electric signals need not to be in relation to perception of sound and the frequency should fall within the audio frequency range. He submitted that the item in question is used for measuring and checking electrical apparatus. The classification of items under sub-heading 8518.00 pertains to amplification of sound waves. The description of the items in sub-heading 8518.00 clearly discloses that there should be an input item like a microphone and output item like a loudspeaker. The items which are described in subheading 8518.00 pertains to audio frequency electrical amplifiers and electric sound amplifier sets. These items pertaining to those amplifiers which amplified sound waves for human ear and not with those items pertaining to correction or amplification of low electrical waves in the oscilloscope. He, further, pointed out that this item satisfies ISI specification i.e. IS : 1885 Part III/Section 11965-64. He, further, pointed out that electric amplifiers range from 15 Hz. to 20,000 Hz., while signal amplifiers range from DC to 200 Hz. Ld. Counsel argued that the test for classification in this particular case should be as per the trade understanding and as per the understanding of the item in the commercial sense and trade parlance. In this context, he relied on the ruling rendered by the Hon'ble Supreme Court in the case of :
(i) CCE, Kanpur v. Krishna Carbon Paper Co. -1988 (37) E.L.T. 480 (SC).
(ii) Atul Glass Industries Ltd. and Ors. v. Collector of Central Excise and Ors. -1986 (25) E.L.T. 473 (SC)
(iii) Rohit Pulp and Paper Mills Ltd. v. CCE - 1990 (47) E.L.T. 491 (SC).
9A. Ld. JDR, Shri S.K. Sharma arguing for the Revenue submitted that the item is an audio frequency equipment as per the catalogue itself. As it is frequency amplifier from 0 to 100 KHz. In this context, he relied on the definition of audio amplifier appearing at page 864 of Mc Graw-Hill Encyclopedia of Science & Technology (5th Edition). He submitted that this item is like a voltage amplifier which is used for refrigerators. All this come in the category of audio amplifier such as microphone or a phone pick-up. He submitted that the frequencies level shown in the catalogue falls within the audible range. Therefore, the description and function being specific for its classification under sub-heading 8518.00 is correct.
10. We have carefully considered the submissions made by both the sides and have perused the records. The contesting Tariff Entries namely: sub-heading 8518.00 and the sub-heading 90.30 alongwith Note 2(a)(b)(c) of Section XVIII are reproduced herein below :
* * * * * * * The first and foremost aspect of this matter is to classify the goods as per Section Note and Chapter Note. As can be seen from the extracted note 2(b) it clearly stipulates that parts and accessories, suitable for use solely or principally with the particular kind of machine, instruments or apparatus of that kind are to be classified alongwith that machine, instrument or accessory. Before applying Note 2(b), we have to see as to whether Note 2(a) is applicable or not in this case. It is admitted, on both the sides that the item in question is not specifically included in any of the heading specified in Note 2(a). Hence its applicability is ruled out. Therefore, we have to see as to whether this item is an accessory, which is used solely or principally with a particular kind of machine, instrument or apparatus to be classified along with it. The sub-heading 90.30 refers to oscilloscope and apparatus for measuring or checking electrical quantities. It is the appellants' case that the item in question is solely and principally used along within the oscilloscopes and it is an apparatus for measuring or checking electrical quantities. They pointed out that it does not have any other function and it cannot be used independently, although it may be having an optional use. They submitted that by itself is not a ground to exclude the item with the scope of Note 2(b). The Revenue has not contested about this aspect of the matter, in as much as that it is admitted by the Revenue that the item in question is suitable for use solely or principally with the oscilloscopes. As can be seen from the Collector's order, the scope of interpretation of Note 2(b) has not been examined at all. The ld. Collector has based his findings on the opinion of the BHEL. Therefore, the opinion of the BHEL has to be examined from the light of queries posed to them At the outset, it has to be observed that the query posed to the BHEL is somewhat improper in as much an opinion on classification under various sub-headings has been asked. This is function of a quasi-judicial authority and not of BHEL. As can be seen from the question No.3 the Assistant Collector has posed a question as to whether item should be preferably covered by Chapter Heading 85.18 or 85.43. Further opinion is expressed by department that the item may not be covered under Heading 90.30. They have also posed in question 5 to identify the various types of amplifiers under Chapter Heading 85.18 or 85.43. It has to be observed that the department has to merely seek technical clarification and opinion about the item and the quasi- judicial function of the classification has to be performed by the authority dealing with the said function. The technical experts help in the understanding of the technical aspect of the products. As regards the classification of an item as the same has to be done as per the principles laid down in the interpretative rules, Section Note and Chapter Note and the rulings on the subject has to be applied. Therefore, the questions posed to the BHEL for opinion are inappropriate. The questions are not clear, in as much as there has been no seeking of technical information. But mere opinion on the classification has been obtained. The opinion given by BHEL, therefore, loses its evidentiary value. BHEL has not given any opinion as to whether the item in question is low audio electrical measuring equipment. The answers given to questions 3 & 4 by BHEL in para 3 & 4 of their opinion are general in nature and that they have not been given with specific reference to the item in question, although the view of the department in para 3 posed to the BHEL is that signal conditioning amplifiers are not the measuring or recording apparatus for electrical quantities. The opinion is general in nature and the opinion is that the amplifiers in themselves are not measuring instruments or recording apparatus for electrical quantities. There has been no specific opinion expressed with regard to the item in question and as to what the item in question is and what functions it performs. The question No. 4 posed is a general question pertaining to amplifiers and answer has also been given in a general way without any specific reference to the item in question. As regards the 5th question, the department should not have referred such a question to the expert, as it is for the department to decide the correct classification and not for the technical expert to opine as to what heading the item should be classified in. In that view of the matter the opinion expressed by BHEL is not of any help with regard to the understanding of the product in question and, therefore, the same is rejected. The findings of the ld. Collector not having been based on the Section Note 2(b) of Section XVIII and also having fully relied only on the BHEL opinion and further while rejecting the certificates produced by the assessee, has not given any reasons, therefore, the order becomes vitiated and unsustainable in law. The ld. Collector has accepted in para 17.1 of his order that the item in question does not have any independent function and that it has to be used alongwith the oscilloscope. Therefore, on this fact of admission by itself, the assessee's case that item not having any independent function and that they are used solely and principally along with the oscilloscope it requiring classification alongwith it has to be accepted. The ld. Collector has in para 18 referred to the audio frequency range and that of the signal conditioning amplifier range. This aspect does not gain much for the purpose of classification of this item in view of Note 2(b). The assessee has clearly brought out difference between audio electrical frequency and electrical frequencies. The audio frequency is the frequency which is audible to the human ear. The equipments and apparatus which amplifies the sound waves which are within the human ear's perception are classified under sub-heading 8518.00. As has been rightly pointed out by the ld. Advocate, the items which are classified under Heading 8518.00 are those which have audio frequency amplifiers, which help in the perception of the audio frequencies by the human ear. They have pointed out from the various certificates that the function of the present item does not fall within the aspect of audio frequency but come within the signal conditioning amplifiers. The certificates clearly state that the signal conditioners are neither audio frequency electric amplifier nor electric amplifiers are used with transducers and measured on oscilloscope and oscil-lographic recorders.
11. Let us examine the certificates issued by various authorities :
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12. On a reading of all these certificates, it clearly indicates that the items in question are used alongwith the Oscilloscope and that they are not audio frequency electrical amplifiers. The certificates bring out the distinction between signal conditioning amplifiers and audio frequency electric amplifiers. There is a very categorical opinion expressed by such high governmental institutions that the signal conditioning amplifiers are not public address audio amplifiers used for entertainment purpose. It has been clearly stated in the certificate issued by the Prof. B.S. Sonde of Indian Institute of Science that these amplifiers are essentially meant for signal conditioning used in instrumentation and that does not in any way be possible for using them as audio frequency electric/electronic amplifiers. The ld. Advocate has fallen in a great error in not accepting these authentic certificates of such high governmental institutions. The main case of the department as stated earlier had been based on B.H.E.L. opinion, which we have already held as not helpful for the purpose of classification. Therefore, the ld. Collector not having discussed the evidence of the assessee has erred and the order is totally vitiated, hence it requires to be set aside.
13. In view of our findings and the experts' opinion categorically stating that they do not come within the category of audio frequency electric amplifier or electric amplifier set, the classification of the items in question under sub-heading 8518.00 is totally ruled out. The experts also opine that the item in question is required to be used with oscilloscope and that they are used in conjunction with measurement recording devices or with transducers i.e. Oscilloscope or Osdllographic recorders, and that they are used solely and principally alongwith it, therefore, by applying Note 2(b) of Chapter 90, the claim for classification under sub-heading 9030.00 is upheld. The principles of classification as brought out in the rulings cited before us by the ld. Advocate are also pertinent to the present case and they are well taken note of. In the result, the appeal is allowed.
P.C. Jain, Member (T)
14. I agree with the conclusion reached by my learned brother, Shri S.L. Peeran, Judicial Member that Signal Conditioning Amplifiers (SCAs) fall under Tariff Heading 90.30 and not under Tariff Heading 85.18.1 would, however like to add the following :
14.1 The lower authority has held the goods 'SCAs' on the ground that these are specifically mentioned in Tariff Heading 85.18 already reproduced at pages 12 and 13 of the learned brother's order. This has been reiterated strongly by the learned J.D.R., Shri S.K. Sharma for the Revenue. Attention has also been drawn to Section Note 2(a) to Section XVIII wherein it has been stated that parts and accessories which are goods included in any of the heading of this Chapter or of Chapters 84, 85 or 91 (other than Heading Nos. 84.85, 85.48 or 90.33) are in all cases to be classified in their respective Headings. It has, therefore, been stressed that SCA being audio frequency electric amplifiers inasmuch as the range of frequency controlled by SCA is 0 to 100 Hz. being covered by the audio frequency range 15 Hz. to 20,000 Hz. It is not possible to accept this contention of the Revenue. The entire range of frequency covered by SCA obviously does not fall within the audio frequency range, as mentioned above since the range of frequency between 0 to 15 Hz. is admittedly not covered by the audio frequency range. If we go by the aforesaid data, it is apparent that the SCAs cannot be called audio frequency electric amplifiers. Therefore, their classification under Heading 85.18 would be inappropriate. Section Note 2(a) to Section XVIII would not, therefore, be applicable and hence the Section Note 2(a) to Section XVIII would have to be applied. Based on that Section Note, no doubt is left in view of the overwhelming opinion of the experts brought on record by the appellants and produced in extenso by the learned brother in his order that the SCAs would be classifiable under Tariff Heading 90.30 because SCAs are principally used with Oscilloscopes which are specifically mentioned in the said Heading 90.30.