Custom, Excise & Service Tax Tribunal
Mitsubishi Electric Automotive India ... vs Commissioner, Customs-Patparganj on 11 September, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI.
PRINCIPAL BENCH,
COURT NO. I
CUSTOMS APPEAL NO. 51981 OF 2022
[Arising out of the Order-in-Appeal No. CC-A/CUS/D-II/ICD/PPG/246-305-
2022-23 dated 9/05/2022 passed by Commissioner of Customs (Appeals),
New Customs House, New Delhi.]
M/s Mitsubishi Electric Automotive ......Appellant
India Pvt. Ltd.
Plot No. 167-170, Sector - 5, IMT - Manesar,
Gurgaon, Haryana - 122 050.
Versus
Commissioner of Customs ....Respondent
ICD, Patparganj, New Delhi.
With 51982/22, 51983/22, 51984/22, 51985/22, 51986/22, 51987/22, 51988/22, 51989/22, 51990/22, 51991/22, 51992/22, 51993/22, 51994/22, 51995/22, 51996/22, 51997/22, 51998/22, 51999/22, 52000/22, 52001/22, 52002/22, 52003/22, 52004/22, 52005/22, 52006/22, 52007/22, 52008/22, 52009/22, 52010/22, 52011/22, 52012/22, 52013/22, 52014/22, 52015/22, 52016/22, 52017/22, 52018/22, 52019/22, 52020/22, 52021/22, 52022/22, 52023/22, 52024/22, 52025/22, 52026/22, 52027/22, 52028/22, 52029/22, 52030/22, 52031/22, 52032/22, 52033/22, 52034/22, 52035/22, 52036/22, 52037/22, 52038/22, 52039/22, 52040/22.
APPEARANCE:
Ms. Anjali Singh, Advocate for the appellant Shri S.K. Rahman, Authorized Representative for the Department CORAM:
HON'BLE JUSTICE MR. DILIP GUPTA, PRESIDENT HON'BLE MR. P.V. SUBBA RAO, MEMBER (TECHNICAL) FINAL ORDER NO'S. 58663-58722/2024 DATE OF HEARING/DECISION : 11.09.2024 P.V. SUBBA RAO:
These 60 appeals have been filed by M/s Mitsubishi Electric Automotive India Pvt. Ltd.1 to assail the order-in-
appeal2 dated 09.05.2022 passed by the Commissioner of 1 the appellant 2 Impugned order
2 C/51981 OF 2022 & 59 others Customs (Appeals), New Customs House, New Delhi whereby he rejected the appeals filed by the appellant assailing the classification of the goods imported under 60 Bills of Entry from August, 2020 to February, 2022.
2. We have heard Ms. Anjali Singh, learned counsel for the appellant and Shri S.K. Rahman, learned authorized representative for the revenue and perused the records.
3. Both sides fairly submitted that 127 appeals on the same issue in respect of the same appellant were decided by Final Order No. 56067-56193/2024 dated July 30, 2024 in favour of the Revenue and against the appellant.
4. The appellant manufactures and supplies parts of automobiles and for this purpose it imported "electronic control units for electronic power steering" (EPS - ECU) and their parts and classified them under Customs Tariff Item3 85437099 as "electrical machinery or apparatus having individual function".
The department classified the goods under Customs heading 8708 as parts and accessories of motor vehicles. The disputed goods are as follows :-
(i) Complete EPS - ECU ;
(ii) Sub-assembly i.e. complete EPS - ECU without cover and
(iii) Parts of EPS - ECU i.e. cover, housing frame assembly, hit sink, housing assembly, spaces, circuit assembly.
3 CTI 3 C/51981 OF 2022 & 59 others
5. There is no dispute that the imported goods are electronic by nature. There is also no dispute that they are parts of automobiles and have no other function. According to the Revenue, they fall under the head "parts and accessories of motor vehicles" and should be classified, as such. According to the appellant, since they are electrical/electronic parts they should be classified, as such and not as parts of motor vehicles.
6. EPS - ECU is used in automobiles with power steering and determines how much assistance is required to augment the steering effort of the driver steering the wheel. In vehicles with manual steering, the vehicle is steered by driver's effort. In vehicles with power steering, the driver's effort is supplemented by a power from a motor. The extent to which the driver should be assisted while steering has to be dynamically determined based on various factors. EPS - ECU does this determination.
7. A 12 - volt car battery runs the motor which assists in steering. However, if the motor is run at full capacity it will provide too much power. Therefore, the 12-volt battery is connected to the EPS - ECU and through it to the motor. The EPS - ECU receives signals from the speed sensor (which senses the speed of the vehicle) and the torque sensor (which gives the angular position) while turning on the road. The EPS - ECU has a micro-processor which processes this data and determines how much power should be given to assist the steering effort of the driver and regulates the voltage given to the motor accordingly.
4 C/51981 OF 2022 & 59 others
8. Thus, the EPS - ECU is connected to the battery, the motor and the speed and torque sensors. If any anomalies arise within the input/out framework, it alerts the user so that necessary corrective steps can be taken.
9. According to the Revenue, EPS-ECU and its parts are classifiable under CTI 8708 94 00.
10. According to the appellant, EPS-ECU and its sub-assembly are correctly classifiable under Customs Tariff Item4 9032 90 00 as 'Automatic regulating or controlling instruments and apparatus' because based on the speed and torque of the vehicle EPS-ECU regulates the voltage supplied to the motor and thereby the amount of assistance provided in steering.
According to the learned counsel, it not only regulates the electrical quantity viz., voltage but also regulates the non-
electrical quantity of torque.
11. As an alternative, the appellant claims that the EPS-ECU is classifiable under CTI 8537 10 00 as "Boards, panels, consoles, desks, cabinets and other bases, equipped with two or more apparatus of CTH 8535 or 8536, for electric control or the distribution of electricity, including those incorporating instruments or apparatus of Chapter 90, and numerical control apparatus, other than switching apparatus of CTH 8517 of voltage not exceeding 1000 volts".
12. The second alternative claim of the appellant is for the EPS-ECU to be classified under CTI 8543 70 99 as "Electrical 4 CTI 5 C/51981 OF 2022 & 59 others machines and apparatus having individual functions, not specified or including elsewhere in this chapter- others".
Classification of parts of EPS-ECU
13. According to the Revenue, parts of EPS-ECU are also parts (or child parts) of the power steering and hence they were correctly classified under CTI 8708 94 00.
14. The appellant has three alternative submissions on the classification of parts of EPS-ECU. Its first submission is that they are classifiable under CTI 9032 89 90. According to the appellant, since the EPS-ECU is classifiable under CTI 9032 89 10, its parts consequently fall under CTI 9032 89 90.
15. The appellant's alternative (second) submission is that parts of EPS-ECU are classifiable under CTI 8538 90 00 (cover, housing, housing assembly, spacer and circuit assembly) and CTI 8538 10 90 (heat sink). This submission is linked to its alternative submission that EPS-ECU is classifiable under CTI 8537 10 00.
16. The appellant's another alternative (third) submission is that parts of EPS-ECU are classifiable under CTI 8543 90 00.
This submission is linked to its alternative submission that EPS-
ECU is classifiable under CTI 8543 70 99.
17. As submitted by both sides, the Tribunal decided this issue of classification in Final Order No 56067-56193 dated 30.7.2024, the relevant portions of which are reproduced below:
"18. We now proceed to decide the classification of the goods.
Classification of EPS-ECU and its sub-assembly 6 C/51981 OF 2022 & 59 others
19. It is undisputed that the sub-assembly is the same as EPS-ECU, except its cover. Therefore, according to the appellant, it should be treated as an incomplete EPS-ECU and should be classified as complete EPS-ECU as per GIR 2(a) which reads as follows:
Rule 2: (a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or failing to be classified as complete or finished by virtue of this Rule), presented unassembled or disassembled.
20. The department also classified both EPS-ECU and its sub-
assembly under the same CTI. Thus, we agree with this submission of the learned counsel for the appellant that the EPS-ECU and its sub-assembly should be classified under the same CTI. The competing entries are CTI 8708 94 00 (by the Revenue) and CTI 9032 89 10 (first claim by the appellant), CTI 8537 10 00 (second claim by the appellant) and CTI 8543 70 99 (third claim by the appellant). Relevant entries of the Customs Tariff are reproduced below.
8708 Parts and accessories of the motorvehicles of headings
8701 to 8705
8708 10 - Bumpers and parts thereof :
8708 10 10 --- For tractors
8708 10 90 --- Other
- - Other parts and accessories of bodies (including cabs) 8708 21 00 -- Safety seat belts 8708 29 00 -- Other 8708 30 00 - Brakes and servo-brakes; parts thereof 8708 40 00 - Gear boxes and parts thereof 8708 50 00 - Drive-axles with differential, whether or not provided with other transmission components, non-driving axles; parts thereof Road wheels and parts and accessories thereof 8708 70 00 - Road wheels and parts and accessories thereof 8708 80 00 - Suspension systems and parts thereof (including shock absorbers)
- Other parts and accessories:
8708 91 00 -- Radiators and parts thereof 8708 92 00 -- Silencers (mufflers) and exhaust pipes; parts thereof 8708 93 00 -- Clutches and parts thereof 8708 94 00 -- Steering wheels, steering columns and steering boxes; parts thereof 8708 95 00 -- Safety airbags with inflater system; parts thereof 8708 99 00 -- Other 9032 Automatic regulating or controlling instruments and apparatus 9032 10 - Thermostats :
9032 10 10 --- For refrigerating and air-conditioning appliances and machinery 9032 10 90 --- Other 9032 20 - Manostats:
9032 20 10 --- For refrigerating and air-conditioning appliances and
machinery
9032 20 90 --- Other
- Other instruments and apparatus:
9032 81 00 -- Hydraulic or pneumatic
9032 89 -- Other :
9032 89 10 --- Electronic automatic regulators
9032 89 90 --- Other
9032 90 00 - Parts and accessories
8537 Boards, panels, consoles, desks, cabinets and other
bases, equipped with two or more apparatus of heading 8535 or 8536, for electric control or the distribution of electricity, including those incorporating instruments or apparatus of chapter 90, and numerical control 7 C/51981 OF 2022 & 59 others apparatus, other than switching apparatus of heading 8517 8537 10 00 - For a voltage not exceeding 1,000 V 8537 20 00 - For a voltage exceeding 1,000 V 8543 Electrical machines and apparatus having individual functions, not specified or including elsewhere in this chapter 8543 10 - Particle accelerators:
8543 10 10 --- Ion implanters for doping semi-conductor material 8543 10 20 --- Vane graff, cock-croft, Walton accelerators 8543 10 30 --- Synchrocyclotrons, synchrotrons 8543 10 90 --- Other including cyclotrons 8543 20 - Signal generators :
8543 20 10 --- Sweep generators
8543 20 20 --- Impulse generators
8543 20 30 --- Tacho generators
8543 20 90 --- Other
8543 30 00 --- Machines and apparatus for electroplating, electrolysis or
electrophoresis
8543 70 - Other machines and apparatus:
8543 70 11 ---- Proximity card and tags
8543 70 12 ---- Metal detector
8543 70 13 ---- Mine detector
8543 70 19 --- Other
--- Audio special effect equipment:
8543 70 21 ---- Digital reverberators
8543 70 22 ---- Mixing system or consoles
8543 70 29 ---- Other
--- Video special effect equipments:
8543 70 31 ---- Video mixing system or consoles
8543 70 32 ---- Video effect system
8543 70 33 ---- Digital layering machine
8543 70 34 ---- Paint box
8543 70 35 ---- Video typewriter
8543 70 36 ---- Video matting machine
8543 70 39 ---- Other
--- Edit control Unit:
8543 70 41 ---- Computerised editing system controlling more than three
video editing machines
8543 70 42 ---- Other video control unit
8543 70 49 ---- Other
8543 70 50 --- Colour corrector
--- Amplifier:
8543 70 61 ---- Broadcast amplifier
8543 70 62 ---- Limiting amplifier, video distribution amplifier and
stabilizing amplifiers
8543 70 69 ---- Other
--- Graphic equalizer and synthesized receivers:
8543 70 71 ---- Graphic equalizer
8543 70 72 ---- Synthesised receivers
--- Other:
8543 70 91 ---- RF(radio frequency) power amplifier and noise generators
for communication jamming equipment, static and mobile or man-portable 8543 70 92 ---- Equipment gadgets based on solar energy 8543 70 93 ---- Professional beauty care equipment 8543 70 94 ---- Audio visual stereo encoders 8543 70 95 ---- Time code generator 8543 70 99 ---- Other 8543 90 00 - Parts
21. The submission of the revenue is that the EPS-ECU is a part of an automobile and parts of goods falling under Section XVII which includes automobiles falling under Chapter 87 must be classified in the respective Chapters. CTH 8708 specifically covers parts and accessories of automobiles. The description of the goods in the bills of entry itself shows that EPS-ECU is a part of automobiles- more specifically a part of its power steering system. There is no other use of this good and its principal and also only use is as a part of the automobile. Therefore, according to the Revenue, EPS-ECU deserves to be classified under CTH 8708 and within that under CTI 8708 94 00 -- Steering wheels, steering columns and steering boxes; parts thereof.
8 C/51981 OF 2022 & 59 others
22. Further, according to the Revenue, the term 'parts and accessories' can fall under Section XVII (of which Chapter 87 is a part) subject to three conditions laid down in the HSN Explanatory note to Section XVII. These are:
a) They are not excluded by section note 2 to this section;
b) They must be suitable for use solely or principally with the articles of the chapters 86 to 88; and
c) They must not be more specifically included elsewhere in the nomenclature.
23. There is no dispute that the EPS-ECU is meant solely for use in automobiles with power steering and therefore, the second of the above conditions is met. Certain goods are specifically excluded from the expression 'parts and accessories' by virtue of Section Note 2 to this Section. It reads as follows:
"2. The expressions "parts" and "parts and accessories" do not apply to the following articles, whether or not they are identifiable as for the goods of this Section:
(a) joints, washers or the like of any material (classified according to their constituent material or in heading 8484) or other articles of vulcanised rubber other than hard rubber (heading 4016);
(b) parts of general use, as defined in Note 2 to Section XV, of base metal (Section XV), or similar goods of plastics (Chapter 39);
(c) articles of Chapter 82 (tools);
(d) articles of heading 8306;
(e) machines and apparatus of headings 8401 to 8479, or parts thereof, other than the radiators for the articles of this Section, articles of heading 8481 or 8482 or, provided they constitute integral parts of engines and motors, articles of heading 8483;
(f) electrical machinery or equipment (Chapter 85);
(g) articles of Chapter 90;
(h) articles of Chapter 91;
(ij) arms (Chapter 93);
(k) luminaries and lighting fittings and parts thereof heading 9405; or
(l) brushes of a kind used as parts of vehicles (heading 9603)"
24. This list does not include EPS-ECU by name although it excludes articles of Chapters 85 and 90. Thus, if any of the appellant's three alternative claims of classification is upheld, EPS-ECU cannot fall under chapter 87. Otherwise, the first of the above conditions for the EPS-ECU to be classified as part of automobile under Chapter 87 will be fully met. The third condition is that the goods should not be more specifically covered elsewhere. Here again if any of the appellant's claims that the EPS-ECU is more specifically covered in the other Customs Tariff headings is accepted, then it cannot be part of automobiles under Chapter 87; otherwise, EPS-ECU is clearly covered as part of automobiles.
25. The appellant's first submission is that the burden of classification is on the department which it failed to discharge. Learned counsel relies on HPL Chemicals in which Supreme Court held that if the department intends to classify the goods 9 C/51981 OF 2022 & 59 others under a particular heading or sub-heading different from that claimed by the assessee, the department has to adduce evidence and discharge burden of proof. However, in these appeals, the appellant had self-assessed goods classifying them under CTI 8708 94 00 and the department had not disputed this classification. Thereafter, the appellant challenged its own self-assessment by filing appeals before the Commissioner (Appeals) which were dismissed. Therefore, it is the appellant which is seeking to change the classification and the burden is on it to provide evidence. Learned counsel for the appellant does not dispute the fact that it had self- assessed the Bills of Entry classifying the goods under CTI 8708 94 00 but asserts that it had so classified the goods on the insistence of the department so as to get the goods cleared. We do not find any force in this argument. Any importer can self-assess goods by filing the Bill of Entry. Until the Bill of Entry is filed, the departmental officer cannot assess or take any action on it with respect to assessment. If the proper officer does not agree with the self-assessment by the importer, he can re-assess the duty and provide a speaking order. We do not see how the departmental officers could have insisted that the goods should be classified in a particular heading in the Bill of Entry even before it was filed. Even if there was any informal discussion with the proper officer and he had suggested that the goods should be classified under any particular CTI, the appellant could not have been compelled to file the Bills of Entry in any particular manner. Differences on the question of classification of goods between the importer and the proper officer are a matter of everyday occurrence and where the proper officer disagrees with the classification by the importer and re-assesses the Bill of Entry, he is duty bound to pass a speaking order (unless the importer agrees to the change in classification in writing). The appellant is a large company supplying EPS-ECU to automobile manufacturers and we cannot countenance a situation where it was either not aware of the legal position regarding assessment or it could have been compelled by any officer to file Bills of Entry in any manner.
26. The appellant's second submission is that EPS-ECU and its sub-assembly are correctly classifiable under CTI 9032 90 00 as 'Automatic regulating or controlling instruments and apparatus' because based on the speed and torque of the vehicle EPS-ECU regulates the voltage supplied to the motor and thereby the amount of assistance provided in steering. According to the learned counsel, it not only regulates the electrical quantity viz., voltage but also regulates the non- electrical quantity of torque. Learned counsel laid great emphasis on Chapter Note 7 to Chapter 90 which reads as follows:
7. Heading 9032 applies only to:
(a) instruments and apparatus for automatically controlling the flow , level, pressure or other variables of liquids or gases, or for automatically controlling temperature, whether or not their operation depends on an electrical phenomenon which varies according to the factor to be automatically controlled, which are designed to bring this factor to, and maintain it at, a desired value, stabilized against disturbances, by constantly or periodically measuring its actual value; and
(b) automatic regulators of electrical quantities, and instruments or apparatus for automatically controlling 10 C/51981 OF 2022 & 59 others non-electrical quantities the operation of which depends on an electrical phenomenon varying according to the factor to be controlled, which are designed to bring this factor to, and maintain it at, a desired value, stabilized against disturbances, by constantly or periodically measuring its actual value.
(emphasis supplied)
27. According to the learned counsel, the torque assist provided by the power steering is the non-electrical quantity which is regulated by the EPS-ECU and it is dependent on the electrical value, i.e., the current so as to bring it at a desired value and it also serves to dampen the oscillations within the system such as when the vehicle encounters a stone or other obstacle. According to the learned counsel, EPS-ECU also constantly or periodically measures the actual value of torque.
28. According to the learned authorised representative, EPS- ECU is not an instrument or apparatus by itself. It does not measure the speed or torque but it receives the information about speed and torque from the speed sensors and torque sensors. It processes this information and determines how much assistance should be provided in steering and the assistance is actually provided by the motor using the energy from the battery and based on the instructions received from EPS-ECU.
29. We find from the details of the EPS-ECU provided by the learned counsel, that it acts as the brain and receives inputs from the speed sensor and torque sensor dynamically and processes this information to determine how much assistance should be provided to the driver in steering in a particular situation. Thereafter, based on this information it regulates the amount of voltage provided to the motor from the battery. The motor and battery are not part of the EPS-ECU. EPS-ECU is connected to the motor on one hand and the battery on the other.
30. EPS-ECU regulates the amount of assistance provided to the driver in steering. This regulation is based on two other phenomena-speed and torque. In other words, two non- electrical quantities viz. speed and torque are measured by sensors which provide information to the EPS-ECU and based on this it regulates another quantity viz., amount of assistance provided in steering. EPS-ECU is in essence not a regulator of electrical quantity but is a regulator of the assistance provided to the driver in steering.
31. We are conscious that there are electronic instruments and apparatus which, though used in automobiles, are classifiable under Chapter 90. However, EPS-ECU is not an instrument or an apparatus but is a part of the power steering system. Merely because it is in the form of a PCB and other electronic components does not change it from a part of an automobile into an instrument or an apparatus. It is, in essence, a microprocessor with certain other parts which receives information from the speed and torque sensors and processes it and issues instructions to regulate the assistance provided by the power steering to the driver. Therefore, in our considered view, EPS-ECU does not merit classification under CTI 9032 90 00.
11 C/51981 OF 2022 & 59 others
32. The first alternative claim of the appellant is CTI 8537 10 00 as "Boards, panels, consoles, desks, cabinets and other bases, equipped with two or more apparatus of CTH 8535 or 8536, for electric control or the distribution of electricity, including those incorporating instruments or apparatus of Chapter 90, and numerical control apparatus, other than switching apparatus of CTH 8517 of voltage not exceeding 1000 volts".
33. As discussed above, EPS-ECU is not designed for electricity distribution or electric control. It is a part of an automobile -specifically a part of the power steering system to decide how much assistance should be provided to the driver in steering. The mere fact that it makes this determination and intervenes between the 12-volt car battery and a small motor does not, in our considered view does not make, EPS-ECU into an electrical board, panel, etc. We, therefore, find that EPS-ECU does not merit classification under CTI 8537 10 00.
34. The second alternative claim of the appellant is for the EPS-ECU to be classified under CTI 8543 70 99 as "Electrical machines and apparatus having individual functions, not specified or including elsewhere in this chapter- others".
35. We find that CTH 8543 covers various "electrical machines and apparatus having individual functions but not specified elsewhere in that Chapter". This includes, various specific electrical machines and apparatus such as particle accelerators, signal generators, machinery for electroplating, electrolysis, audio visual equipment. This CTH lists various types of machines and has a residual category 'Other' preceded by "---" (three dashes). Within this three dash 'Other" category are various equipment and machines each preceded by "----" (four dashes) such as radio frequency power amplifiers, beauty care equipment, audio visual stereo encoders, etc. and the last four dash category is CTI 8543 70 99 "----other". We do not find that EPS-ECU, which is essentially a part of an automobile specifically designed to be a part of power steering and which has no other function, can be classified in the general residual entry of electrical machines and equipment.
36. For all the above reasons, we find that EPS-ECU and its sub-assembly deserve to be classified and were correctly classified under CTI 8708 94 00. The impugned order insofar as this classification is concerned needs to be upheld.
Classification of parts of EPS-ECU
37. According to the Revenue, parts of EPS-ECU are also parts (or child parts) of the power steering and hence they were correctly classified under CTI 8708 94 00.
38. The appellant has three alternative submissions on the classification of parts of EPS-ECU. Its first submission is that they are classifiable under CTI 9032 89 90. According to the appellant, since the EPS-ECU itself is classifiable under CTI 9032 89 10, its parts consequently fall under CTI 9032 89
90. Since we have held that EPS-ECU do not merit classification under CTI 9032 89 10, its parts, consequently, do not fall under CTI 9032 89 90.
12 C/51981 OF 2022 & 59 others
39. The appellant's alternative (second) submission is that parts of EPS-ECU are classifiable under CTI 8538 90 00 (cover, housing, housing assembly, spacer and circuit assembly) and CTI 8538 10 90 (heat sink). This submission is linked to its alternative submission that EPS-ECU is classifiable under CTI 8537 10 00. Since we have held that EPS-ECU do not merit classification under CTI 8537 10 00, its parts, consequently, do not fall under CTI 8538 90 00 (cover, housing, housing assembly, spacer and circuit assembly) and CTI 8538 10 90(heat sink).
40. The appellant's another alternative (third) submission is that parts of EPS-ECU are classifiable under CTI 8543 90 00. This submission is linked to its alternative submission that EPS-ECU is classifiable under CTI 8543 70 99. Since we have held that EPS-ECU do not merit classification under CTI 8543 70 99, its parts, consequently, do not fall under CTI 8543 90
00.
41. In view of the above, the impugned order deserves to be upheld. All the 127 appeals, therefore, deserve to be dismissed and are dismissed."
18. Since the facts and the dispute in these appeals are identical to those in the Final order dated 30.07.2024, all the sixty appeals, for the reasons stated in the aforesaid order, deserve to be dismissed.
19. The impugned order is, therefore, upheld and all 60 appeals are dismissed.
(Order pronounced in open court) (JUSTICE DILIP GUPTA) PRESIDENT (P.V. SUBBA RAO) MEMBER (TECHNICAL) Tejo