Customs, Excise and Gold Tribunal - Delhi
Electrotherm (I) Ltd. vs Collector Of Customs on 29 January, 1996
Equivalent citations: 1996(83)ELT318(TRI-DEL)
ORDER
S.K. Bhatnagar, Vice President
1. This is an appeal filed against the Collector of Customs (Appeals) dated 19-11-1993.
1.1 The Ld. Counsel stated that the appellants are engaged in the manufacture of induction melting furnace and induction heating equipment.
1.2 They imported induction transistor generator with capacitor bank from Spain. At the original stage, the Assistant Collector classified the goods under Heading 85.43.
1.3 It was his contention that these were classifiable under Heading 85.14 or in the alternative under 85.04.
1.4 It was also his submission that while initially the assessment was claimed in the bill of entry under 8514.90 and subsequently vide their letter dt. 4th August, 1993, the assessment was claimed under 8504.90 as a static converter covered under Notification No. 59/87. But the Asstt. Collector ruled out 85.04 in his adjudication order and classified them under 85.43.
1.5 The Collector (Appeals) confirmed the classification under 85.43 and rejected their appeal. Hence, the petition.
1.6 The Ld. Counsel further submitted that the description of the item as per the bill of entry No. 4003, dated 13-7-1993 is as follows :
"PARTS OF INDUCTION HEATING SYSTEM A. 1.50 KW output power induction transistors generator working on the range of 50-200 HZ input voltage 3 x 300V, 50 HZ fitted with one switchover for the alternative operation of two heat station.
B. Two heating stations with capacitor bank 400 KVAR linked by flexible cables to the generator, (cable length 5 metres).
1.7 The technical writeup along with diagram and technical literature/catalogue has been filed by them.
1.8 The Customs had initially considered the various units separately classifiable under three different headings: The generator was sought to be classified under 8504.40 and switchover unit and heating station were sought to be classified as 85.36 and 85.24 respectively. However, the item heating station was not imported and in view of the adjudication order of the Asstt. Collector and the order of Collector (Appeals), the issue which survives for consideration is as to whether the entire thing was required to be classified under Heading 85.43 or 85.04 or alternatively under 85.14.
1.9 These headings read as follows :
85.43 Electrical machines and apparatus, having individual functions not specified or included elsewhere in this chapter.
85.04 Electrical transformers, static converters (for example, rectifiers) and inductors.
It was his contention on that from technical literature incl. diagram and the examination report, it was evident that what has been imported consists of parts of induction heating system including one inductor, one rectifier and one capacitor bank; Together they act as a static convertor of induction transistor generator type.
2.0 The main job of static converters is to change the characteristics of electrical current i.e. to change the input voltage, phase and frequency to different voltage, phase and frequency as indicated in the Technical literature and Suppliers letter dt. 21st MARCH, 1995; They can be used for converting alternating current into direct current and vice versa. In the transistorised induction generator, the output is a high frequency wave which induces eddy currents which in turn, results into heating of the load. It was also his submission that although, the capacitor bank is outside the main body of the convertor the latter cannot function without it.
2.1 Ld. Counsel also drew our attention to Generator Block Diagram annexed herewith and the technical pamphlet filed by them called as 'MOS generator 50 KW manual' issued by G.H. Industrial S.A. It gives the (i) General Description, components, construction and indicates that it consists of :
1. Automatism and Control Section
2. Input Section
3. Rectifier Section
4. Inverter Section and
5. MF Capacitors Section The generators operation general description also shows that the resonance free-running frequency for the loads used in the inductive heating changes according to the application and even for the same application during the heating process ...
2.2 The power section description shows that according to the diagram (at annexure A), its operation includes the following :
1.3 POWER SECTION DESCRIPTION The three phase mains input is delivered to the controlled rectifier bridge and transformed into direct current to supply the inverter. The controlled inverter regulate the power given to the load through the opening of the thyristors firing angles. The control is done by comparison between the required and the present current and voltage value.
The MOS transistors inverter has the configuration of a full bridge. Its switching frequency is automatically adjusted to the load frequency, with variable loads or variable load characteristics during the heating process.
CONTROL SECTION description shows : "The electronic control is composed by 6 plug-in-printed circuit cards. This is a control device that offers a high capability degree with a reduced circuit number." It includes start/stop logic and protections. (2) Rectifier bridge control device (3) Inverter bridge control device.
Ld. Counsel further stated that it was their contention that rectifier plug inverter along with control system and the capacitor together constitute a part of induction heating system for their furnaces. It was also their contention that they were classifiable under Heading 85.04 based on the fact that the HSN notes Heading No. 8504.90 specifically covers static converters.
In HSN at page 1338, the note on electrical static converters mentions inter alia as follows :
(II) ELECTRICAL STATIC CONVERTERS The apparatus of this group are used to convert electrical energy in order to adapt it for further use. They incorporate converting elements (eg. valves) of different types. They may also incorporate various auxiliary devices (e.g. transformers, induction coils, resistors/command regulators, etc.) Their operation is based on the principle that the converting elements act alternatively as conductors and non-conductors.
The fact that these apparatus often incorporate auxiliary circuits to regulate the voltage of the emerging current does not affect their classification in this group, nor does the fact that they are sometimes referred to as voltage or current regulators.
This group includes :
(A) Rectifiers by which alternating current (single or polyphase) is converted to direct current, generally accompanied by a voltage change.
(B) Inverters by which direct current is converted to alternating current.
(C) Alternating Current Converters and cycle converters by which alternating current (single or polyphase is converted to a different frequency or voltage.
(D) Direct current converters by which direct current is converted to a different voltage.
It was also their contention that it was not classifiable under 85.43 because the explanatory notes under this heading state inter alia that:
This heading covers all electrical appliances and apparatus, not falling in any other heading of this chapter, nor covered more specifically by a heading of any other Chapter of the nomenclature, nor excluded by the operation of a Legal Note to Section XVI or to this Chapter. The principal electrical goods covered more specifically by other chapters are electrical machinery of Chapter 84 and certain instruments and apparatus of Chapter 90.
The electrical appliances and apparatus of this heading must have individual functions. The introductory provisions of Explanatory Note 84.79 concerning machines and mechanical appliances having individual functions apply, mutatis mutandis, to the applicances and apparatus of this heading.
Most of the appliance of this heading consist of an assembly of electrical goods or parts (valves, transformers,, capacitors, chokes, resistors, etc.) operating wholly electrically. However, the heading also includes electrical goods ... incorporating mechanical features provided that such features are subsidiary to the electrical function of machine or appliance.
Being a residuary entry it could be invoked only if the item was not found classifiable in other entry of this Chapter and had individual functions.
2.3 The Heading 85.14 of HSN as well as Customs Tariff as follows :
"INDUSTRIAL OR LABORATORY ELECTRIC (INCLUDING INDUCTION OR DIELECTRIC) FURNACES AND OVENS; OTHER INDUSTRIAL OR LABORATORY INDUCTION OR DIELECTRIC HEATING EQUIPMENT."
The HSN Explanatory note indicates that "the heading also includes electric or dielectric heating equipment, even if not in the form of a furnace or oven. This equipment (used mainly for the heat treatment of small articles consists essentially of electrical equipment for producing high frequency oscillations, mounted together with the appropriate plates or coils, often of special design for the particular articles to be treated."
He would like to emphasise that this shows high frequency generators when presented together with heat treatment equipment are covered but when presented separately they fall under Heading 85.43 or 85.14 as the case may be. The item cannot be classified under 85.02; and 85.43 can be attracted only if it was not classifiable under Heading 85.14.
2.4 In view of the manufacturer's technical write-up and clarification, he would emphasise that the function of this generator is to change input voltage phase or frequency into a different one suiting induction heating application and the words 'generator' and 'static converter' have been vised as synonymous. In fact it is known as solid stage, high frequency thyristorica generator/transistorised generator for induction heating/melting applications and the transistorised one is also known as Transithermic. Further it was his contention that since, the items imported taken together are a part of electric heating equipment and not merely a static converter simplicitor,. their alternative prayer was for classification under 85.14. In fact, in the light of the technical literature now produced along with the manufacturers clarification he would plead that it is this heading which appears to be more appropriate.
2.5 The LD. JDR drew our attention to the Order-in-original and the Order-in-appeal and reiterated the Department's view point emphasising that appellants submissions themselves show that it is not a static converter simplicitor but something more and different.
2.6 There is no dispute regarding its use as a part of heating system but it cannot be classified under 85.14 also because that heading excludes the induction, heating equipment classifiable under 85.02 or 85.43 as per HSN. Since, admittedly, it does not fall under 85.02, the only alternative is to classify it under 85.43. 85.43 specifically covers high frequency generator and therefore from this angle also the classification under this heading is justified; And in this connection he would draw attention to the explanatory notes under this heading.
2.7 The Ld. Counsel stated in reply that there is no doubt that HSN Notes 85.43 includes high frequency generator of various types but it is important to see as to what type of generators are included under 85.43. A perusal of this sub-heading would show that it includes machines of the type of particle accelator, single generator and other electrical machines having individual functions. Whereas the item imported does not have individual function as such nor is one of the types of generators mentioned under 85.43 although it is undoubtedly a high frequency generator. Hence, it is required to be considered under 85.14 although it has not been imported along with heating station.
2.8 We have considered the above submissions. We observe that Ld. Counsel's pleadings have a lot of force in as much as 85.43 is only a residuary entry which could be invoked only if the item was not found classifiable in any other entry of this chapter and could be shown to have individual functions.
2.9. As far as Heading 85.04 is concerned it is ruled out as the imported item is admittedly something more than a static converter simplicitor. It is actually in the nature of an assembly which forms, indisputably a part of an electronic or electric heating system as evident from the catalogue, the description of its structure and functions and the circuit diagram as also the submissions of both the sides based thereon.
In so far as Heading 85.14 is concerned since this heading covers "other dielectric equipment even if not in the form of furnace or oven" and includes even equipment producing high oscillation as per HSN; Again, while it is true that the HSN notes also say that the item covers generators when presented together with heat treatment equipment; and when presented separately they fall under Heading 85.02 or 85.14 as the case may be and therefore; the objection of the Ld. DR has some force but the imported item is not one of the types of generators indicated in the explanatory notes under Heading 85.43 or 85.02. Hence, in spite of the fact that it has not been presented together with heating station, it will be more appropriate to classify it under this heading.
3.0 Looking at it from a slightly different angle, the imported item appears to be very akin to the type of items indicated in the explanatory note II under the heading "other industrial or laboratory induction or dielectric heating equipment".
Again looking, in a yet different way it is in the nature an assembly or sub-assembly which is admittedly a part of induction heating equipment and the parts of 85.14 are classifiable in the same heading as the main item as per HSN also. Once again 85.14 would be more appropriate heading.
3.1 Hence, we set aside the impugned orders and accept the appeal.