Custom, Excise & Service Tax Tribunal
M/S Crompton Greaves Ltd vs Commissioner Of Central Excise, Nashik on 15 November, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II Appeal No. E/1168 & 1169/04 (Arising out of Order-in-Appeal No. CEX.XI/JMJ/418 & 421/916/NSK/APPEAL/2005 dated 24.12.2003 passed by the Commissioner of Central Excise &Customs(Appeals), Nashik). For approval and signature: Honble Shri Ramesh Nair, Member (Judicial) Honble Shri Raju, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy : Seen
of the order?
4. Whether order is to be circulated to the Departmental : Yes
authorities?
======================================================
M/s Crompton Greaves Ltd.
Appellant
Vs.
Commissioner of Central Excise, Nashik
Respondent
Appearance:
Shri Nitin N Mehta, Advocate
for Appellant
Shri V.K. Shashtri, Asstt. Commissioner (AR)
for Respondent
CORAM:
SHRI RAMESH NAIR, MEMBER (JUDICIAL)
SHRI RAJU, MEMBER (TECHNICAL)
Date of Hearing: 22.08.2016
Date of Decision: 15.11.2016
ORDER NO.
Per: Raju
The appellant, M/s Crompton Greaves Ltd., manufactured products namely Advanced Variable Speed (AVS) Drive Controller, PM-2 Controller, HESG-101 Governor and Cogen-C system. The appellant sought to classify these items under Heading 9032 of the Central Excise Tariff Act, 1985. Lower authorities classified the product under Heading 8537.00. Aggrieved by the said order, the appellants are in appeal before this Tribunal.
2. Learned Counsel for the appellant described the products in the appeal filed as follows: -
AVS Drive Controller: AVS drive controller is a basic electronic hardware to control operation of brushless DC Motor by controlling current, torque, speed etc. The equipment consists of a Power Transistor with heat sink assembly and different control cards which operate automatically as soon as the AC power supply is available and ON command is given to the controller.
PM2 Soft Start Energy Saving Motor Controller: PM2 motor controller is a basic electronic hardware to control automatically the current, voltage, torque of an electric motor hence controlling operation of pump, compressor, conveyors, fans and many such applications of industrial nature. The equipment consists of a Power Thyristor with Heat sink assembly and a control card. The input to the equipment is a three phase AC supply and the output is the motor to be driven. The equipment operates fully automatically when the AC supply is available at the input to the controller.
HESG 101: HESG-101 stands for Electronic Speed Governor for Hydroturbines. It is a microprocessor based state of the art controller designed for controlling all hydroturbines e.g. Keplan type, Franois turbine and Pelton turbines. This HESG-101 controls the speed of the turbine at a reference speed by controlling water inlet valve. When the turbine is connected to grid, it controls the active power fed to grid.
CoGen-C Stytem: CoGen-C system is a comprehensive control system developed specially for the cogeneration application. It controls the total power generated from the steam turbine and also the power export to grid. The controller does it by giving controlled output to the steam inlet output and compares it with the reference power signal and error is corrected automatically by giving signal to valve to increase or decrease the volume of steam admission in the turbine.
The learned Counsel for the appellant argued that the heading 9032 specifically meant for such system. The heading 9032 reads as follows: -
9032 : Automatic regulating or controlling instruments and apparatus
-Thermostats and pressure switches:
9032.80 - Other instruments and apparatus 10% The Chapter Note 6 of Chapter 90 reads as follows: -
6. Heading No. 90.32 applies to:
(a) Instruments and apparatus for automatically controlling the flow, depth, 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; and
(b) Automatic regulators of electrical quantities, and instruments or apparatus for automatically controlling non-electrical quantities the operation of which depends on an electrical phenomenon varying according to the factor to be controlled. He argued that the product is clearly classifiable under Chapter 90.32. Heading 8537 reads as under: -
85.37 8537.00 Boards, panels (including numerical control panels), consoles, desks, cabinets and other bases, equipped with two or more apparatus of heading No. 35.35 or 85.36, for electric control or the distribution of electricity, including those incorporating instruments or apparatus of Chapter 90, other than switching apparatus of heading No. 85.17.
He relied on the Explanatory Note to Heading 90.32, which reads as follows: -
AUTOMATIC REGULATIORS OF ELECTRICAL QUANTITIES, AND INSTRUMENTS OR APPARATUS FOR AUTOMATICALLY CONTROLLING NON-ELECTRICAL QUANTITIES THE OPERATION OF WHICH DEPENDS ON AN ELECTRICAL PHENOMENON VARYING ACCORDING TO THE FACTOR TO BE CONTROLLED 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, stabilised against any disturbances, by constantly or periodically measuring its actual value. They consist essentially of the following devices:
(A) A measuring device (sensing device, converter, resistance probe, thermocouple, etc.) which determines the actual value of the variable to be controlled and converts it into a proportional electrical signal.
(B) An electrical controldevice 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 (generally contacts, switches or circuit breakers, reversing switches or, sometimes, relay switches) which supplies current to an actuator in accordance with the signal received from the control device.
An automatic regulator within the meaning of Note 7(b) to this Chapter consists of the devices described in (A), (B), and (C) above, whether assembled together as a single entity or in accordance with Note 3 to this Chapter, a functional unit.
If they do not conform to the definitions outlined above, these devices are to be classified as follows:
(1) Electrical measuring devices generally fall in heading 90.25, 90.26 or 90.30.
(2) Electrical control devices are to be classified in this heading as incomplete automatically controlling instruments or apparatus.
(3) Starting, stopping or operating devices are generally to be classified in heading 85.36 (switches, relays, etc.).
Automatic regulators are connected to an electrical, pneumatic or hydraulic actuator, which brings the controlled variable back to the desired value. This actuator may be the clamps which adjust the gap between the electrodes of an arc furnace, the motorised valve which controls the intake of water or steam in a boiler, a furnace, a pulping machine, etc. The actuators are to be classified in their own appropriate headings (adjustable clamp: heading 84.25; motorised or solenoid valve: heading 84.81; electro-magnetic positioner: heading 85.05; etc.). If the automatic regulator is combined with the actuator, the classification of the whole is to be determined under either Interpretative Rule 1 or Interpretative Rule 3(b) (see Part (III) of the General Explanatory Note to Section XVI and the Explanatory Note to heading 84.81).
Electronic regulators function on a strictly electrical principle, and not electro-mechanically. Their characteristic features are semiconductors (transistors) or integrated circuits.
These regulators are used not only for electrical quantities, such as voltage, amperage, frequency and power, but also for other quantities such as revolutions per minute, torque, traction force, level, pressure, flow or temperature. He also relied on the Explanatory Note to 8537, which reads as follows: -
These consist of an assembly of apparatus of the kind referred to in the two preceding headings (e.g., switches and fuses) on a board, panel, console, etc., or mounted in a cabinet, desk, etc. They usually also incorporate meters, and sometimes also subsidiary apparatus such as transformers, valves, voltage regulators, rheostats or luminous circuit diagrams.
The goods of this heading vary from small switchboards with only a few switches, fuses, etc. (e.g., for lighting installations) to complex control panels for machine-tools, rolling mills, power stations, radio stations etc., including assemblies of several of the articles cited in the text of this heading.
The heading also covers:
(1) Numerical control panels with built-in automatic data processing machine, which are generally used to control machine-tools.
(2) Programmed switchboards to control apparatus; these permit variations in the choice of operations to be followed. They are normally used in domestic electrical appliances, such as washing machines and dish washers.
(3) Programmable controllers which are digital apparatus using a programmable memory for the storage of instructions for implementing specific functions such as logic, sequencing, timing, counting and arithmetic, to control, through digital or analog input/output modules, various types of machines.
The heading does not cover automatic controlling apparatus of heading 90.32. He pointed out that heading 8537 does not cover automatic controlling apparatus of Heading 90.32.
3. Learned AR relied on the impugned order.
4. We have gone through the rival submissions. We find that heading 8537 read as under: -
85.37 8537.00 Boards, panels (including numerical control panels), consoles, desks, cabinets and other bases, equipped with two or more apparatus of heading No. 35.35 or 85.36, for electric control or the distribution of electricity, including those incorporating instruments or apparatus of Chapter 90, other than switching apparatus of heading No. 85.17.
Heading 90.32 reads as under: -
9032 : Automatic regulating or controlling instruments and apparatus
-Themostats and pressure switches:
9032.80 - Other instruments and apparatus The distinguishing feature between Heading 8537 and 9032 is that 8537 is meant for equipment meant for electric control for distribution of electricity. The heading 90.32 covers automatic regulating or controlling instruments and apparatus like, Thermostats and pressure switches etc. It is seen from the tariff description and connected explanatory notes that if the device is meant for electric control or the distribution of electricity does it qualify to be classified under heading 8537. In the instant case the devices are designed for control of speed in case of AVS Drive Controller, control of torque in case of PM2 Soft Start Energy Saving Motor Controller, control of inlet valve for turbines in case of HESG 101and control of steam inlet valve in case of CoGen-C Stytem. It is seen that in these goods are not meant for electric control or the distribution of electricity and therefore these do not qualify to be classified under heading 8537 claimed by the revenue. The appeal is therefore allowed.
(Pronounced in Court on 15.11.2016)
(Ramesh Nair) (Raju)
Member (Judicial) Member (Technical)
Sinha
2
Appeal No. E/ 1168 & 1169/04