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According to the Department, the terms "control" and "control systems" generally refer to the control of a device, process or system by monitoring one or more of its characteristics. This is used to ensure that output, processing, quality and/or efficiency remain within the parameters over the duration of time. According to the Department, in several control systems, digital data processing monitors a device, process or system and automatically adjusts its operational parameters. In other control systems, such an apparatus only monitors the device, process or system and displays alarm leaving responsibility for adjustment to the operator. Thus, process control is typically employed in the manufacturing sector for process and discrete manufactures. According to the Department, field devices include temperature, flow and other sensors that measure characteristics of the device, process or system being controlled. On the other hand, control devices include valves, actuators which control the devise, process or system itself. According to the Department, controllers generate settings for the control devices based on measurements from the field devices. Controller operation is typically based on control algorithm that maintains a control system at a desired level by minimizing differences between the values measure by the sensors. According to the Department, controllers may be connected to other computing apparatus that facilitates monitoring or administration. According to the Department, the principal function of controllers is to execute control algorithms for the real time monitoring and to control devices, processes or systems. They have neither the computing power nor user interfaces required to facilitate the design of a control algorithm. Historically, the process control industry has used manual operations, such as manually reading level and pressure gauges, turning valve wheels, etc. in order to operate the measurement and control field devices within a process. However, with the emergence of the microprocessor-based Distributed Control System ("DCS"), the distributed electronic process control came into existence in the process control industry. A DCS includes an analog or a digital computer, such as a Programmable Logic Controller ("PLC"), connected to numerous electronic monitoring and control devices like electronic sensors, transmitters, transducers etc. located throughout a process. The DCS computer stores and implements a centralized and complex control scheme in order to effect measurement and control of devices within the process so as to control process parameters according to the overall control scheme. According to the Department, PACs are not meant to be used as personal computers. The purpose of controllers is to control industrial processes. Thus, according to the Department, a controller by its very name performs functions distinct from data processing. Moreover, according to the Department, there are differences in the structure and the function of a controller and the function of a PAC vis-a-vis the PC. According to the Department, PAC cannot be equated to a PC as is sought to be done by the Tribunal. A PAC combines a PLC and a PC. The Department also placed reliance on the webcast to show that a processor is separated from FPGA by a high-speed bus. According to the Department, the webcast further shows that a processor is separate and distinct from the main controller wherein the hardware is dedicated to perform measurement and control applications. According to the Department, the software used in order to programme the processor is designed using a proprietary software known as Lab View. The catalogue is relied upon by the Department to show that the controller, in the present case, has been designed and made for a specific function and regulating and controlling industrial processes. According to the Department, none of the above aspects have been duly considered by the Tribunal. The entire case of the Department before us was that the Programmable Process Controllers when imported were suitable for use principally with industrial process control equipment, i.e., sensors which measure temperature, pressure, flow etc. and therefore such programmable process controllers were classifiable as a part of the said equipment, instrument or apparatus. The programmable process controller, though separate from sensors, is necessarily an individual component intended to contribute to a clearly defined function. According to the Department, the programmable process controllers being parts and accessories of a regulating or controlling apparatus have been classified rightly by the adjudicating authorities under CTH 9032 89 10. According to the Department, PACs whether embedded or otherwise are in essence Programmable Process Controllers. In support thereof, the Department has placed reliance on two circulars issued by Central Board dated 2.9.1996 and 9.5.1997.

26. Briefly, the case of the importer before us was that imported items cannot perform any specific function unless the end-users have an appropriate programming software.

According to the importer, the input for the above items is digital signals captured by sensors. According to the importer, just because the imported items were to be used with measuring instruments, it cannot be said that such items are to be classified under Chapter 90. According to the importer, PXI controller, I.O. modules and signal converters are all varieties of ADP Machines. They all run on operating systems like linux, windows etc. According to the importer, no ADP Machine can capture an electrical signal such as temperature, voltage, pressure etc. on its own as a stand-alone item. According to the importer, an ADP Machine requires various types of interface boards/units which are required to be installed in it and connected to sensors so that temperature, voltage and pressure can be received by the interface boards/units and converted into digital signals and then sent to ADPM processing. Therefore, according to the importer, it is the sensor which measures the real world phenomena as ADPM cannot interface by itself directly with the sensors. Thus, assessee imports a variety of such interface boards/units which are then installed into ADPM. According to the importer, these boards/units meet the criteria mentioned in Chapter Note 5(B) as well as Explanatory Notes (I)(D)(4) & (5) which inter alia state that such boards/units when imported should be classified under CTH 8471 as units of ADPM. According to the importer, an ADPM when imported has only an operating software which cannot perform any specific function without application of software. For example, a PXI Controller is incapable of processing the digital data fed to its CPU unless a specific software is written for such processing. At the time of import no software is written or provided. It is the end-user who uses a programming language or an appropriate tool such as Lab View software to write a specific software for its own stand-alone instrument or application like thermostat, spectrum analyzer, oscilloscopes etc.. According to the importer, at the time of import, the assessee is not aware of what application the end-user may put the PXI controller to use. Moreover, a PXI controller is not dedicated to a single type of machine or operator. It is capable of being connected to multiple apparatuses simultaneously which apparatuses can be changed continuously. As such, the PXI controller is freely programmable as per the requirements of the user. This end-user developed software or programme is stored in the memory and is executed by PXI controller. It is according to the software and the data fed to the CPU that the PXI controller processes the data and provides the required processed output. According to the importer, as the PXI controller satisfies the requirement of free programmability, storing and processing of programmes, performance and arithmetical computation and execution of programmes, the PXI controller qualifies as ADP Machine in terms of Chapter Note 5(A) to Chapter 84 of Customs Tariff.

Reasons:

(A) Based on Technical Material:

30. Whether a PXI Controller = PC Controller = ADPM? This is the basic issue which we need to answer in this civil appeal.

31. On examination of the technical write-up, before going into the analysis of the classification principles, we are of the view that the purpose of Controllers whether embedded or not, is to control industrial processes. Programmable Automation Controller is the combination of PLC and PC technology and this means the ruggedness of PLCs, software stability of a PC and the independence to incorporate modular and diverse I/O. PAC is an improvement over PLC. PAC is capable of being controlled by a PC/Laptop but it is not a PC/Laptop. The principal function of Controllers is executing Control Algorithms for the Real-time monitoring and control of devices, processes or systems whereas the principal function of a PC by itself is acquisition, analysis and display of data. A controller performs functions in addition to data processing. The webcast presentation also shows the difference in the structure and functions of a Controller vis-`-vis a PC (simpliciter). The hardware in the Controller is dedicated to perform Measurement and Control Applications. Basically, PACs are Programmable Process Controllers which are suitable for use principally in conjunction with Industrial Process Control equipment like sensors which measures temperature, pressure etc. The programmable process controller, though distinct from sensors, is an individual component intended to perform a specific function. The programmable process controller is a part and accessory of a controlling apparatus.

39. In our view, the above argument of the importer is unsustainable for the following reasons. Firstly, it is nobody's case that a PAC/Programmable Process Controller by itself is an automatic regulating, controlling instrument or apparatus in terms of Chapter 90. On the contrary, in view of Chapter Note 2(b) to Chapter 90 read with Note 3 of the same Chapter, PACs/Programmable Process Controllers are parts and accessories of a system/instrument which are suitable for use solely or mainly with a number of machines, instruments, apparatus of the same Heading, i.e., 9032 like sensors, thermostats etc. In our view, PACs/Programmable Process Controllers imported by the assessee herein are suitable for use principally with Industrial Process Control Equipment like sensors, thermostats etc. which measures temperature, process etc. Therefore, they are correctly classifiable as a part of the said machine, instrument or apparatus. Secondly, a "control system" generally refers to the control of a device, process or system by monitoring one or more of its characteristics. It ensures that output processing remains within the desired parameters over a period of time. Controllers are generally connected to other computing apparatus. The principle function of controllers is to execute control algorithm for real time monitoring and for controlling devices, processes or systems. In this connection, it may be noted that, a PAC/Programmable Process Controller ("PPC") is not by itself an automatic regulating, controlling instrument or apparatus. A PAC/PPC when imported is suitable for use mainly with an industrial process control equipment like sensors, which measures temperature, pressure etc. As such, a PAC/PPC is a part of an industrial process control equipment/system and accordingly such controllers are classifiable as a part of instrument or apparatus (see Chapter Note 2(b) read with Note 3 of Chapter 90). Thirdly, in this case, we are concerned with not only classification of PXI Controller and other controllers, we are also concerned with classification of Input-Output Modules and Chassis. The key aspect, therefore, concerns the nature and function of I.O. Modules and Chassis along with controllers. One has therefore to take into account all the imported items as constituting a complete System which performs the work of measurement. PXI is a system. It is composed of three basic components - chassis, system controller and peripheral modules. These modules are also imported by the importer in this case. One such module is Network Interface Module. This module is used to connect to a network for distributed control applications. It interconnects a PC to a measuring instrument by sending and receiving messages from the two units. It is important to note that in the chassis of the PXI there are slots in which Analog Output Boards (Cards); Digital Input-Output Boards, Image Acquisition Boards, Distributed Input-Output Boards, NIM etc. are inserted. Each I.O. Module imported by the assessee is tailored to a specific function and therefore such I.O. Module is a part of a regulating or controlling apparatus. Take the case of NIM. It is a hardware device. It may be in the form of a network interface card or a network adapter or in the form of Network Interface Controller ("NIC"). NIM is a computer hardware component designed to allow computers to communicate over a computer network. It provides connectivity between the industrial network and the I.O. Module. A network interface module works as a connector and adapter unit in order to provide a two way interconnection between external sensor unit and the ADP. Thus, I.O. Module is a hardware. It is also known as I.O. device or I.O. Point. It may be in the form of I.O. Cards or I.O. Boards. When I.O. Module is used to accept data (input) from sensors, transducers, Programmable Logic Controllers ("PLC"), computers etc. and then distributes the data (output) to other devices in the system, then I.O. Module is called as Distributed I.O. Module. Such system is also called as Distributed Control System ("DCS"), which is a control system used normally in a manufacturing plant or in any other kind of dynamic system. DCS, therefore, is used in a variety of industries to monitor and control distributed equipments. An I.O. Module is important from another angle also. It converts readings from sensors and provides output signals which are used for operating actuators (which make a device move or start working) via Network Interface Module. A Modular Distributed I.O. System which is also known as a Field Point provides for industrial monitoring and control applications. Thus, the Field Point System includes Analog and Digital I.O. Modules, terminal bases and network modules which connect I.O. Modules to industrial networks and software tools. Field Point Systems are ideal for use in industrial environment. Fourthly, Programmable Logic Controller ("PLC") is a control device. It is normally used in industrial control applications. It is a Programmable Microprocessor based device which is used to control assembly lines and machinery on the shop floor as well as to control many other types of mechanical, electrical and electronic equipment in a plant. A PLC is designed for real-time use in rugged industrial environments, connected to sensors and actuators. PLCs are characterized by the number of I.O. Ports which they provide. PLCs are also categorized by their I.O. scan rates. As stated, PACs, which expands the role of PLCs and, at the same time, combines the capabilities of several traditional controls and monitoring systems, offers several benefits in the form of enhanced functionalities. Thus, a PAC does not replace the traditional PLCs but it expands the role of a PLC. A PAC has features found in Programmable Logic Controllers, Distributed Control Systems, Remote Terminal Units and PCs.