2004 (2) TMI 531 - AT - Central Excise

Summary

Issues:
Classification of product as inverter or Uninterrupted Power Supply System (UPSS).

Analysis:
The main issue in this appeal was to determine the correct classification of the respondent's product, whether it is an inverter under Heading 8504.00 or an Uninterrupted Power Supply System (UPSS) under Heading 8543.00. The Commissioner (Appeals) had accepted the respondent's claim that their product was an inverter based on various considerations, including the absence of an in-built battery and a static by-pass switch, which are essential components of a UPSS. The Commissioner also relied on evidence such as invoices and correspondences with customers to establish that the product supplied was indeed an inverter. The Commissioner found that the appellant's product did not meet the criteria to be classified as a UPSS as defined in the relevant circular. The appellant argued that their product, although having automatic switching capabilities, was primarily used for domestic or industrial purposes and should be classified as an inverter.

The Revenue contended that there was no functional difference between the respondent's product labeled as "Inverter UPSS" and a UPSS falling under Heading 8543.00. They argued that the automatic switching feature of the product during power failures resembled the function of a UPSS, which is to supply stable AC power in case of disruptions in the main electricity supply. The Revenue relied on the Tribunal's decision in the case of J.K. Synthetics Ltd. and highlighted the definition of machines under Chapter Heading 85.43 to support their classification argument. They also referred to the Larger Bench decision in the case of Luminous Electronics Pvt. Ltd., where UPSS was held to fall under Heading 85.04 of the Central Excise Tariff of 1985.

During the hearing, the respondent's representative emphasized that the orders placed by customers were for inverters, and the supplied products were indeed inverters. They clarified the functional differences between an inverter and a UPSS, particularly in terms of power supply timing and usage with sophisticated electronic equipment like computers. The respondent's representative also argued that even if their product was considered a UPSS, it should still be classified under Heading 8504.00 based on the precedent set by the Larger Bench decision.

After considering the arguments presented by both parties, the Appellate Tribunal found that the respondent's product was correctly classified as an inverter under Heading 8504.00. The Tribunal agreed with the detailed findings of the Commissioner (Appeals) regarding the nature of the product and the absence of essential components of a UPSS. The Tribunal also took into account the relevant case law, including the Tribunal's decision in J.K. Synthetics Ltd. and the Larger Bench decision in Luminous Electronics Pvt. Ltd. Based on these considerations, the Tribunal concluded that there were no merits in the Revenue's appeal and rejected it.