2014 (2) TMI 111 - AT - Central Excise

Classification of goods - Programmable Logic Controllers/Programmable Process Controllers and Automatic Data Processing Machines - Classification under Heading 85.37 or Heading 84.71 / 90.32 - Held that - barring the product literature, the other documents cannot be admitted as evidence at this stage. This is the second round of litigation and in the first round, the issue was considered by the adjudicating authority, first appellate authority and this tribunal which was the second stage appellate authority. These documents were not produced before any of these authorities in the first round of litigation. In the second round of litigation also the same route/hierarchy has been followed and the appellant chose not to produce these documents before all the authorities. Neither any explanation nor any sufficient cause is forthcoming as to why the appellant could not produce any of these documents before the authorities. The Revenue also had no occasion to consider any of these documents. In these circumstances, we reject the request of the appellant to take the additional evidences on record except the product literature. As regards the product literature, the same formed part of the technical/expert opinion adduced by the appellant before the lower authorities and therefore, it is not a new evidence. To qualify as programmable process controller , Continuous monitoring of the various parameters such as pressure, flow and temperature level etc. has to be done and comparison should be made of the parameters of the desired value with the actual value and the machine should be capable of bringing the variables to the desired value. None of the machines in the present case undertake these functions nor do they have a measuring device to measure any of these parameters. As per the HSN Explanatory Notes, to fall under heading 9032, the equipment should consist of a measuring device (sensing device, resistance probe, thermocouple, etc.) which determines the actual value of the variable to be controlled and converts it into a proportional electrical signal, an electrical control device which compares the measured value with the desired value and a starting or stopping or operating device (contacts, switches or circuit breakers, relay switches). From the technical literature, it is seen that the impugned goods do not satisfy the criteria laid down. The Programmable logic controllers manufactured by the appellant do not fall under CETH heading 90.32 as programmable process controllers nor do they fall under CETH 84.71 as automatic data processing machines; - All the seven products under consideration, Simatic S5 110A/s, Simatic S-5 135/150U, Simatic AS-5 100U, Teleperm ME, Sinaut 8F, Sicomp M and Coros 2000 merit classification under CETH 85.37 as programmable logic controllers. - Decided against assessee.

Summary

Issues Involved:
1. Classification of Programmable Logic Controllers (PLCs) and related products.
2. Admissibility of additional documents submitted by the appellant.
3. Interpretation of relevant tariff headings and explanatory notes.
4. Applicability of previous judgments and expert opinions on the classification.

Issue-wise Detailed Analysis:

1. Classification of Programmable Logic Controllers (PLCs) and related products:
The primary issue revolves around the correct classification of the appellant's products, including various models of PLCs and related equipment. The appellant argued for classification under CETH 84.71 (automatic data processing machines) or alternatively under CETH 9032 (automatic controlling and regulating instruments). The Revenue contended that the products should be classified under CETH 8537 (electric control or distribution of electricity).

The Tribunal previously remanded the case, instructing the lower authority to consider the Board's order dated 09/05/1997, manufacturer's literature, trade parlance, and the Supreme Court's judgment in the N.I. Systems case. Upon re-evaluation, the adjudicating and appellate authorities concluded that the goods did not measure or control parameters like flow, pressure, or temperature, thus not fitting under CETH 9032. They also did not qualify as automatic data processing machines under CETH 84.71 but were programmable controllers under CETH 8537.

2. Admissibility of additional documents:
The appellant submitted additional documents, including product literature, technical write-ups, and customer certificates after the conclusion of arguments. The Tribunal considered Rule 23 of the CESTAT (Procedure) Rules, 1982, and the principles laid down by the Supreme Court in Shivajirao Nilengakar Patil vs. Dr. Mahesh Madhav Gosavi, which require sufficient cause for admitting additional evidence. The Tribunal admitted only the product literature, as it was part of the technical opinion already considered by lower authorities. Other documents were rejected due to lack of sufficient cause and opportunity for the Revenue to rebut.

3. Interpretation of relevant tariff headings and explanatory notes:
The Tribunal examined the technical literature and expert opinions, focusing on the descriptions under CETH 84.71, 85.37, and 90.32. It was determined that the products in question, such as Simatic S5 110A/s, 135/150U, and 100U, were programmable logic controllers. These controllers did not merely process data but controlled various automation tasks, fitting the description under CETH 8537.

For products like Teleperm ME, Sinaut 8F, Sicomp M, and Coros 2000, the Tribunal noted that they performed control and monitoring functions integral to industrial automation, thus meriting classification under CETH 8537. The Tribunal referenced the HSN Explanatory Notes and Section Notes 3 and 4 to Section XVI, concluding that the principal function of these machines was control, not mere data processing.

4. Applicability of previous judgments and expert opinions:
The appellant relied on the Supreme Court's decision in N.I. Systems (India) Pvt. Ltd. and the Tribunal's decision in Larsen & Toubro Ltd. The Tribunal distinguished these cases, noting that the technical opinions in the present case classified the products as programmable logic controllers, not automatic data processing machines or programmable process controllers. The Tribunal also referred to the CBEC's 37B order, which differentiated between programmable logic controllers and programmable process controllers, supporting the classification under CETH 8537.

Conclusion:
1. The Programmable Logic Controllers (PLCs) and related products do not fall under CETH 90.32 or CETH 84.71.
2. All products, including Simatic S5 110A/s, Simatic S-5 135/150U, Simatic AS-5 100U, Teleperm ME, Sinaut 8F, Sicomp M, and Coros 2000, are classified under CETH 85.37.
3. The duty demands confirmed under CETH 85.37 are upheld, along with interest.
4. No penalty is imposed due to the classification dispute.

Pronounced in Court on 20.12.2013