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2021 (12) TMI 1389 - AAR - CustomsClassifications of a group of products - measuring devices - flowmeters and level measurement instruments - Section 28-I(2) of the Customs Act, 1962 - HELD THAT - According to Section 28-I(2) of the Customs Act, 1962, the authority shall not allow the application where the question raised in the application is either already pending in the applicant s case before any officer of customs, the Appellate Tribunal or any Court; or has already been decided by the Appellate Tribunal or any Court. It is true that there is an appeal of the applicant pending before the CESTAT. The pending appeal is in respect of products that are not involved in any of the 21 applications involved in the present proceedings. The term advance ruling is defined in the Act as a written decision on any of the questions referred to in Section 28H raised by the applicant in his application in respect of any goods before their importation or exportation - It has to be kept in mind that the process of advance rulings is not a dispute settlement mechanism, but is purely a facilitative nature and seek to enhance ease of cross border trade by indicating entry tax liabilities before import or export. In such circumstances, if the present applications are rejected only because an appeal is pending in respect of similar products, that would be a travesty. The items under consideration are stated to be measuring instruments consisting of 20 applications of flowmeters and one application of a level measuring device. Flowmeters are devices that measure/check the mass flow of liquids and gases, along with other parameters such as temperature, specific gravity etc. The level measuring instrument is used for point level/interface detection of different liquids. The product catalogues submitted with these applications are also in agreement with the averments of the applicant. The applicant has explained the basis of groupings of the instruments/devices as common sensor and each group of products are intended for different applications/industries - Measuring or checking instruments or apparatus of this heading combined with taps, valves, etc., are to be classified as indicated in the Explanatory Note to Heading 84.81. APPARATUS FOR MEASURING OR CHECKING THE FLOW OR RATE OF FLOW OF LIQUIDS OR GASES . Apparatus for measuring or checking the flow or rate of flow of liquids or gases - HELD THAT - The HSN Explanatory Notes to Heading 90.26 states that apart from specific exclusions as mentioned, Heading 90.26 covers instruments and apparatus for measuring the flow, level, pressure, kinetic energy or other process variables of liquids or gases. From the product description, it is evident that the flowmeters under consideration indicate the rate of flow. They are fitted with a sensor that is sensitive to the variations in the quantity to be measured. These variations are converted into electrical signals - The HSN explanatory notes specifically include flowmeters working on the principles of magnetic field (applications at Sr. Nos. 1-7), ultrasound (applications at Sr. Nos. 13-16), heat (applications at Sr. Nos. 8-12) and differential pressure (applications at Sr. Nos. 17-20). These flowmeters do not fall under the exclusion criteria specified in explanatory notes. Instruments for measuring or checking the level of liquid or gases - HELD THAT - The HSN explanatory states that level indicator includes inter alia, electrical type based, for example, on the variations of resistance, capacitance, ultrasound, etc. This heading covers not only level indicators for closed reservoirs or tanks, but also those for open basins and canals (hydroelectric works, irrigation systems, etc.). Instruments for measuring or checking the level of solid materials are excluded (Heading 90.22 or 90.31, as the case may be). From the product description, it is evident that the liquicap (application at Sr. No. 21) is used to measure the level of liquid using variations of capacitance. A transmitter is also fitted for communication purposes. Further, this level instrument does not fall under the exclusion criteria specified in explanatory notes - Thus, the impugned goods are classifiable under Heading 90.26 of the Customs Tariff Act, 1975, the flowmeters are classifiable under sub-heading 9026 10 10 and the level measuring instrument is classifiable under sub-heading 9026 10 20. The flowmeters under consideration appear to only measure the flow rate and make available the measured value in the required signal format for further processing/information, based on the requirement of the end customer. There is nothing on record, or available in the product catalogues to indicate that these devices/instruments have the capacity to perform additional functions of automatically controlling or regulating the flow of liquids. In the context of explanatory notes, these devices lack 2 essential components, viz, a control device and a stating/stopping/operating device. Therefore, it appears that the goods under consideration do not fulfil the criteria laid down in explanatory notes and are consequently not classifiable under Heading 9032. The instruments/devices under consideration merit classification under Heading 90.26 and more specifically, devices listed at Sr. Nos. 1 to 20 of Table 1 under sub-heading 9026 10 10 of the First Schedule to the Customs Tariff Act, 1975 and devices at Sr. No. 21 of the said table under sub-heading 9026 10 20 of the first schedule to the said act - Application disposed off.
Issues Involved:
1. Classification of measuring devices (flowmeters and level measurement instruments). 2. Applicability of Heading 90.26 vs. Heading 90.32. 3. Consideration of past import classifications and pending appeals. 4. Allegations of mala fide intentions by the applicant. Detailed Analysis: 1. Classification of Measuring Devices: The applications filed by M/s. Endress+Hauser (India) Pvt. Ltd. seek to classify various measuring devices, including electromagnetic flowmeters, thermal mass flowmeters, ultrasonic flowmeters, vortex flowmeters, and a capacitance point level measuring device. The devices are used for measuring the flow, level, pressure, and temperature of liquids and gases across various industries. 2. Applicability of Heading 90.26 vs. Heading 90.32: The primary issue revolves around whether these devices should be classified under Heading 90.26, which covers "Instruments and apparatus for measuring or checking the flow, level, pressure or other variables of liquids or gases," or under Heading 90.32, which pertains to "Automatic regulating or controlling instruments and apparatus." Analysis of Heading 90.26: - The flowmeters and level measuring devices measure parameters such as flow rate, temperature, and level, and provide the measured values in digital or analog formats for further processing. - The HSN Explanatory Notes for Heading 90.26 include instruments for measuring flow using principles such as magnetic fields, ultrasound, heat, and differential pressure, which align with the operating principles of the devices in question. - The devices do not possess the capability to independently control or regulate the flow of liquids or gases, as they lack control devices and starting, stopping, or operating devices required for classification under Heading 90.32. Analysis of Heading 90.32: - Heading 90.32 applies to instruments that automatically control variables by measuring and maintaining them at desired values. - The devices in question do not incorporate the necessary components for automatic control, such as a control device or an operating device. - The devices are primarily measuring instruments and do not perform any controlling functions independently. 3. Consideration of Past Import Classifications and Pending Appeals: - The applicant had previously imported similar measuring instruments and classified them under Heading 90.26, but the original authority reclassified them under Heading 90.32. - The Commissioner (Appeals) upheld this reclassification, but the applicant has filed an appeal, which is pending before the CESTAT. - The current applications do not involve the same products as the pending appeal, and the classification should be determined based on the specific characteristics and functions of the devices in question. 4. Allegations of Mala Fide Intentions: - The Jurisdictional Commissionerate alleged that the applicant intended to evade duties by importing the goods under a different heading from a different port. - The applicant clarified that the decision to import through the Sri city SEZ was based on logistical and operational efficiency, and they sought advance rulings to ensure predictability in their operations. - The authority found these allegations unsubstantiated and emphasized the importance of advance rulings in promoting certainty and predictability in international trade. Conclusion: The instruments/devices under consideration are classified under Heading 90.26, with specific sub-headings for flowmeters (9026 10 10) and level measuring instruments (9026 10 20). The devices are measuring instruments and do not perform any controlling functions, thus not falling under Heading 90.32. The authority dismissed the allegations of mala fide intentions, recognizing the applicant's transparency and the role of advance rulings in facilitating trade.
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