2016 (5) TMI 394 - AT - Customs

Classification - Photo Sensors imported - Whether goods are to classified under Chapter Heading 8541 40 as per appellant or under Chapter Headings 9031 as per respondent - Petitioner contended that their product is not a kind of measuring and checking instruments covered under Chapter Heading 9031 of Customs Tariff. Also not a measuring or checking instrument, appliance and machine, covered as inclusion in the Chapter Heading 9031 of Customs Tariff s Explanatory Notes 1(A)7. Held that - the item in question is photocouples means it is a combination of LED (Light Emitting Diodes) and phototransistors. The impugned item is specifically mentioned under the name of photocouples saying that it consists of electroluminescent diodes combined with Photodiodes, Phototransistors or Photothyristors. Here item consists of LED (Light Emitting Diode, which is nothing but electroluminescent diode as mentioned in the Explanatory Notes and phototransistor. In this device, light passes through LED and phototransistor receives the light. In this way the item gives a signal, whenever light is obstructed, when some other substance or a thing comes in between. In this way whenever there is obstruction and there is no signal received by phototransistor, the outcome again will be a kind of signal and that is used in signal receiving machines/instrument to know that how many times there is restriction/obstruction in receiving light. In this way this item is being used by the appellants for manufacturing harness connectors which are then supplied to ATM manufacturing companies. Revenue s argument that the item in question is covered under Chapter Heading 9031.8000 saying that it is a measuring and checking instrument, which is the specific description for Chapter Heading Entry 9031. Here Revenue refers to Explanatory Notes under Section (I)(A) and Entry 7 further saying it is an opto-electronic and pneumatic sensor. However Revenue has completely failed to indicate/prove that how the item in question is a measuring or checking instrument to be covered under CTH 9031.8000. Therefore, the subject item is covered by 8541.40 and it cannot be covered under the Chapter Heading 9031.8000. - decided in favour of appellant with consequential relief

Summary

Issues Involved:
1. Classification of imported Photo Sensors under the appropriate Customs Tariff Heading.
2. Applicability of HSN Explanatory Notes for determining the correct classification.
3. Validity of the previous orders by Deputy Commissioner and Commissioner (Appeals) regarding the classification.

Issue-wise Detailed Analysis:

1. Classification of Imported Photo Sensors:
The primary issue is the classification of Photo Sensors imported by the appellants. Initially, these goods were cleared under Chapter Heading 8541 40 until January 2011. From February 2011 to April 2011, Customs classified and cleared the goods under Chapter 9033, and since May 2011, under Chapter Heading 90.31. The appellants contested the classification under Chapter Headings 9033 or 9031, leading to appeals and subsequent orders by the Commissioner (Appeals) and Deputy Commissioner, who upheld the classification under 9031.8000.

2. Applicability of HSN Explanatory Notes:
The appellants argued that their product, a Photo Sensor, should be classified under Chapter Heading 8541, as it is a photosensitive semiconductor device. They presented a letter from an expert, Associate Professor M.K. Gunasekaran, stating that the product is a photo-sensitive semiconductor device and not a measuring or checking instrument as covered under Chapter Heading 9031. The appellants also referred to HSN Notes for Heading 8541, which includes photosensitive semiconductor devices such as photocouples and photorelays.

3. Validity of Previous Orders:
The Revenue argued that the item should be classified under Chapter Heading 9031.8000, citing the HSN Explanatory Notes and a Supreme Court decision that HSN Notes are a dependable guide for interpreting Customs Tariff. However, the Tribunal found that the Revenue failed to prove how the item in question functioned as a measuring or checking instrument. The Tribunal noted that the previous orders did not provide specific evidence or reasoning to support the classification under 9031.8000.

Conclusion:
The Tribunal concluded that the Photo Sensors should be classified under Chapter Heading 8541.40, as they are photosensitive semiconductor devices. The Tribunal emphasized that the item consists of LED and phototransistor, which are components of photocouples mentioned in the HSN Explanatory Notes under Heading 8541. The appeal was decided in favor of the appellants, with consequential relief, if any.

Order:
The appeal is allowed, and the classification of the imported Photo Sensors is determined to be under Chapter Heading 8541.40. The previous orders classifying the goods under 9031.8000 are set aside.