2022 (1) TMI 520 - AAR - Customs

Classification of group of goods - measuring devices, namely flowmeters - to be classified under CTH 90.26 or not - benefit of Notification No. 24/2005-Customs, dated 1-3-2005 (Sl. No. 31). HELD THAT - The applicant has explained the basis of grouping of the instruments/devices and each group of products are intended for different applications/industries. For example, the Cubemass group of products are for chemical/petrochemical industries while Dosimass are for personal care/F B industries. Two expert opinions, from Fluid Control Research Institute, Palakkad. Kerala; and Institute of Chemical Technology, Mumbai arc also confirming the applicant s stand in respect of the instruments manufactured by their Aurangabad plant. In this case, there are two different possible headings for classification of the impugned devices/instruments, i.e., 90.26 which is for INSTRUMENTS AND APPARATUS FOR MEASURING OR CHECKING THE FLOW, LEVEL, PRESSURE OR OTHER VARIABLES OF LIQUIDS OR GASES (FOR EXAMPLE. FLOWMETERS. LEVEL GAUGES, MANOMETERS, HEAT METERS), EXCLUDING INSTRUMENTS AND APPARATUS OF HEADING 9014, 9015, 9028 OR 9032 or 90.32 which is for AUTOMATIC REGULATING OR CONTROLLING INSTRUMENTS AND APPARATUS . From the product catalogues, it appears that these flowmeters measure the mass flow of liquids and gases, along with other parameters such as temperature. The flowmeters appear to be capable of only measuring the value and the measured parameter(s) are displayed visually or provided as a digital output. Hence, these instruments appear to match the description for goods covered under Heading 90.26, as instruments and apparatus for measuring or checking the flow, level, pressure or other variables of liquids or gases. I find that the Heading 90.26 specifically mentions flowmeters - The instruments and apparatus of this heading may be fitted with recording, signalling or optical scale-reading devices or transmitters with an electrical, pneumatic or hydraulic output. Measuring or checking apparatus generally incorporates an element sensitive to variations in the quantity to be measured (e.g. Bourdon tube, diaphragm, bellows, semiconductors) moving a needle or a pointer. In some devices the variations are converted into electrical signals. 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. There is no material to reject the applicant s contention that these flowmeters are individually marketable and in many cases, operate without any control system at the customers end and that they can be used as stand-alone instruments for measurements in some industries (water management and sugar industries) where only measurement is involved for monitoring with no interface with any other system. These flowmeters do not and cannot control the flow of the liquid/gas. The export invoice from parent company in Germany also shows that the classification adopted was CTH 9026. Even though it is possible that some of the flowmeters proposed to be imported by the applicant can be used in a system to control and regulate process parameters, these flowmeters, by themselves, are not automatic controlling and regulating apparatuses - The instruments/devices listed at the first paragraph of this ruling merit classification under Heading 90.26 and more specifically, under sub-heading 9026 10 10 of the first schedule to the Customs Tariff Act, 1975. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Classification of flowmeters under appropriate HS code.
2. Applicability of previous rulings and decisions on the current applications.
3. Evaluation of expert opinions and their relevance.
4. Admissibility of applications for advance ruling.

Issue-wise Detailed Analysis:

1. Classification of Flowmeters under Appropriate HS Code:
The primary issue in these proceedings is the classification of various models of flowmeters imported by the applicant. The applicant contends that these flowmeters, which measure parameters like mass flow, temperature, and density, should be classified under Heading 90.26 as instruments for measuring or checking the flow, level, pressure, or other variables of liquids or gases. The Authority examined the characteristics and functionalities of the flowmeters, noting that they operate based on the Coriolis principle and are used for measuring rather than controlling or regulating the flow of liquids or gases. The Authority concluded that these flowmeters fit the description under Heading 90.26, which specifically includes flowmeters. The General Rules for Interpretation of the Import Tariff and the HSN Explanatory Notes support this classification, emphasizing that the flowmeters are measuring instruments and do not perform automatic controlling or regulating functions.

2. Applicability of Previous Rulings and Decisions on the Current Applications:
The applicant had previously imported similar measuring instruments, which were classified under Heading 90.32 by the original authority and upheld by the Commissioner (Appeals). However, the applicant argued that the current applications involve different products and that each item must be evaluated on its own merits. The Authority agreed, stating that the pending appeal before the Tribunal pertains to different products and that rejecting the current applications solely based on the previous dispute would defeat the purpose of advance rulings. The Authority emphasized that the advance ruling process is facilitative and not a dispute settlement mechanism.

3. Evaluation of Expert Opinions and Their Relevance:
The applicant provided expert opinions from the Fluid Control Research Institute and the Institute of Chemical Technology, supporting the classification of the flowmeters under Heading 90.26. The jurisdictional customs authorities raised doubts about the relevance and validity of these opinions, considering their age and the possibility of changes in specifications. The applicant clarified that the expert opinions were submitted to assess the functionalities of the instruments and that the Promass flowmeters have remained functionally the same. The Authority found merit in the applicant's contention and noted that the expert opinions, while not the sole basis for classification, provided additional support for the applicant's arguments.

4. Admissibility of Applications for Advance Ruling:
The jurisdictional Commissionerate suggested that the applications were not fit for advance rulings due to the pending appeal involving similar products. However, the Authority determined that the applications were admissible, as the pending appeal did not involve the specific products covered in the current applications. The Authority reiterated that the advance ruling process aims to provide clarity on entry tax liabilities prior to import or export and should not be hindered by unrelated disputes.

Conclusion:
Based on the detailed analysis, the Authority concluded that the flowmeters listed in the applications merit classification under Heading 90.26 and more specifically under sub-heading 9026 10 10 of the first schedule to the Customs Tariff Act, 1975. The Authority emphasized that the classification should be based on the state of the goods at the time of import and that the flowmeters, as imported, are measuring instruments without automatic controlling or regulating functions.