2006 (7) TMI 1 - SC - Central Excise

Classification of power controllers manufactured by each of the four appellants Held that - The assessee-appellant has not shown any technical write-up to substantiate their claim to the effect that the items produced by them perform the function of either switching, protecting or for making connections to or in electrical circuit. Heading 85.43 covers electrical machines or apparatus t individual functions not specified or included elsewhere in the Chapter. The power controllers do not either switch or protect or for make connections to or in electrical circuits. Its only function is to control the degree of illumination and outflow of heat, i.e., it functions as a light dimmer and speed controller. Its function is to control the degree of illumination and flow of electric current. The apparatus whose function is to control the degree of illumination and flow of current has not been mentioned in either of the entries of Chapter 85. It performs individual function. The fact that the se of product manufactured by the respondent is to regulate the flow of electricity to the object in question, the same cannot be treated as an apparatus for making or protecting switching or making connections to or in electricity circuits. The machine/apparatus manufactured by the appellant is for controlling or regulating the electric current/power so as to feed the required quantum of current to the other equipments connected to the circuits. Apparatus power controller is capable of controlling the current/power in the circuit and therefore, definitely performs the individual function. Such machine or apparatus would fall under residuary entry 85.43 and not under 85.36. Against assessee.

Summary

Issues: Classification of "power controllers" under Central Excise Tariff Act

Classification under Chapter 85, Sub-heading 8543.00 vs. Sub-heading 8536.90:
The case involved the classification of "power controllers" manufactured by four appellants under the Central Excise Tariff Act. Initially classified under Sub-heading 8543.00, the appellants later shifted to Sub-heading 8536.90. The Department issued show cause notices challenging this classification, alleging the correct classification to be under Sub-heading 8543.00. The appellants argued that the controllers fell under Sub-heading 8536.90 for controlling power flow and protecting circuits. The Assistant Collector confirmed the classification under Sub-heading 8543.00, while the Collector (Appeals) classified them under Sub-heading 8536.90. The Tribunal, however, sided with the Department, stating that the controllers fell under Heading 85.43 as they provided variable current to connected loads.

Interpretation of Headings 85.36 and 85.43:
The dispute centered on whether the controllers should be classified under Heading 85.36 or 85.43. Heading 85.36 covered electrical apparatus for switching, protecting circuits, or making connections for voltages not exceeding 1000 volts. The Tribunal noted that the controllers did not switch, protect, or make connections in circuits but controlled illumination and heat flow. Heading 85.43 encompassed apparatus with individual functions not elsewhere specified. The Tribunal concluded that as the controllers regulated electric current to other connected equipment, they belonged under the residuary entry 85.43.

Analysis of Tribunal's Decision:
The Tribunal rejected the appellants' argument that the controllers should be classified under Heading 85.36. It emphasized that apparatus solely intended for switching or protecting circuits should be classified under that heading. The Tribunal found that the controllers' function of regulating current for connected equipment aligned more with Heading 85.43, which covers apparatus with individual functions. Therefore, the Tribunal upheld the Department's classification under Heading 85.43, emphasizing the controllers' role in providing variable current to connected loads.

Final Judgment and Dismissal of Appeals:
The Supreme Court, after considering the arguments and findings, dismissed the appeals. It concurred with the Tribunal's decision that the controllers fell under Heading 85.43 due to their function of regulating electric current for connected equipment. The Court found no merit in the appeals and ordered each party to bear their own costs, thereby upholding the classification of "power controllers" under the Central Excise Tariff Act.