2000 (1) TMI 106 - AT - Customs

Summary

Issues Involved:
1. Classification of the imported "Automotive Exhaust Emission Measuring System."
2. Eligibility for exemption under Notification No. 243/78.
3. Eligibility for exemption under Notification No. 23/91.

Issue-wise Detailed Analysis:

1. Classification of the Imported "Automotive Exhaust Emission Measuring System":

The primary issue was the appropriate classification of the imported system under the Customs Tariff. M/s. Bajaj Auto Ltd. claimed the classification under Heading 90.27.80, which pertains to "Gas or Smoke analysis apparatus." The Department initially classified it under Heading 9031.00, which covers "Measuring or checking instruments, appliances and machines, not specified or included elsewhere in this Chapter."

The appellate authority, upon remand, subdivided the system into various parts, classifying them under different headings. The Assistant Collector classified the system as follows:
- Sampling unit (Model CVS 51) under Heading 90.31.
- Automotive Exhaust Emission Analysis System (HORIBA MEXA 8320) under Heading 90.31.
- Emission Test Processor (HORIBA HERT 200) under Heading 84.71.

However, the Tribunal found that the equipment, consisting of analysers (MEXA series 8320), Constant Volume Sampler (CVS 51), Calibration gases, and Emission Test Processor (HERT 200), functioned as an integrated unit. The Tribunal referred to Section Note 4 to Section XVI of the Central Excise Tariff Act, which states that a machine consisting of individual components intended to contribute together to a clearly defined function should be classified under the heading appropriate to that function. The Tribunal concluded that the entire system should be classified under Heading 90.27 as one integrated unit.

2. Eligibility for Exemption under Notification No. 243/78:

Notification No. 243/78 provides an exemption for certain goods, including "Exhaust gas analysers for measurement of pollutants." The Assistant Collector extended this benefit to the system classified under Heading 90.31 but denied it for other parts. The Tribunal, however, agreed that since the system was classifiable under Heading 90.27, it was eligible for the exemption under Notification No. 243/78.

3. Eligibility for Exemption under Notification No. 23/91:

Notification No. 23/91 provides an exemption for instruments that depend directly and entirely on electrical phenomena. The Assistant Collector denied this benefit, arguing that the system did not depend entirely on electrical phenomena. The Collector (Appeals) allowed the benefit, stating that the system worked on electrical phenomena.

The Tribunal noted that the system's operation involved electrical signals varying with the quantity of pollutants, qualifying it under the conditions of Notification No. 23/91. However, the Tribunal remanded the matter to the jurisdictional Assistant Commissioner to reassess the duty liability, ensuring that the system met the notification's conditions.

Conclusion:

The Tribunal concluded that the "Automotive Exhaust Emission Measuring System" should be classified under Heading 90.27 as an integrated unit, eligible for exemptions under both Notifications No. 243/78 and No. 23/91. The matter was remanded to the jurisdictional Assistant Commissioner for reassessment of duty liability based on this classification.