2001 (1) TMI 159 - AT - Central Excise

Summary

Issues:
Classification of "power controllers" under heading 85.36 or 85.43.

Analysis:
The judgment revolves around the classification of "power controllers" manufactured by four respondents under heading 85.36 or 85.43 of the tariff. Initially, the manufacturers classified the product under heading 85.36 but later claimed classification under heading 85.43, which was not accepted by the department. The Assistant Collector confirmed the classification under heading 85.36, while the Collector (Appeals) accepted the manufacturers' classification, leading to appeals by the department.

The crucial determination is whether the power controller falls under heading 85.36, which covers electrical apparatus for switching or protecting electrical circuits, or under heading 85.43, for electrical machines and apparatus with individual functions not specified elsewhere. The function of the power controller, described as regulating the supply of voltage to objects like fans or lamps, was examined. The department argued that the product's primary use is to regulate electricity flow, not merely for switching or protecting electrical circuits.

Reference to the Harmonised System of Nomenclature (HSN) and Explanatory Notes was made to interpret the scope of the headings. It was emphasized that apparatus solely or predominantly used for switching or protecting electrical circuits should be classified under heading 85.36. The judgment highlighted the absurdity of classifying every apparatus with a switch or fuse under this heading, indicating that the power controller does not fit this classification.

Regarding heading 85.43, it was argued that the apparatus must have individual functions, as per the Explanatory Notes. The power controller's function of providing variable current to connected loads was deemed as an individual function, aligning with the requirements of heading 85.43. The judgment emphasized that the power controller's ability to function independently distinguishes it from parts of machinery, supporting its classification under heading 85.43.

Ultimately, the Tribunal accepted the department's contention that the goods are classifiable under heading 85.43, setting aside the Collector (Appeals) orders and restoring the Assistant Collector's classification. The judgment clarified the distinct functions of the power controller and its alignment with the requirements of heading 85.43, leading to the resolution of the classification dispute.