2024 (3) TMI 1145 - AT - Customs

Classification of imported goods - Electronic Control Unit (ECU) - classifiable under CTI 8708 99 00 or under CTI 9032 89 10? - case of the department is that since it is an automotive part, it should be classified as parts of automobile under CTI 8708 89 10, regardless of the fact that it is a printed circuit board - whether or not ECU is an article under Chapter 90? - HELD THAT - The submissions of the learned authorised representative for the department deserve to be accepted. From the records of the case and the detailed technical submissions made by the learned counsel for the appellant, it is evident that the ECU does not and cannot either measure or regulate anything. It only analyses the data provided to it by other parts of the ABS (sensors) and compares it with standards and issues instructions. Based on these instructions, other parts of the ABS regulate the manner in which the car brakes ensure that the braking is safe - Merely because it is in the form of a PCB does not change it from a part of an automobile into an instrument or an apparatus. Automatic regulators, even according to the HSN Explanatory Notes relied upon by the appellant, essentially consist of a measuring device, a control device and a starting, stopping or operating device and ECU does not have these abilities, except that of the analysis of data. Evidently, Section Note 7(b) deals with either regulators of electrical quantities or instruments or apparatus for automatically controlling non-electrical quantities which depend on electrical phenomenon. ECU is not a regulator of electrical quantity nor is it an instrument or apparatus for regulating non-electrical quantities which depend on electrical phenomenon. It is not an instrument or apparatus by itself. It is the ABS which regulates the braking to ensure safe braking - Merely because ECU is a chip which analyses the data (and through any chip electricity flows), the function of the ABS or its part ESCS (manufactured by the appellant) or its further sub-part ECU (imported by the appellant) do not, in our considered view, qualify as automatic regulators of electrical quantities and instruments or apparatus for automatically controlling non-electrical quantities the operation of which depends on electrical phenomenon . It however, needs to be noted that ABS regulates the braking and not the speed. This regulation is based on certain other phenomena like speed, regular rotation, etc. and not based on the extent of braking. In other words, there are three non-electrical quantities viz. speed, sideways movement and angular rotation based on which a fourth quantity viz., braking is regulated. The factor to be controlled is the braking, a non-electrical quantity, and ECU issues instructions in the form of electrical signals which vary not according to the factor to be controlled (braking) but according to three other non-electrical quantities. Neither the ABS nor the ESCS manufactured nor the ECU imported by the appellant can fit into Section Note 7 (b) by any stretch of imagination. Since Section Note 7 makes it explicit that CTH 9032 applies only to such goods which fall under (a) or (b), ECU gets clearly excluded from CTH 9032. All the Customs Appeals are dismissed and the impugned orders are upheld.

Summary

Issues Involved:
1. Classification of Electronic Control Unit (ECU) under Customs Tariff.
2. Applicability of Harmonized System of Nomenclature (HSN) Explanatory Notes.
3. Interpretation of General Rules of Interpretation (GIR).

Summary:

1. Classification of Electronic Control Unit (ECU) under Customs Tariff:
The primary issue was whether the ECU imported by the appellant should be classified under Customs Tariff Item (CTI) 9032 89 10 as "Electronic automatic regulators" or under CTI 8708 99 00 as "parts and accessories of automobiles." The appellant argued that the ECU, being a printed circuit board used in Electronic Stability Control Systems (ESCS) for automobiles, should be classified under CTI 9032 89 10. The department maintained that the ECU is an automotive part and should be classified under CTI 8708 99 00.

2. Applicability of Harmonized System of Nomenclature (HSN) Explanatory Notes:
The appellant contended that the ECU does not meet the conditions for classification under Chapter 87 as per HSN Explanatory Note (III) to Section XVII. They argued that the ECU is more specifically covered under CTI 9032 89 10 and is excluded from Chapter 87 by Section Note 2(g) to Section XVII. The department countered that the ECU is not an instrument or apparatus under Chapter 90 and thus meets all conditions for classification under Chapter 87.

3. Interpretation of General Rules of Interpretation (GIR):
The appellant also invoked GIR 3(b) and 3(c), arguing that CTI 9032 89 10, being a more specific and later entry, should prevail over the generic heading of 8708. The department argued that GIR 1, which determines classification based on the terms of the headings and relevant Section or Chapter Notes, suffices in this case, making GIR 3(b) and 3(c) inapplicable.

Findings:
The Tribunal found that the ECU does not measure or regulate any parameter but merely analyzes data provided by sensors. It is part of the ESCS, which in turn is part of the Anti-lock Braking System (ABS) of automobiles, and thus should be classified under CTI 8708 99 00 as automotive parts. The Tribunal concluded that the ECU does not qualify as an "Electronic automatic regulator" under CTI 9032 89 10 because it lacks the essential functions of measuring and regulating.

Conclusion:
The appeals were dismissed, and the impugned orders classifying the ECU under CTI 8708 99 00 were upheld. The Tribunal emphasized that the ECU, being an automotive part, does not fall under Chapter 90 and thus should be classified under Chapter 87 as "parts and accessories of automobiles."

(Order pronounced in open court on 19/03/2024.)