2016 (12) TMI 85 - AT - Central Excise

Classification of manufactured item - Advanced Variable Speed (AVS) Drive Controller - PM-2 Controller - HESG-101 Governor - Cogen-C system - classified under Heading 9032 of the Central Excise Tariff Act, 1985 or Heading 8537.00 - Held that - The distinguishing feature between Heading 8537 and 9032 is that 8537 is meant for equipment meant for electric control for distribution of electricity. The heading 90.32 covers automatic regulating or controlling instruments and apparatus like, Thermostats and pressure switches etc. It is seen from the tariff description and connected explanatory notes that if the device is meant for electric control or the distribution of electricity does it qualify to be classified under heading 8537. In the instant case the devices are designed for control of speed in case of AVS Drive Controller, control of torque in case of PM2 Soft Start Energy Saving Motor Controller, control of inlet valve for turbines in case of HESG 101and control of steam inlet valve in case of CoGen-C Stytem. It is seen that in these goods are not meant for electric control or the distribution of electricity and therefore these do not qualify to be classified under heading 8537 claimed by the revenue. Appeal allowed - decided in favor of appellant-assessee.

Summary

Issues: Classification of products under Central Excise Tariff Act, 1985 - Heading 9032 vs. Heading 8537

In this judgment by the Appellate Tribunal CESTAT MUMBAI, the issue at hand involves the classification of products manufactured by M/s Crompton Greaves Ltd. under the Central Excise Tariff Act, 1985. The appellant sought to classify products like AVS Drive Controller, PM2 Controller, HESG-101 Governor, and Cogen-C system under Heading 9032, while the lower authorities classified them under Heading 8537. The main contention revolves around whether these products qualify as automatic regulating or controlling instruments and apparatus under Heading 9032 or as boards, panels, consoles, etc., equipped with apparatus for electric control or distribution of electricity under Heading 8537.

Analysis:

The appellant argued that the products, namely AVS Drive Controller, PM2 Soft Start Energy Saving Motor Controller, HESG-101, and CoGen-C System, should be classified under Heading 9032 of the Central Excise Tariff Act, 1985. The appellant's counsel described the technical specifications and functionalities of each product, emphasizing their role in controlling various industrial operations. The argument was supported by Chapter Note 6 of Chapter 90, which specifies the scope of Heading 9032, encompassing instruments for automatically controlling variables like flow, pressure, or temperature, dependent on electrical phenomena. The counsel highlighted that the products align with the criteria outlined in Chapter Note 6, making them suitable for classification under Heading 9032.

Furthermore, the appellant relied on the Explanatory Note to Heading 90.32, which elaborates on automatic regulators of electrical and non-electrical quantities, emphasizing the devices' essential components and functions. The counsel emphasized that the products in question meet the criteria set forth in the Explanatory Note, reinforcing their classification under Heading 9032. Additionally, the Explanatory Note to Heading 8537 was referenced to distinguish the nature of apparatus covered under Heading 8537, which excludes automatic controlling apparatus falling under Heading 90.32.

In contrast, the Assistant Commissioner (AR) supported the impugned order, maintaining the classification under Heading 8537. However, upon reviewing the submissions, the Tribunal observed the distinction between Heading 8537 and Heading 9032. Heading 8537 pertains to equipment for electric control or distribution of electricity, while Heading 9032 covers automatic regulating or controlling instruments and apparatus. The Tribunal noted that the products in question, designed for controlling speed, torque, turbine operations, and power generation, do not align with the criteria for electric control or distribution of electricity under Heading 8537. Therefore, the Tribunal allowed the appeal, classifying the products under Heading 9032 based on their intended functions and characteristics.

In conclusion, the Tribunal's decision focused on the specific functionalities and intended use of the products, ultimately determining their classification under the appropriate heading based on the Central Excise Tariff Act, 1985. The judgment highlights the importance of aligning product characteristics with the defined criteria for classification under relevant tariff headings to ensure accurate categorization for taxation purposes.