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TMI Blog2011 (3) TMI 861X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise, Mumbai-II. 2. The issue involved is the classification of 'Programmable Logic Controllers' manufactured by the assessee M/s. Larsen Toubro Ltd. The assessee had filed a classification list No.2/86-87 dated 01/03/86 classifying the programmable logic controllers manufactured by them under heading No.84.71 of Central Excise Tariff Act, 1985 claiming it to be an automatic data processing machine and also claiming benefit under Notification No.64/86-CE dated 10/02/86 as amended. The product supplied by the assessee to the various customers were described as 'L T Yaskawa R-84 H Programmable Controller System'. 2.1 The department, who investigated the matter came to the conclusion that the goods manufactured and cleared by the assessee were Control Panels incorporating programmable logic controllers, which are different from the automatic data processing machines falling under heading No.84.71 and are classifiable under heading No.85.37 of CETA, 1985, which covers 'Boards, Panels, (including numerical control panels), consoles, desks, cabinets and other bases, equipped with two or more apparatus of heading No.85.35 or heading No.85.36, for electric co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... logically and give out suitable instructions and information (by doing arithmetical computations) to the field equipment. Therefore, these are rightly classifiable under automatic data processing machine falling under chapter heading No.84.71. They further argued that programmable controllers are not for electric control or for the distribution of electricity as described under heading No.85.37. It was submitted that the programmable controllers manufactured satisfied the criteria laid down in Board's order No.49/3/97-CX dated 11/09/05/97 and as such they were classifiable under heading No.90.32 and classification under heading No.85.37 was not sustainable in law. 3. The case was adjudicated by the Ld. Commissioner of Central Excise, who held that only machines having data processing operation as a main function can be classified under heading No.84.71. The programmable logic controllers are used for controlling industrial plant and machinery in a desired manner. The programmable logic controller is a combination of machines, one of its component machine, being 84.71, intended to control plant and machinery in industrial environment. As per note 4 to Section XVI of HSN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee but gave an option to redeem the same on payment of fine of Rs.10.00 lakhs under Section 34 of the said Central Excise Act. It is against this order, the appellant is in appeal before us. 4. In their appeal, the appellant has given up their claim for classification under heading No.84.71 and they are claiming that the correct classification would be under heading No.90.32 of the CETA, 1985. Their arguments are as follows. (1) As can be seen from the show-cause notice, the product manufactured by them is used in many industrial application for controlling various parameters, such as temperature, pressure, level of fluid flow and speed etc. in industrial or commercial process in various automatic industrial plants like cement, thermal power station, steel plant, etc. (2) As per CBEC 37B order No.45/3/96-CX dated 06/08/96, instruments and apparatus which consists essentially of (a) a measuring device (b) a control device and (c) a starting, stopping or operating device are to be classified under heading N0. 90.32. Programmable logic controller manufactured by them consists of " (i) a control device by way of servo meter, LED numeric indicators and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod of time is totally incorrect, as has been held by the Hon'ble High Court of Bombay in the writ petition filed by them vide judgement dated 16/09/2002 and also in the light of the judgement of the Hon'ble apex court in the case of O.K. Play (India) Ltd., Vs. CCE, Delhi-III, 2005 (180) ELT 300 (SC), CCE Vs. Dabur (India) Ltd., - 2005 (182) ELT 308, CCE Vs. Muzzaffarnagar Steels - 1989 (44) ELT 562. In view of this position, no penalty is also warranted under Rule 173Q as has been held by the Tribunal in the case of Escorts Ltd., Vs. CCE, New Delhi-II - 2002 (141) ELT 72 (Tri-Del) wherein it has been held that once the classification list is filed, penalty under Section 173Q is not warranted and the said decision of the Tribunal has been maintained by the Hon'ble apex Court in the same case reported in 2003 (152) ELT A257 (SC). (7) As regards the proposal for confiscation of plant and machinery, the same is not warranted as has been held in H.T. Bhavani Chemicals (P) Ltd., Vs. CCE Baroda - 1997 (92) ELT 502. 5. The Ld. DR on the other hand reiterates the findings given by the Ld. Commissioner. He submits that as per the product literature and the various classificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, even as per the Board's circular the product is classifiable under 85.37. As regards the reliance placed by the assessee on the decision of the Hon'ble apex Court on the decision of N.I. Systems (India) Pvt Ltd. (supra), the Ld. DR submits that in the said case classification under heading No.85.37 of the CETA, 1985 was not under consideration. The Ld. DR further submits that as has been rightly observed by the adjudicating authority, the appellant/assessee has misled the department about the true description and functions of the product and had suppressed the information from the department with malafide intention to evade duty. Accordingly, the invocation of extended period of time by the adjudicating authority is correct in law and, therefore needs to be upheld. 6. We have carefully considered the rival submissions. 7. From the records it is seen that the assessee had submitted as early as in 1985 vide letter dated 11/11/85, the product catalogue of the product to be manufactured by them in collaboration with Yaskawa, Japan. The product description was given as follows:- R-84-H Advanced Programmable Controller for - (i) Factory automation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons maintaining the variable to be controlled such as pressure, temperature, level of fluid, etc. at pre-determined level. These are functions undertaken by the programmable process controller as per the 37B order issued by the CBEC vide order dated 09/05/97 which reads as follows: "2. Representations have been received from trade pointing out that programmable logic controller and programmable process controllers such as process control equipment/distributed control systems are two different types of controls classifiable under different headings of central excise tariff i.e. heading 85.37 and heading 90.32 respectively. The following specific differences have been pointed out between two types of controllers. Programmable Logic Controller Programmable Process controller These are for controlling various types of machines These are for controlling various types of processes Operations depends on set of pre-determined operations Operations depend on factor to be controlled Operations based on desired sequence of operations Operation operates basically by continuously monitoring and maintain the variable to be controlled such as pressure, flow, temperatu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise Tariff." 7.3 A comparison of the functions attributed to the product in question in the product catalogue and also as mentioned in the show cause notice with the 37B order quoted supra, it can be easily seen that the product satisfies the criteria specified for 'Programmable Process Controller' falling under heading No. 90.32 of the Central Excise Tariff and we hold accordingly. 7.4 In the NI Systems (India) Pvt. Ltd., case decided by the Hon'ble apex Court cited supra where the Hon'ble apex Court was dealing with the classification of PXI controllers and the in the said case the hon'ble apex court held as follows: "39.?In our view, the above argument of the importer is unsustainable for the following reasons. Firstly, it is nobody's case that a PAC/Programmable Process Controller by itself is an automatic regulating, controlling instrument or apparatus in terms of Chapter 90. On the contrary, in view of Chapter Note 2(b) to Chapter 90 read with Note 3 of the same Chapter, PACs/Programmable Process Controllers are parts and accessories of a system/instrument which are suitable for use solely or mainly with a number of machines, instruments, apparatus of the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Boards, NIM etc. are inserted. Each I.O. Module imported by the assessee is tailored to a specific function and therefore such I.O. Module is a part of a regulating or controlling apparatus. Take the case of NIM. It is a hardware device. It may be in the form of a network interface card or a network adapter or in the form of Network Interface Controller ('NIC'). NIM is a computer hardware component designed to allow computers to communicate over a computer network. It provides connectivity between the industrial network and the I.O. Module. A network interface module works as a connector and adapter unit in order to provide a two way interconnection between external sensor unit and the ADP. Thus, I.O. Module is a hardware. It is also known as I.O. device or I.O. Point. It may be in the form of I.O. Cards or I.O. Boards. When I.O. Module is used to accept data (input) from sensors, transducers, Programmable Logic Controllers ('PLC'), computers etc. and then distributes the data (output) to other devices in the system, then I.O. Module is called as Distributed I.O. Module. Such system is also called as Distributed Control System ('DCS'), which is a control system used normally in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Device has to form a 'single entity'. There is no dispute that if all the above three devices are found in one 'single entity' then classification will fall under Chapter 90. However, the test of 'single entity' containing three devices is not a pre-condition for classification under CTH 9032. On the contrary, the test is not that of single entity, but of the device being capable of working as a functional unit. In this connection, Note 3 of Chapter 90 is to be read. Note 3 incorporates Note 4 to Section XVI. Note 4 inter alia provides for a machine consisting of individual components which may be separate as long as they are intended to contribute to a clear defined function. The PACs/Programmable Process Controller, though separate from sensors, is an individual component intended to contribute to a clearly defined function. Note 3 of Chapter 90 has to be read with Note 2(b) of Chapter 90 and if so read then it becomes clear that PAC/Programmable Process Controllers, being parts and accessories and a regulating or controlling apparatus like sensors have got to be classified under CTH 9032.89.10. 42.?For the above reasons, we hold that PACs (including embedded Controllers/Pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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