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TMI Blog2014 (2) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... CETH 9032. However, it is Revenue's contention that the goods are classifiable under CETH 8537 and duty is payable on such goods under that heading. 2.1 This issue had come up before the Tribunal earlier and this Tribunal vide order No. A/01 & 02/2011/EB/C-II dated 29/12/2010 had remanded the case back to the Commissioner (Appeals) with the following directions: "9. The real issue to be considered is whether the product in question in classifiable under Heading 85.37 as claimed by the Revenue or under Heading 84.71 / 90.32 as claimed by the assessee. The lower appellate authority will have to address this issue keeping in view the Board's order dated 09/05/1997 and other relevant materials such as the manufacturer's brochure literature on the product, trade parlance, etc. We are of the considered view that the Hon'ble Supreme Court's recent judgment in N.I. Systems case (supra), wherein their Lordships elaborately examined the features / attributes of various equipments, including programmable process controllers and programmable logic controllers and classified the goods in question under CTH 9032 90 00, after taking into account the relevant tariff schedule provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tivation. Similarly, the analog modules are used to connect sensor like thermocouple/RTD. The products, namely, Sinaut 8F, Sicomp M and Coros 2000 are industrial computers used for centralized monitoring and control of the processes in various production lines/plants. It is their contention that they are parts and accessories which are used in conjunction with industrial process controllers and hence in terms of Chapter Note 2(b) of Chapter 90, they have to be classified under Chapter 90. 3.2 They also rely on the decision of the Hon'ble Apex Court in the case of Commissioner of Customs vs N.I. Systems (India) Pvt. Ltd. 2010 (256) ELT 173 (SC) wherein it was held that programmable controller, whether an automated controller or process controller, is suitable mainly with industrial process control equipment like sensors and therefore ought to be classified under Chapter 90.32. It is also contended that the appellant's products are used in various industries for controlling and regulating processes. In the technical report provided by Victoria Jubilee Technical Institute (VJTI), it has been stated that the appellant's products are used for monitoring and controlling processes of var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.37. It is therefore, pleaded that the decision of the Hon'ble apex Court in the case of N.I. Systems (India) Pvt. ltd. (supra) is not relevant. So is the case with the decision of the Tribunal in the case of Larsen & Toubro Ltd. 2011 (270) ELT 385. 4.2 As regards the contention that, alternatively the goods manufactured by the appellant should be classified under Heading 84.71, the learned AR submits that as per the expert opinion tendered by the appellant himself, the products are programmable controllers are classified under Heading CETH 85.37. It is therefore, prayed that the appeals do not have any merits and are liable to be rejected. 5. After conclusion of the arguments by both the sides on 17-10-2013, both the sides were directed by the Bench to file synopsis of their submissions by 25-10-2013. In their submissions by 25-10-2013. In their submissions received on 31-10-2013, the appellant along with their written submissions have enclosed certain additional documents, namely, product literature of the goods involved in the impugned order, affidavit dated 31-10-2013 of Shri. Milind Kulkarni, Head Factory, Automation of the appellant firm, certain technical write ups and bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pinion adduced by the appellant before the lower authorities and therefore, it is not a new evidence. Therefore, we take on record only the product literature of the goods whose classification is the subject matter of this appeal. 6.2 We have perused the product literature available on record as also those produced along with their written submissions received on 31-10-2013, the expert opinion submitted by the appellant from M/s. VJTI and also by Shri Vijay Ramchand Ansari, a chartered engineer and also from the Department of Electronics. 6.3 It will be useful at this juncture to refer to the tariff descriptions of the competing entries and they are reproduced below: "8471 Automatic data processing machines and units thereof; magnetic or optical readers, machines for transcribing data on to data media in coded form and machines for processing such data, not elsewhere specified or included." The said entry covers computers and other data processing machines, input or output units whether or not containing storage units in the same housing, printers and storage units. 6.4 Entry 85.37 as it stood at relevant time read as follows: "8537 Boards, panels, consoles, desks, cabinets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tomation tasks of the medium and upper range performance'. There are two types of central processors available for this controller, namely, S-processor for 'open-loop control, monitoring and reporting' and R-processor for 'arithmetic operations, closed loop control, monitoring and reporting'. These controllers perform the following tasks - "loop control, sequence control with Graph, digital functions, reporting systems, data exchange with communications processors and operation of signal preprocessing I/Os." Thus from the technical opinion given by VJTI and the product literature, it is obvious that these goods are not mere data processing machines falling under CETH 84.71 or automatic regulators of electrical quantities of instruments or apparatus for automatically controlling non-electrical quantities. These goods, from the nature of functions undertaken by them are controllers with built in data processing machines and based on the programme written in the memory, monitors the input status and executes the outputs. Thus, on the basis of technical literature produced and the expert opinion adduced, these are programmable logic controllers meriting classification under CETH 8537 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ducts as automatic data processing machines, the said opinion can not be accepted in view of Notes 3 and 4 to Section XVI which reads as under:- "3. Unless the context otherwise requires, composite machines consisting of machines fitted together to form a whole ad other machines designed for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function. 4. Where a machine (including a combination of machines) consists of individual components (whether separate or interconnected by piping, by transmission devices, by electrical cables or by other devices) intended to contribute together to a clearly defined function covered by one of the headings in Chapter 84 or Chapter 84, then the whole falls to be classified in the heading appropriate to that function." From the product literature, it is obvious that the principal function of these machines are control of machines and not computation of data. Automatic processing of data is with a view to perform the control function. Therefore, as per Section Notes 3 and 4 cited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their own failures and those of the machines or processes. PLCs have been successfully implemented in every segment of the industry, including steel mills, paper plants, food-processing plants, chemical plants and power plants. PLCs perform a great variety of control tasks, from repetitive ON/OFF control of simple machines to sophisticated manufacturing and process control. The HSN Explanatory notes on CETH 8537 also states that goods of this heading vary from small switchboards to complex control panels for machine tools, rolling mills, power stations, radio stations, etc. Thus the technical literature on the subject as also the HSN explanatory notes clearly support the classification of the goods discussed above under CETH 8537 as Programmable Logic Controllers. 6.10 The Central Board of Excise & Customs had issued a 37B order vide order NO. 49/3/97-Cx dated 09/05/1997 clearly pointing out differences between a programmable logic controller and programmable process controller. The said 37B order is reproduced below: "2. Representations have been received from trade pointing out that programmable logic controller and programmable process controllers such as process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt control strategies like Proportional-integral-differential (PID) control and other forms of control. 4. It is observed that opinion of the Dept. of Electronics is also in conformity with the Explanatory Notes of HSN. 5. Now therefore, in exercise of the powers conferred under sectin37B of the Central Excise Act, 1944 and in supersession of the Board's order dated 6-8-96 referred to above, and for the purpose of ensuring uniformity in the classification of the goods in question, Board hereby orders that programmable logic controller as described in para 2 and other similar forms will be classifiable under heading No. 85.37 of the Central Excise Tariff and programmable process controllers as described in para 2 and other similar forms will be classifiable under heading No. 90.32 of the Central Excise tariff". 6.11 From the above clarifications it is seen that to qualify as 'programmable process controller', Continuous monitoring of the various parameters such as pressure, flow and temperature level etc. has to be done and comparison should be made of the parameters of the desired value with the actual value and the machine should be capable of bringing ..... 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