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TMI Blog2021 (12) TMI 1389X X X X Extracts X X X X X X X X Extracts X X X X ..... raised by the applicant in his application in respect of any goods before their importation or exportation - It has to be kept in mind that the process of advance rulings is not a dispute settlement mechanism, but is purely a facilitative nature and seek to enhance ease of cross border trade by indicating entry tax liabilities before import or export. In such circumstances, if the present applications are rejected only because an appeal is pending in respect of similar products, that would be a travesty. The items under consideration are stated to be measuring instruments consisting of 20 applications of flowmeters and one application of a level measuring device. Flowmeters are devices that measure/check the mass flow of liquids and gases, along with other parameters such as temperature, specific gravity etc. The level measuring instrument is used for point level/interface detection of different liquids. The product catalogues submitted with these applications are also in agreement with the averments of the applicant. The applicant has explained the basis of groupings of the instruments/devices as common sensor and each group of products are intended for different applications/ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... measure the flow rate and make available the measured value in the required signal format for further processing/information, based on the requirement of the end customer. There is nothing on record, or available in the product catalogues to indicate that these devices/instruments have the capacity to perform additional functions of automatically controlling or regulating the flow of liquids. In the context of explanatory notes, these devices lack 2 essential components, viz, a control device and a stating/stopping/operating device. Therefore, it appears that the goods under consideration do not fulfil the criteria laid down in explanatory notes and are consequently not classifiable under Heading 9032. The instruments/devices under consideration merit classification under Heading 90.26 and more specifically, devices listed at Sr. Nos. 1 to 20 of Table 1 under sub-heading 9026 10 10 of the First Schedule to the Customs Tariff Act, 1975 and devices at Sr. No. 21 of the said table under sub-heading 9026 10 20 of the first schedule to the said act - Application disposed off. X X X X Extracts X X X X X X X X Extracts X X X X ..... ious customers across the country. These applications can be grouped based on the operating principle employed, e.g., electromagnetic flowmeters (Sr. Nos. 1-7), thermal mass flowmeters (Sr. Nos. 8-12), ultrasonic flowmeters (Sr. Nos. 13-16), vortex flowmeters (Sr. Nos. 17-20) and capacitance point level instrument (Sr. No. 21). The details of the instruments and their characteristics, as stated in the application, are discussed below. 2.1 Electromagnetic flowmeters using Faraday's law of magnetic induction :- These instruments are covered in the applications listed at Sr. Nos. 1 to 7 of Table 1 and are collectively referred to as electromagnetic flowmeters. They detect flow by using Faraday's Law of induction. The flowing medium is the moving conductor. Inside a flowmeter, the flow is measured using an electromagnetic coil that generates a magnetic field, and electrodes that capture electromotive force (voltage). As the flow changes, the electromotive force (voltage) captured by the electrodes change. This voltage is detected by sensors mounted in the flowmeter body and sent to a transmitter which calculates the volumetric flow rate based on the pipe dimensions. A flowmeter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re (compared to the measured process temperature) by controlling the electrical current used by the heating element. The greater the mass flow passing over the heated resistance thermometer, the greater the extent to which cooling takes place, and therefore, stronger is the current required to maintain a constant differential temperature. This means that the heat current measured is an indicator of the mass flow rate of the medium. These instruments are characterized by a high operable flow range and direct mass flow measurement, and measure utility and process gases as well as gas mixtures in small line sizes. In the T mass models of thermal flowmeter, the sensor integrated into any instrument is denoted by an alphabet, namely, F, I, A, B and T. Sensor F I A B T Medium Utility and process gases Utility and process gases Gases Utility gases Gases The thermal mass flowmeters are used to measure flowrate of utility and process gases as well as gas mixture in circular piping or rectangular duct. The transmitter is denoted by a number, namely, 300, 500 and 150. Transmitter 300 500 150 Nature of transmitter integral remote remote Thus, the transmitter and sensor ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to electrical pulses. The vortices develop very regularly within the permitted application limits of the device. Therefore, the frequency of vortex shedding is proportional to the volume flow. Vortex flowmeters are used in numerous branches of industry to measure the volume flow of liquids, gases and steam. Modern vortex meters such as the multivariable Prowirl 200 are built to measure volume flow but are also equipped with temperature sensors and flow computers. In the Prowirl models of vortex flowmeters, the sensor integrated into any instrument is denoted by an alphabet, namely, F, D, O and R. Sensor F D O R Medium Steam Steam, gases and liquids High pressure Steam, gases and liquids Steam, gases and liquids with low flow The vortex flowmeters are used to measure flowrate of liquids and gases. The transmitter is denoted by number the 200 which can be used as both the integral and remote unit. The measured variables of these types of instruments include volume flow and temperature. 2.5 Capacitance point level measurement instrument utilising the principle of change in capacitance of the capacitor due to the change in the level :- This instrument is listed at S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -2018 claiming the classification under Heading 90.26 and the benefit of Notification No. 24/2005-Customs, dated 1-3-2005 (Sl. No. 31). The items covered in the said bills of entry were :- (1) Promass P 100 8P1B15, DN15 1/2" 8P1B15-1RT4/0 Coriolis flowmeter (2) Promass P 100 8P1B08, DNO8 3/8" 8P1B08-1MM1/0 Coriolis flowmeter (3) Promass F 300 8F3B80, DN80 3" 8F3B80-8QV7/0 Coriolis flowmeter (4) Promass 84F08, DN8 3/8" 84F08-2196/0 Coriolis flowmeter (5) Cerabar PMC 11 (pressure transducer) (6) Cerabar (7) Micropilot FMR20 (liquid level measuring instruments) (8) Liquiphant M FTL51H (liquid level measuring instruments) (9) Ceraphant PTP33B (pressure switch). During the course of assessment, the original authority had rejected the classification claimed and classified the items under Tariff Entry 9032 89 90 and consequently denied the exemption. The applicant filed an appeal with the jurisdictional Commissioner of Customs (Appeals) against the said assessment. In the Order-in-Appeal dated 28-6-2019, the Commissioner (Appeals) had observed that the imported parts and accessories might have been used in manufacturing either the measuring device or the controlling dev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al part of control systems. Further, in the website of the importer it is mentioned that the products are not merely measuring instruments but are field instruments required to measure and control different automation processes. As per Note 3 to read with Note 2(b) to Chapter 90, the measuring devices, being parts and accessories of controlling apparatus have to be classified under Tariff Entry 9032 90 00. Therefore, the imported devices should be seen as parts of the main machine/combined machine for performance of a common function, i.e., "flow control", and not to be seen in isolation. (ii) Similar observations have been made by the Commissioner (Appeals), Mumbai in the OIA No. MUM-CUSTM-AMP-APP-255 & 256/19-20, dated 28-6-2019 in case of M/s. Endress & Hauser India Pvt. Ltd., Mumbai, involving classification of "Micro pilot NMR 81 (Model No. NMR81). It is opined that the ratio of the issue as decided by the said OIA applies to the applications under consideration. It is also suggested seeking comments from the concerned Mumbai Commissionerate. (iii) Presently the applicant has gone into appeal before Hon'ble CESTAT, Mumbai against order OIA No. MUM-CUSTM-AMP-APP-255 & 256/1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been summarised below :- (i) The sensing element in the instruments generates an electrical phenomenon that is directly proportional to the parameter under measurement. The electrical phenomenon is taken to a transmitter which stabilizes the phenomenon to give an output, which is representative of the measured process variable. The output may then be used for giving input to an independent process control system or process controller which usually compares the signal received with desired measurements and sends a control command or signal. The instruments may have facilities for providing a digital output to just ensure that the end-user can integrate the measuring instruments with other controlling apparatus (which are not supplied by them), as per their needs. All sensors today are equipped with electronics including a microprocessor for processing of physical signals; however, this does not imply that the instruments have inherent automatic control or regulating functions. The devices also have a local LCD for showing the process variable being measured. Profibus, Hart & Fieldbus are industry network protocols for the purpose of configuring devices (e.g., selection of lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other goods (not covered in these applications) cannot impact the present applications. (v) The applicant states that M/s. Endress + Hauser Flowtec (I) Pvt. Ltd. is a distinct corporate entity, with its PAN, IEC, GST and such other registrations. Hence, it is not relevant to the present application. (vi) In respect of an allegation of mala fide intentions, the applicant states that the decision to import at Sri city SEZ was taken considering efficient logistics & commercial operations for the current and future business transactions and available infrastructure. They presented all facts to the department on their own and sought rulings to bring predictability to their operations and that the unsubstantiated allegation are not called for. 5. These applications were heard on 26-10-2021, 27-10-2021 and 30-11-2021. S/Shri Hemal Desai, Santosh Kumar, Satish Reddy and Ms. Sonali Trivedi appeared on behalf of the applicant. Ms. Sowmya Nuthalapati, Joint Commissioner, Commissioner of Customs (Preventive), Vijayawada appeared on behalf of the jurisdictional Commissionerate. 5.1 In all the 21 applications involving flow measuring devices operating under 5 different scientifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding in the applicant's case before any officer of customs, the Appellate Tribunal or any Court; or has already been decided by the Appellate Tribunal or any Court. It is true that there is an appeal of the applicant pending before the CESTAT. The pending appeal is in respect of products that are not involved in any of the 21 applications involved in the present proceedings. The term "advance ruling" is defined in the Act as a written decision on any of the questions referred to in Section 28H raised by the applicant in his application in respect of any goods before their importation or exportation. The Technical Guidelines on Advance Rulings for Classification, Origin and Valuation, published by the World Customs Organisation, in its Clause 7, says that 'An application for advance ruling on classification, origin or valuation shall be made in writing to a competent authority and relate to only one good (emphasis supplied). From a reading of the law as it stands and the WCO's mandate, it would appear that if advance ruling applications are to be rejected only on the ground that a similar product is involved in a dispute, the entire purpose of seeking advance rulings would be defeat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CONTROLLING INSTRUMENTS AND APPARATUS'. 8. From the product catalogues, it appears that these flowmeters measure the mass flow of liquids and gases, along with other parameters such as temperature. The flowmeters appear to be capable of only measuring the value and the measured parameter(s) are displayed visually or provided as a digital output. Hence, these instruments appear to match the description for goods covered under Heading 90.26, as instruments and apparatus for measuring or checking the flow, level, pressure or other variables of liquids or gases. I find that Heading 90.26 specifically mentions flowmeters. The HSN Explanatory Notes for Heading 90.26 states, "This heading covers instruments and apparatus for measuring or checking the flow, level, pressure, kinetic energy or other process variables of liquids or gases. The instruments and apparatus of this heading may be fitted with recording, signalling or optical scale-reading devices or transmitters with an electrical, pneumatic or hydraulic output. Measuring or checking apparatus generally incorporates an element sensitive to variations in the quantity to be measured (e.g., Bourdon tube, diaphragm, bellows, semic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notes. 8.2 In respect of instruments for measuring or checking the level of liquid or gases, the HSN explanatory states that level indicator includes inter alia, electrical type based, for example, on the variations of resistance, capacitance, ultrasound, etc. This heading covers not only level indicators for closed reservoirs or tanks, but also those for open basins and canals (hydroelectric works, irrigation systems, etc.). Instruments for measuring or checking the level of solid materials are excluded (Heading 90.22 or 90.31, as the case may be). From the product description, it is evident that the liquicap (application at Sr. No. 21) is used to measure the level of liquid using variations of capacitance. A transmitter is also fitted for communication purposes. Further, this level instrument does not fall under the exclusion criteria specified in explanatory notes. Considering the above it appears that the impugned goods are classifiable under Heading 90.26 of the Customs Tariff Act, 1975, the flowmeters are classifiable under sub-heading 9026 10 10 and the level measuring instrument is classifiable under sub-heading 9026 10 20. 9. As per Chapter Note 7 to Chapter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pump, compressor, valve, furnace burner, etc.) which restores the variable (e.g., liquid measured in a tank or temperature measured in a room) to the prescribed value, or which, in the case of a safety system, for instance, stops the operation of the machine or apparatus controlled. This appliance, generally remote-controlled by a mechanical, hydraulic, pneumatic or electric, is to be classified in its own appropriate heading (pump or compressor : Heading 84.13 or 84.14; valve : Heading 84.81, etc.). If the automatic control apparatus is combined with the appliance which carries out the orders, the classification of the whole is to be determined under either Interpretative Rule 1 or Interpretative Rule 3(b) (see Part (III) of the General Explanatory Note to Section XVI and the Explanatory Note to Heading 84.81). 9.2 The flowmeters under consideration appear to only measure the flow rate and make available the measured value in the required signal format for further processing/information, based on the requirement of the end customer. There is nothing on record, or available in the product catalogues to indicate that these devices/instruments have the capacity to perform addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Supreme Court in the case of Dunlop India Ltd. v. UOI - 1983 (13) E.L.T. 1566 (S.C.), cited by the applicant, states that 'the condition of the article at the time of importing is a material factor, for the purpose of classification as to under what head, duty will be leviable'. In the present case, what are proposed to be imported and cleared are measuring instruments used in measuring the flow of liquids or gases or measuring the level of liquid. Therefore, the goods are required to be classified as only flowmeters or level indicators, which per se, are not capable of performing any controlling function. The applicant's global company, according to information available in the public domain, is a market leader in the field of manufacturing measuring instruments. The product positioning of these goods is as measuring instruments only. There is no material before me to reject the applicant's contention that these devices are individually marketable and, in many cases, operate without any control system at the customers' end and that they can be used as stand-alone instruments for measurements in some industries (water management and sugar industries) where only measurement is i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to form a whole and 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 electric 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 85, then the whole falls to be classified in the heading appropriate to that function. HSN explanatory rules to Chapter 90 were referred to. It states that subject to Chapter Note 1, parts or accessories identifiable as suitable for use solely or principally with the machines, appliances, instruments or apparatus of this Chapter are classified with those machines, appliances, etc. However, this general rule does not apply to parts or accessories which in themselves constitute articles falling in any particular heading of this Chapter or of Chapter 84, 85 or 91 (other than the residual Heading 84.85, 85.48 or 90.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so denied the benefit of exemption. However, I am unable to agree with the conclusions of the Ld. Commissioner (Appeals) in holding that the imported goods were parts and accessories for the manufacture of automated process control systems. As I have already observed earlier in this ruling, classification has to be decided on the basis of the state of goods at the time of import and any subsequent activity shouldn't influence the classification decision. This also is the view of the Hon'ble Supreme Court in the case of M/s. Sony India Ltd. reported at 2008 (231) E.L.T. 385 (S.C.) apart from the ruling in the case of M/s. Dunlop India v. UOI - 1983 (13) E.L.T. 1566 (S.C.) cited by the applicant. Therefore, I am unable to agree with the conclusions of the Ld. Commissioner (Appeals) and hold that even though it is possible that some of the flowmeters proposed to be imported by the applicant can be used in a system to control and regulate process parameters, these flowmeters, by themselves, are not automatic controlling and regulating apparatuses. 11. In view of my aforesaid discussions, I rule that the instruments/devices under consideration merit classification under Heading 90 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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