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TMI Blog2023 (11) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... e Interpretative Rules specified above. Moreover, they are more akin to the description given under Chapter 8504 and as per Clause (4) above of General Rules for the Interpretation of Import Tariff they are to be classified under Chapter Heading 8504 only - Admittedly, the principal function of the imported item is of an inverter and it is also not under dispute that these drives are being used in those machinery which are classifiable under Chapter 84 or 85. Therefore, based on the above Section Notes absolutely there is no confusion as to the classification of the product. It also says that the machine refers to the machines classifiable under Chapter 84 or 85 so the question of classifying the product under Chapter 90 does not arise. The WCO also for which India is a member decided the classification of the frequency converter under Chapter 8504. The goods are rightly classifiable under Chapter Heading 8504 as against the classification under Chapter Heading 9032 as claimed by the appellant - appeal dismissed. - HON'BLE DR. D.M. MISRA, MEMBER (JUDICIAL) AND HON'BLE M RS. R. BHAGYA DEVI, MEMBER (TECHNICAL) Appearance: For the Appellant : Ms. Neetu Ja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncreases, VFD will automatically increase the motor speed to keep the air pressure constant in order to meet pressure demand. Thus, it ensures motor control of the machinery to ensure optimum performance. Variable-Frequency drives are also known as Adjustable-Frequency Drives (AFD), Variable-Speed Drives (VSD), AC drives, micro drives or inverter drives. c) The frequency converter has two components; one is the rectifier and other is an inverter. The rectifier receives the AC voltage and converts it to Direct Current (DC) voltage. A DC bus inside the VSD functions as a parking lot for the DC voltage. The DC bus energizes the inverter, which converts it back to AC voltage again. The inverter can be controlled to produce an output frequency of the proper value for the desired motor shaft speed. When the capacity of the drive increases, the drives are split into two components namely, the Supply Unit (Converter) and the Drive Unit (Inverter), by adding the inverters in parallel. d) The frequency converter (variable speed drive) is made up of several different units namely, the diode supply unit, IGBT Supply unit, Thyristor supply unit, dynamic breaking unit and control unit, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of electrical quantities and instruments or apparatus for automatically controlling nonelectrical quantities the operation of which depends on an electrical phenomenon varying according to the factor to be controlled . The automatic regulators of this heading include an automatic regulator which consists of a measuring device, an electrical control device and a starting, stopping or operating device, whether assembled together as a single entity or in accordance with Note 3 to Chapter 90 as a functional unit. The electrical control device compares the measured value with the desired value and gives a signal generally in the form of a modulated current. Electrical control devices even if they do not conform to the definition of Note 7(b) are to be classified in 9032 as incomplete automatically controlling instruments or apparatus. The electronic regulators function on a strict electrical principle and not electro mechanically. The regulators are used not only for electrical quantities such as voltage, amperage, frequency, and power but also for other quantities such as revolutions per minute, torque etc. 5. The learned counsel also rely on the Circular No. 45/95-Cus dated 19.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t when certain grounds are not mentioned in the show-cause notice, the department cannot travel beyond the show cause notice and invoke such grounds at a later stage. Similarly, the Apex Court in Commissioner of C. Ex. v. Brindavan Beverages (P.) Ltd., 2007 (213) E.L.T. 487 (S.C.) held that the Show Cause Notice is the foundation on which the department has to build up its case and that all the allegations and evidence must find place in the Show Cause Notice. 7. The Authorised Representative on behalf of the Revenue referring to the order of the original authority submits that based on the Section and Chapter Notes to Chapter 8504 and 9032, the authorities were right in classifying the said products under Chapter 8504. He also refers to the classification of the said product by the WCO i.e., classification of standard frequency converters in Chapter Heading 8504 40. It is further submitted that based on the technical literature produced by the appellant, the item imported is as per the specifications referred under Chapter 8504 and the supplier has classified the said product under Chapter Heading 8504 and hence, the appellant cannot change the classification. It is argued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o noted that there is no reply to the show-cause notice though the personal hearing was attended by the appellant. The second show-cause notice dated 22.2.2010 was a recurring show-cause notice, therefore, no grounds were specified in that show-cause notice, hence, the claim by the appellant that the show-cause notice is an invalid notice is baseless since the grounds are already mentioned in the first show-cause notice. 10. The item imported Frequency converter as per their own literature is described as an attractive solution to the challenge of linking asynchronous electric systems, or transforming utility grade energy into the frequency and voltage required for the particular application. Whenever the grid frequency does not match the customer s requirements, ABB s static frequency converters provide an economic solution. AC drives are also referred to as frequency converters, variable speed drives or variable frequency drives. Frequency converter refers to a device used to adjust the frequency of alternating current. Frequency converters are a central component in variable-speed drives to control the speed, torque or power on the shaft of an electric motor by adjusting th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrent ( DC ) voltage. A DC bus inside the VSD functions as a parking lot for the DC voltage. The DC bus energizes the inverter, which converts it back to AC voltage again. The inverter can be controlled to produce an output frequency of the proper value for the desired motor shaft speed. When the capacity of the Drive increases, the drives are split into two components namely, the Supply Unit (Converter) and the Drive Unit (Inverter), by adding the inverters in parallel. These drives are used in Industries such as metals, cement, mining, pulp and paper, printing, Chemical industries etc. The above facts are not in dispute but the appellants only claim is that the frequency inverter is not a mere inverter which converts the DC current into AC current but it further regulates the frequency of the current into a variable speed and thereby controls the motor speed and thereby facilitates motion control. Therefore, they are not merely converters, hence, not to be classified under Chapter Heading 8504. Based on these submissions, its very clear and categorical that these drives primary function as conversion of the current from DC to AC and also functions as inverters. The above HSN ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it at, a desired value, stabilized against disturbances, by constantly or periodically measuring its actual value. 14. As rightly observed by the Commissioner (A) in the impugned orders, the products under Chapter 9032 refers to instruments and apparatus for automatically controlling the flow, level, pressure or other variables of liquids or gases, or for automatically controlling temperature, while the product under dispute undisputedly converts alternating current to different frequency which are entirely different from an automatic regulator. Therefore, the question of classifying the Frequency converter imported by the appellant under 9032 is ruled out. 15. Further as per the General Rules for the Interpretation of Import Tariff classification of goods are governed by the following principles: 1. The titles of Sections, Chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or notes do not otherwise require, according to the following provisions: 2. . 3. When by application of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision Image and Sound Recorders and Reproducers, and Parts and Accessories of Such Articles. The Section Notes reads as follows: 1. This Section does not cover : 2. Subject to Note 1 to this Section, Note 1 to Chapter 84 and to Note 1 to Chapter 85, parts of machines (not being parts of the articles of heading 8484, 8544, 8545, 8546 or 8547) are to be classified according to the following rules : (a) parts which are goods included in any of the headings of Chapter 84 or 85 (other than headings 8409, 8431, 8448, 8466, 8473, 8487, 8503, 8522, 8529, 8538 and 8548) are in all cases to be classified in their respective headings; 3. Unless the context otherwise requires, composite machines consisting of two or more machines fitted together 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 of interconnected by piping, by transmission devices, by electric cable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, Note 3 of Section XVI (which includes both Chapter 84 and Chapter 85) reads as follows: Unless the context otherwise requires, composite machines consisting of two or more machines fitted together 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. 20. This view of classification being based on the principal function was once again upheld by this Tribunal in the case of Logic India Trading Co. vs. Commr. of C. Ex.: 2022 (382) ELT 244 (Tri Bang.) which was upheld by the Apex Court. 21. The reliance placed on by the learned counsel on note 1(m) of Section XVI which states this Section does not cover articles of Chapter 90 is totally misplaced as seen from the chapter notes and the explanatory notes supra. The learned counsel has also relied on the explanatory notes where it states automatic voltage regulators are classified in heading 90.32, conveniently ignoring the HSN explanatory notes under Chapter 8504 . As discussed above, the items imported are not automotive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stoms may not be binding but definitely have great persuasive value as the Classification Code followed by all these countries, are based on ,which the classification system adopted by Indian Customs is also aligned. It is only beyond six-digit level that local jurisdictions have their own expansions. 24. The Hon ble Supreme Court of India in the case of Thermax Ltd. Versus Commissioner of Central Excise, Pune-I: 2022 (382) E.L.T. 442 (S.C.) dated on 13-10-2022 the Supreme Court held that: 6. The definition of a product given in the HSN should be given due weightage in the classification of a product for the purpose of levying excise duty. This is because in the Statement of Objects and Reasons of the Bill leading to enactment of Central Excise Tariff Act, 1985, it was clearly stated that the pattern of tariff classification is broadly based on the system of classification derived from the International Convention on the Harmonised Commodity Description and Coding System (Harmonised System) with such contraction or modification thereto as are necessary, to fall within the scope of the levy of Central Excise duty. The tariff so suggested for the levy under the Indian T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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