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TMI Blog2024 (3) TMI 1145X X X X Extracts X X X X X X X X Extracts X X X X ..... late the manner in which the car brakes ensure that the braking is safe - Merely because it is in the form of a PCB does not change it from a part of an automobile into an instrument or an apparatus. Automatic regulators, even according to the HSN Explanatory Notes relied upon by the appellant, essentially consist of a measuring device, a control device and a starting, stopping or operating device and ECU does not have these abilities, except that of the analysis of data. Evidently, Section Note 7(b) deals with either regulators of electrical quantities or instruments or apparatus for automatically controlling non-electrical quantities which depend on electrical phenomenon. ECU is not a regulator of electrical quantity nor is it an instrument or apparatus for regulating non-electrical quantities which depend on electrical phenomenon. It is not an instrument or apparatus by itself. It is the ABS which regulates the braking to ensure safe braking - Merely because ECU is a chip which analyses the data (and through any chip electricity flows), the function of the ABS or its part ESCS (manufactured by the appellant) or its further sub-part ECU (imported by the appellant) do not, in our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i D.K. Rana, Advocate, Shri Dhanur Gupta, Advocate, Shri Ayush Aggarwal, Advocate. For the Department : Shri S.K. Rahman, Authorized Representative. P.V. SUBBA RAO M/s. Continental Automotive Brake Systems Ltd. [the appellant] , filed these 75 appeals for setting aside the following impugned orders: S.No. Appeal No. Respondent Impugned order 1. C/50546 to 50603 of 2021 Commissioner of Customs D-II/ICD/PPG/ 1147-1206/ 2020-21 dated 17/12/2020 2. C/51565 to 51582 of 2022 Principal Commissioner of Customs CC (A) CUS/D-I/Import/NCH/ 4193-4210/2021-22 dated 09/03/2022 2. Since the issue involved in all these appeals is identical, they are being disposed of together. 3. The appellant manufactures Electronic Stability Control Systems [ESCS] which are used by manufacturers of automobiles in Anti-Lock Braking Systems [ABS] or Electronic Braking Systems [EBS] which ensure that the brake, when applied, works optimally on the four wheels thereby preventing skidding and ensuring a safe braking. This is achieved by the ABS or the EBS continuously monitoring various parameters with respect to the four wheels, analyzing the information and passing necessary instructions so that the brake gets appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned authorised representative for the Revenue and have perused the records. Submissions by the appellant 10. Shri D K Rana, learned counsel for the appellant submitted that the appellant imported ECU and manufactured ESCS and sold them to automobile manufacturers for use in their anti-lock braking systems. The brakes will work even without ABS it but the ABS makes the braking safe. ECU is in the form of a printed circuit board; it receives signals from the sensors attached to the wheels and analyses the information and issues signals based on which the braking is managed by the other parts of the ABS. ECU is classifiable under CTI 9032 89 10 as Electronic automatic regulator and not under CTI 8708 99 00 as parts and accessories of automobiles for four reasons: i. ECU cannot fall under CTI 8708 99 00. As per the HSN Explanatory note (III) to Section XVII (under which chapter 87 falls), three conditions must be met for parts and accessories to fall in the chapters under that section- First, the part should not be specifically excluded by any section or chapter note; Second, the part must be meant for use solely or principally with the good falling under that chapter; and Third, the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i. The appellant had been classifying the ECU under CTI 8708 99 00 and paying appropriate duty and there was no dispute. Other importers have also been classifying ECU under this CTI. On 29-11-2017 the appellant sent a letter that they wish to change the classification of the ECU from CTI 8708 99 00 to CTI 9032 89 10 and in reply dated 17-05-2018 the department explained that the correct classification is CTI 8708 99 00. However, the appellant continued to file bills of entry classifying ECU under CTI 9032 89 10 which required the department to re-assess the goods. The intention of the appellant apparently is to pay 21.4% lower duty than is due by wrongly classifying the impugned goods under CTI 9032 89 10. ii. The appellant itself has declared the nature of goods as ECU Automotive parts in all its declarations and has been classifying them under CTI 8708 99 00 and so have been the other importers. ECU is used in the manufacture of anti-lock braking systems of motor vehicles as per the declaration of the appellant itself. iii. Learned counsel for the appellant is correct in pointing out that as per HSN explanatory note (III) to Section XVII (under which chapter 87) falls, three con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the brake is applied. The brake can function even without the ABS but ABS makes the braking safer by regulating it. The appellant has described the imported goods in the Bills of Entry and other import documents as Electronic Control Unit (automotive parts) . The only use of the ECU imported by the appellant, as per the records, is in the manufacture of ESCS and the use of ESCS is as a part of ABS or EBS of the cars. 14. Thus, there is no doubt that ECU imported by the appellant is in the form of a printed circuit board and that it is a part of the ESCS, which is a part of the automobiles. The description of the goods in the Bills of Entry also makes it explicit that they are automotive parts. 15. The case of the appellant is that although it is an automotive part, but since ECU is purely an electronic printed circuit board, it should be classified under CTI 9032 89 10. The case of the department is that since it is an automotive part, it should be classified as parts of automobile under CTI 8708 89 10, regardless of the fact that it is a printed circuit board. 16. The two competing entries are as follows: 8708 Parts and accessories of the motor vehicles of headings 8701 to 870 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d (c) They must not be more specifically included elsewhere in the Nomenclature (see paragraph (C) below). (A) Parts and accessories excluded by Note 2 to Section XVII. This Note excluded the following parts and accessories, whether or not they are identifiable as for the articles of this Section : (1) (2) .. (8) Instruments and apparatus of Chapter 90 , including those used on certain vehicles such as : (a) Photographic or cinematographic cameras ( heading 90.06 or 90.07 ) (b) Navigational instruments and appliances ( heading 90.14 ) (c) Instruments and appliances used in medical, surgical dental or veterinary sciences ( heading 90.18 ) (d) Apparatus based on the use of X-rays and other apparatus of heading 90.22. (e) Manometers ( heading 90.26 ) (f) Revolution counters, taximeters, speed indicators and tachometers and other instruments and apparatus of heading 90.29 (g) Measuring or checking instruments, appliances and machines of heading 94.05 18. There is no dispute regarding the fulfilment of the second condition inasmuch as the imported ECU were used only for automobiles and there is no evidence of any other use. According to the appellant the first and the third conditions a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h are not part of the ECU. It also cannot regulate anything such as braking because that can be done only by the ABS of the automobile. All that the ECU does is analyse the data. 23. The submissions of the learned authorised representative for the department deserve to be accepted. From the records of the case and the detailed technical submissions made by the learned counsel for the appellant, it is evident that the ECU does not and cannot either measure or regulate anything. It only analyses the data provided to it by other parts of the ABS (sensors) and compares it with standards and issues instructions. Based on these instructions, other parts of the ABS regulate the manner in which the car brakes ensure that the braking is safe. We are conscious that there are electronic instruments and apparatus which, though used in automobiles, are classifiable under Chapter 90. However, ECU is not an instrument or an apparatus but is just a part of ESCS which, in turn, is a part of the ABS. Merely because it is in the form of a PCB does not change it from a part of an automobile into an instrument or an apparatus. Automatic regulators, even according to the HSN Explanatory Notes relied upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is applied to different wheels and this does not depend on any electrical quantity but depends on the certain other non-electrical factors such as angular speed, torque, etc. In this entire process, data on sideway movement, wheel speed and angular motion is collected by the sensors and the ECU analyses that and instructions are issued, based on which other parts of the system such as the motor and the solenoid valves and the braking fluid operate to control the manner in which the brake is applied. Merely because ECU is a chip which analyses the data (and through any chip electricity flows), the function of the ABS or its part ESCS (manufactured by the appellant) or its further sub-part ECU (imported by the appellant) do not, in our considered view, qualify as automatic regulators of electrical quantities and instruments or apparatus for automatically controlling non-electrical quantities the operation of which depends on electrical phenomenon... . 27. Learned counsel submitted that as per Note 7 (b), even instruments or apparatus for automatically controlling non-electrical quantities the operation of which depends on an electrical phenomena varying according to the factor to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 and the assessee claimed classification under 9032.89. The Supreme Court noted that the revenue effect was less than Rs. 6 lakhs and for the subsequent period, the Central Government itself issued a notification classifying the goods under 9032.89. In this context, without considering the merits of the appeal filed by the assessee, the appeal was decided. Paragraphs 4 and 5 of this judgment are reproduced below: 4. In the present appeal, the Revenue effect is less than Rs. 6 lacs and since the Revenue itself has classified the goods in dispute under Chapter sub-heading 9032.89 from 1-3-2002, it may not be necessary for this Court to consider in detail the appeal filed by the assessee. 5. In that view of the matter, for the period after 1-3-2002, in view of the Notification issued by the Central Government, the goods, namely Electronic Automatic Regulators would fall under Chapter sub-heading 9032.89. With this observation and clarification, this appeal is disposed of. No costs . 34. This judgment does not help the case of the appellant. 35. Learned counsel for the appellant also placed reliance on following three US Customs decisions in which classification of certain articles we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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