UPS classification turns on principal function: systems converting and regulating power remain static converters under Heading 8504.

Uninterrupted power supply systems are classified by their principal function and the Harmonized System nomenclature: where the equipment mainly converts and regulates electrical energy to provide uninterrupted, stabilised AC supply, it falls under Heading 8504 as a static converter. The presence of batteries or other auxiliary components does not, by itself, remove the goods from that heading when the overall character remains that of a converter system. On that basis, Heading 8543, being residuary, is not appropriate for such goods.

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Issues: Whether uninterrupted power supply system is classifiable under Heading 8504 as a static converter or under Heading 8543 as a residuary entry.

Analysis: The equipment was found to perform the principal function of converting and regulating electrical energy so as to supply uninterrupted, stabilised AC power to the load. The technical material and the Harmonized System Explanatory Notes showed that such systems commonly include rectifier and inverter units and may also include batteries without losing their character as static converters. The Board's circular also supported classification under Heading 8504. The earlier view treating the presence of a battery as taking the goods outside Heading 8504 was disapproved, and the goods were held to answer the description of a static converter rather than a residuary electrical appliance.

Conclusion: The classification under Heading 8504 was correct and the classification under Heading 8543 was not justified; the assessee succeeded on the classification issue.

Final Conclusion: The impugned orders were set aside and the appeal was allowed, with consequential refund of the amount deposited under the stay order.

Ratio Decidendi: For tariff classification, the goods must be classified according to their principal function and the Harmonized System nomenclature, and a product that mainly converts and regulates electrical energy to provide uninterrupted supply remains a static converter even if it includes batteries or other auxiliary components.

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