Classification of multifunction equipment and software under Customs headings, with exemption and refund sustained for the importer.

An imported tyre scanner was held classifiable under Heading 90.27 as an apparatus for measuring or checking porosity because its real and principal function was tyre porosity detection, and additional capabilities did not shift it to Heading 90.31, which was treated as a parts heading. Imported software was held classifiable under Heading 85.24 and therefore eligible for exemption under Notification No. 17/2001-Cus., as amended, with reclassification rejected. The doctrine of unjust enrichment was held not to bar the refund claim where the import related to capital goods used in manufacture of end products. The assessee's classification, exemption and refund claims were accepted.

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Issues: (i) whether the imported tyre scanner was classifiable under Heading 90.27 as an apparatus for measuring or checking porosity or under Heading 90.31; (ii) whether the imported software was classifiable under Heading 85.24 and eligible for exemption under Notification No. 17/2001-Cus.; and (iii) whether the doctrine of unjust enrichment applied to the refund claim.

Issue (i): whether the imported tyre scanner was classifiable under Heading 90.27 as an apparatus for measuring or checking porosity or under Heading 90.31

Analysis: The decisive test was whether the equipment measured or checked porosity, not whether it was used exclusively for that purpose. The technical literature showed that the system was purchased mainly to detect porosity in tyres, and the presence of additional functions did not take it out of Heading 90.27. Heading 90.31 was treated as applicable to machine parts rather than to the imported tyre-checking system.

Conclusion: The tyre scanner was correctly classified under Heading 90.27 and not under Heading 90.31, in favour of the assessee.

Issue (ii): whether the imported software was classifiable under Heading 85.24 and eligible for exemption under Notification No. 17/2001-Cus.

Analysis: The software was treated as classifiable under Heading 85.24. Once so classified, it fell within the exemption available under Sl. No. 261 of Notification No. 17/2001-Cus., as amended. The attempted reclassification with the machine and the objection to exemption were rejected.

Conclusion: The software was classifiable under Heading 85.24 and was exempt, in favour of the assessee.

Issue (iii): whether the doctrine of unjust enrichment applied to the refund claim

Analysis: The refund claim concerned capital goods imported for manufacture of end products, and the doctrine was held inapplicable on the reasoning relied upon by the assessee and accepted by the Tribunal.

Conclusion: Unjust enrichment did not bar the refund claim, in favour of the assessee.

Final Conclusion: The Revenue's challenge failed, the assessee's classification and exemption claims were accepted, and the refund was sustained.

Ratio Decidendi: An imported appliance remains classifiable under the heading for measuring or checking porosity if that is one of its real and principal functions, even when it has additional capabilities; a residual heading cannot prevail merely because the equipment is multifunctional.

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