TaxTMI 
TaxTMI 
2023 (11) TMI 20
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....ribution Control Systems, Control and Relay Panels, Air Circuit Breakers (ACBs), Low Voltage Products etc. They imported 'Frequency Converter' (variable speed drive) from M/s. ABB Finland vide 14 Bills of Entry from classifying them under Chapter Heading 9032 89 90. The original and the appellate authorities rejected the classification of the imported goods under Chapter Heading 9032 8990 as claimed by the Appellants and re-classified the same under Chapter Heading 8504 4010. Aggrieved by these orders, the appellant is in appeal. 3. On behalf of the appellant the counsel made the following submissions: a) The item imported Frequency converter/Variable-Frequency Drive (VFD) is a system for controlling the rotational speed of an AC electric motor by controlling the frequency of the electrical power supplied to the motor. The frequency converters are not mere electric convertors but also carry out the function of motor control and are widely used in industries to control the speed of motor automatically coupled with energy saving feature. b) The VFD senses the requirement of pressure through pressure transducer and vary the speed of the motor to keep pressure cons....
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....to the HSN Explanatory notes states that Chapter Heading 85.04 refers to 'Static Converters', which are only simple inverters which merely does the function of converting the Direct Current into Alternating Current. Referring to the technical literature as discussed above, it is submitted that the 'Frequency Converter' is not a mere inverter which converts the DC current into AC current, but regulates the frequency of the current into a variable speed and thereby controls the motor speed and torque thereby facilitating motion control. It is submitted that Note 1(m) of Section XVI to Customs Tariff specifically excludes goods which are classifiable under Chapter Heading 90 of the Customs Tariff Act, 1975 from being classified under Section XVI (which includes chapter 85). 4. The learned counsel, therefore, submits that the impugned goods are covered under Chapter 9032 by virtue of Note 1(m) to Section XVI since the goods get excluded from Section XVI itself. In this regard, reliance is placed on the Explanatory notes to Refer to HSN EN to 8504 which excludes 9032 provides that Automatic voltage regulators are to be classified under Heading 9032. Instead, it is rightly cla....
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....ustoms, Madras v. Widia (I) Ltd., reported in 1994 (71) E.L.T. 193 (Tribunal). (ii) Collector of Customs, Madras v. Kwality Biscuits Ltd., reported in 1994 (71) E.L.T. 1035 (Tribunal). 6. It is further submitted that the World Customs Organisation (WCO) ruling was specifically in relation to the frequency converter and the frequency converter which was considered by the WCO did not have the control functions and it is for this reason the goods were classified as inverters under 8504 while the impugned goods having control functions including programmable control functions are rightly classifiable under CTH 9032. They also claim that based on the decision in the case Commissioner of Central Excise and Customs v. M/s. Reliance Infrastructure Ltd. with Final Order No. A/30026/2022, the supplier's classification is not binding on the importer. It is further claimed that the Order-in-Original has been passed on grounds not set out in the show-cause notice. In the absence of specific charges set out in the demand notice, it is stated that the demand notice was vague and therefore, the Order-in-Original passed on the basis of the demand notice in question is clearly violative ....
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....0 Other u 7.5% - 8504 Electrical transformers, static converters (for example, rectifier) and inductors 8504 40 Static converters: u 10% - 8504 40 10 --- Electric inverter ---Rectifier 9. The Learned counsel has stated that the show-cause notice is not a valid notice since no grounds were alleged in the notice for reclassification of the said product in question. The original authority vide Order-in-Original No. 286/2009 dated 13.10.2009 has clearly stated that a query was raised for manufacturer's catalogue in substantiation of the classification claimed by the appellant. It is also stated that on scrutiny of import documents and the invoice, it is found that the said goods have been described as 'frequency converter' and the Customs Tariff Heading indicated by the foreign supplier in the invoice is 8504. Based on these observations, a show-cause notice was issued classifying the 'frequency converters' under Chapter Heading 8504 and it is also noted that there is no reply to the show-cause notice though the personal hearing was attended by the appellant. The....
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....ey incorporate converting elements (e.g. valves) of different types. They may also incorporate various auxiliary devices (e.g. transformers, induction coils, resistors, command regulators, etc.) their operation is based on the principle that the converting elements act alternately as conductors and non-conductors. The fact that these apparatus often incorporate auxiliary circuits to regulate the voltage of the emerging current does not affect their classification in this group, nor does the fact that they are sometimes referred to as voltage or current regulators. This group includes: ..... (B) Invertors (C) Alterating current converters and cycle converters by which alternating current (single or polyphase) is converted to a different frequency or voltage. (D) Direct current converters by which direct current is converted to a different voltage." From the submissions of the learned counsel, the item in question the frequency converter has two components; one is the rectifier and other 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 'par....
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....cluding a machine, instrument or apparatus of heading 9010, 9013 or 9031) are to be classified with the machines, instruments or apparatus of that kind; "9032 Automatic Regulating or Controlling Instruments and Apparatus 9032 89 -- Other : 9032 89 10 --- Electronic automatic regulators Heading 9032 applies only to: (a) instruments and apparatus for automatically controlling the flow, level, pressure or other variables of liquids or gases, or for automatically controlling temperature, whether or not their operation depends on an electrical phenomenon which varies according to the factor to be automatically controlled, which are designed to bring this factor to, and maintain it at, a desired value, stabilized against disturbances, by constantly or periodically measuring its actual value; and (b) automatic regulators of electrical quantities, and instruments or apparatus for automatically controlling non-electrical quantities the operation of which depends on an electrical phenomenon varying according to the factor to be controlled, which are designed to bring this factor to, and maintain it at, a desired value, stabilized against ....
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....be classified under Chapter Heading 8504 only. Classification being finalized based on Section / chapter and based on the Rules of Interpretation has been upheld by the Hon'ble Supreme Court in the case of CCE vs. Simplex Mills Co. Ltd.: 2005 (181) ELT 345 (SC). The apex court in the above case at para 11 held that: "11. The rules for the interpretation of the Schedule to the Central Excise Tariff Act, 1985 have been framed pursuant to the powers under Section 2 of that Act. According to Rule 1 titles of Sections and Chapters in the Schedule are provided for ease of reference only. But for legal purposes, classification "shall be determined according to the terms of the headings and any relevant section or Chapter Notes". If neither the heading nor the notes suffice to clarify the scope of a heading, then it must be construed according to the other following provisions contained in the Rules. Rule-I gives primacy to the Section and Chapter Notes along with terms of the headings. They should be first applied......". 17. Section XVI includes Machinery and Mechanical Appliances; Electrical Equipment; Parts Thereof; Sound Recorders and Reproducers, Television Image and Soun....
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.... Interpretation of Import Tariff and the WCO decision, the products are rightly classifiable under Chapter Heading 8504, which is placed below: 19. In the case of Xerox India Ltd. V. CC 2010 (260) ELT 161 (SC), the Hon'ble Supreme Court held that: "10. In order to determine the classification of the Multi-Functional Machines, it is necessary to look into some relevant provisions. Rule 3(a) of the General Rules for the Interpretation of the First Schedule (which along with the Second Schedule specifies the rates at which duties of customs shall be levied under the Customs Act) provides: "The heading which provides the most specific description shall be preferred to headings providing a more general description..." 11. Further, Rule 3(b) of the same reads as follows: "Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable." (emphasis supplied). 12.....
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....gulators'. The dispute involved in the present case relates to the classification of the said "static convertors" manufactured by the appellants. The appellants claimed the classification of the said products under Chapter subheading 85.04 of the Tariff Act and cleared the products at appropriate rate of duty accordingly. By the order impugned in this appeal, the Commissioner (A) classified the said products as "'Panels'' under Chapter Heading 85.37 of the Tariff Act. But based on the primary function of the product, the Tribunal found classification under 8504 to be appropriate. 23. In the case of Pioma Chemicals v. Commissioner of Customs, Nhava Sheva-I: 2019 (370) ELT 301 (Tri-Mumbai) held that: "In our view all the published literature support the findings recorded by the Commissioner in the impugned order to the effect that the goods imported are nothing but re-esterified fat/oil. On going through the published literature referred above, and also the fact that as per the rulings relied from US Customs and Kenya Customs we do not find any error in the classification of the goods determined under Chapter 1516 20 91. It is true that the Rulings of the US Customs and K....
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....ation under Chapter Heading 9032 as claimed by the appellant. 26. The appeals are dismissed. (Order pronounced in Open Court on 20.10.2023.) ============= Document 1 General Secretarial WORLD CUSTOMS ORGANIZATION ORGANISATION MONDIALE DES DOUANES Crabshed in 1952 the Cena Cooperston Counal NGOCSE (HSC/23/May 593 O. Eng Jr. HP-M Brussels, 31 May 1999 2 . NOTE FOR CONTRACTING PARTIES TO THE HARMONIZED SYSTEM CONVENTION APPROVAL OF DECISIONS TAKEN BY THE HARMONIZED SYSTEM COMMITTEE AT ITS 23 SESSION Some of the decisions taken by the Hamjonized System Committee at its 23 Session fall to be approved under the procedure laid down in Article 8.2 of the Harmonized System Convention . These decisions are listed in the Annex Hereto, in the order in which the various items appear in the Report of the Committee's 23" Session (Doc. NC0000E2). Under the procedure laid down in the HS Convention, Contracting Parties who wish to roquest that any of the decisions listed in the Annex be referred to the Council may do so within a period of two months nunning from 1 June 1990. Any such request should therefors ....