TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 139
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....he appellants had filed various Bills of Entry (B/Es) for import of goods viz., 'NOx Sensor, Nitrogen Oxide Sensor, Oxygen Sensor, Ammonia (NH3) Sensor and KPO3 Sensor' by classifying the same under Customs Tariff Item (CTI) 8409 9990, 9031 1000, 9031 8000, 9031 9000, 9032 8990 and 9032 9000 of the First Schedule to the Customs Tariff Act, 1975 by paying applicable duties of customs including 7.5% Basic Customs Duty (BCD). 2.2 During the post-clearance audit of the import transactions that have occurred during the period March, 2015 to February, 2020, the audit officers of the Department had noticed that the appellants had mis-classified the imported goods, and the correct classification of such goods would be under CTI 9027 1000 as 'gas or smoke analysis apparatus' chargeable to BCD at the rate of 10% advalorem. On the basis of above understanding and since in some of the invoices issued by suppliers from USA had mentioned classification of the impugned goods as 9027.10.2000, the Department had initiated the pre-consultative notice proceedings and subsequently issued Show Cause Notice dated 15.06.2020. In the said SCN, the Department had proposed for reclassification of the impor....
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....s a part of the written submissions. 3.3 In support of the classification of the impugned goods under CTI 9026 8090 he stated that the impugned goods are instrument/apparatus for measuring the variables of gases. In terms of the scope and coverage of entries given for classification of goods under Customs tariff and HSN being identical, the Explanatory Notes (EN) to HSN under heading 9026 covers such measuring or checking apparatus. He submitted that the sensors in question measuring the variation of the gas and such variation being converted to electrical signals and is further conveyed; on the basis of which the quantum of NOx present in the exhaust gases is determined and thus the classification of goods as 'measuring are checking apparatus' under CTI 9026 8090 has been correctly declared by the appellants. Further, he stated that in the case of Bosch India Ltd., Vs. Commissioner of Customs, Bangalore - 2021 (375) E.L.T. 227, the goods have been classified under heading 90.26. 3.4 Learned Advocate has also submitted that the imported goods are not functional units capable of performing any stand-alone function. The sensors cannot operate on their own and required to be fitted ....
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.... Paper Book-Vol.I compilation submitted by the appellants (at page 120). The said electrochemical cells use solid zirconia electrolyte and two porous platinum electrodes centred on opposite sides of solid zirconia electrolyte exposed to exhaust gases and reference/ ambience/ atmospheric gases. The exhaust gases/combustion by-products (burnt gases) diffuse the first electrochemical cell wherein products like hydrocarbons (HO), carbon mono oxide (CO), hydrogen (H2) are oxidised on the platinum electrode and are converted into CO2 and H2O. The basic purpose of oxidation of the said compounds is that they should not get oxidised in the second electrochemical cell, otherwise at high temperature of 850˚C, the said compounds will react with the oxygen in the second electrochemical cell and will decrease the concentration of oxygen accordingly and the sensor will reflect incorrect concentration of oxygen and correspondingly incorrect NOx reading. Further, as the partial pressure of oxygen in the ambient/atmospheric/reference air is more than the partial pressure of oxygen in the exhaust/sample gases, the oxygen molecules of the reference air get adsorbed on the reference platinum elec....
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.... their respective headings and not as a part of EATS under CTH 9032. Thus, he claimed that in terms of the aforesaid chapter note and the impugned goods are correctly classifiable under CTI 9027 1000. In respect of other charges alleged in the SCN, learned Authorised Representative reiterated the findings made by the adjudicating authority in the impugned order. 5. We have heard both sides and perused the case records and additional paper books submitted in this case by both sides. 6.1 The issue involved herein is to decide the classification of impugned goods imported by the appellants as to whether, the same merits classification under Customs Tariff Heading/Item (CTH/CTI) 9026, 9032 9000 as claimed by the appellants; or, is it classifiable under Customs Tariff Heading (CTI) 9027 1000 as determined by the learned Commissioner of Customs, for deciding on the appropriate levy of customs duty, in respect of various Bills of Entries filed during the disputed period. Further, it is also required to be decided whether the confirmation of the demand by invoking the extended period of limitation, imposition of consequent redemption fine and penalty is legally sustainable on the basis o....
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..... (b) Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles of rule 3. 3. When by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: (a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. (b) Mixtures, composite goods consisting of different materi....
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....eded by "- -", the said article or group of articles shall be taken to be a sub-classification of the immediately preceding description of the article or group of articles which has "-". where the description of an article or group of articles is preceded by "---" or "----", the said article or group of articles shall be taken to be a sub-classification of the immediately preceding description of the article or group of articles which has "-" or "--". 2. The abbreviation "%" in any column of this Schedule in relation to the rate of duty indicates that duty on the goods to which the entry relates shall be charged on the basis of the value of the goods as defined in section 14 of the Customs Act, 1962 (52 of 1962), the duty being equal to such percentage of the value as is indicated in that column. 3. In any entry, if no rate of duty is shown in column (5), the rate shown under column (4) shall be applicable. ADDITIONAL NOTES In this Schedule,- (1)(a) "heading", in respect of goods, means a description in list of tariff provisions accompanied by a four-digit number and includes all sub-headings of tariff items the first four-digits of which correspond to that number; (b) "....
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....ided by HS explanatory notes, the trade parlance theory is to be adopted for ascertaining as to how the goods are known in the common trade parlance for the purpose of dealing between the parties. 7. In the case before us, the contending classification of imported goods discussed in the impugned order are either under CTH/CTI 9026, 9032 9000 or under CTI 9027 1000 of the First Schedule to the Customs Tariff Act. Thus, it is clear that at the Chapter level i.e., at the first two digits (90), there is no difference of opinion among the department and the appellants; it is only at the level of heading i.e., CTH 9026, 9032 or CTH 9027 (at the third and fourth digit indicating headings), there is a difference of opinion. The dispute in classification therefore lies in the narrow compass of analysis of the appropriate Headings under which the impugned goods are covered as per the Customs Tariff and then classifying the impugned product under the corresponding Sub-heading, Tariff Item which is appropriate as per the legal principles of classification of goods. Now, we may closely examine the scope of the contending classification for determining correct classification of the imported goo....
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.... Lenses, prisms, mirrors and other optical elements, of any material, mounted, being parts of or fittings for instruments or apparatus, other than such elements of glass not optically worked 9003 Frames and mountings for spectacles, goggles or the like, and parts thereof 9004 Spectacles, goggles and the like, corrective, protective or other 9005 Binoculars, monoculars, other optical telescopes, and mountings therefor; other astronomical instruments and mountings therefor, but not including instruments for radio-astronomy 9006 Photographic (other than cinematographic) cameras; photographic flashlight apparatus and flash bulbs other than discharge lamps of heading 8539 9007 Cinematographic cameras and projectors, whether or not incorporating sound recording or reproducing apparatus 9008 Image projectors, other than cinematographic; photographic (other than cinematographic) enlargers and reducers 9009 * * * * 9010 Apparatus and equipment for photographic (including cinematographic) laboratories, not specified or included elsewhere in this chapter; negatoscopes; projection screens 9011 Compound optical microscopes, including those for photomicrography, cine phot....
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....(for example, metals, wood, textiles, paper, plastics) 9025 Hydrometers and similar floating instruments, thermometers, pyrometers, barometers, hygrometers and psychrometers, recording or not, and any combination of these instruments 9026 Instruments and apparatus for measuring or checking the flow, level, pressure or other variables of liquids or gases (for example, flow meters, level gauges, manometers, heat meters), excluding instruments and apparatus of heading 9014, 9015, 9028 or 9032 9027 Instruments and apparatus for physical or chemical analysis (for example, polarimeters, refractometers, spectrometers, gas or smoke analysis apparatus); instruments and apparatus for measuring or checking viscosity, porosity, expansion, surface tension or the like; instruments and apparatus for measuring or checking quantities of heat, sound or light (including exposure meters); microtomes 9028 Gas, liquid or electricity supply or production meters, including calibrating meters therefor 9029 Revolution counters, production counters, taximeters, mileometers, pedometers and the like; speed indicators and tachometers, other than those of heading 9014 or 9015; stroboscopes 9030 Oscil....
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....ntrolling instruments and apparatus; parts and accessories thereof, covered under heading 9023, 9024, 9025, 9027, 9028, 9029, 9030, 9031, 9032 and 9033. (vi) medical or surgical instruments and apparatus including dental, veterinary science, various therapies such as mechano, psychological, ozone, oxygen, aerosol etc., breathing, orthopaedic etc., including complex and highly advanced medical instruments using technology of X-Ray, Radiography, Computerized Tomography (CT), Gamma ray etc.; parts and accessories thereof, covered under headings 9018, 9019, 9020, 9021 and 9022. From the details of the goods covered as explained above, it could be seen that the general content and arrangement of the goods classified under Chapter 90 covers a wide variety of instruments and apparatus which are, as a rule, characterised by their high finish and high precision. Further, it is also explained in the WCO's HS Explanatory notes that most of the goods covered under Chapter 90 are used mainly for scientific purposes (laboratory research work, analysis, astronomy, etc.), for specialised technical or industrial purposes (measuring or checking, observation, etc.) or for medical purposes. Some of....
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....vel of liquids: 9026 1010 --- Flow meters 9026 1020 --- Level gauges 9026 1090 --- Other 9026 2000 - For measuring or checking pressure 9026 80 - Other instruments or apparatus: 9026 8010 --- Heat meters 9026 8090 --- Other 9026 90 - Parts and accessories" And "Tariff Item Description of goods (1) (2) 9027 Instruments and apparatus for physical or chemical analysis (for example, polarimeters, refractometers, spectrometers, gas or smoke analysis apparatus); instruments and apparatus for measuring or checking viscosity, porosity, expansion, surface tension or the like; instruments and apparatus for measuring or checking quantities of heat, sound or light (including exposure meters); microtomes 9027 1000 - Gas or smoke analysis apparatus 9027 2000 - Chromatographs and electrophoresis instruments 9027 30 - Spectrometers, spectrophotometers and spectrographs using optical radiations (UV, visible, IR) : 9027 3010 --- Spectrometers 9027 3020 --- Spectrophotometers 9027 3090 --- Other 9027 50 - Other instruments and apparatus using optical radiations (UV, visible, IR) : xxx xxx 9027 80 - Other instruments and apparat....
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....truments and apparatus are exhaustively covered under CTH 9027 including 'Gas or smoke analysis apparatus', which are used to analyse combustible gases or combustion by-products (burnt gases) for determining their content of carbon dioxide, carbon monoxide, oxygen, hydrogen, nitrogen or other hydrocarbons. Though the description of the tariff items does not explain in detail the principles on the basis of such instruments and apparatus function, these have been elaborated in the HSN Explanatory Notes for chapter heading 9027. Accordingly, the following are the different types or models of apparatus or instruments used for physical or chemical analysis including analysis of gas or smoke. (i) Orsat's apparatus consisting mainly of an aspirating bottle, one or more absorption bulbs and a measuring burette; (ii) Combustion or explosion apparatus equipped with pipette (iii) instruments or apparatus working on the principle of heat conductivity of a gas (iv) instruments or apparatus working on the principle of heat effect of combustible gases on an electrode (v) instruments or apparatus working on the principle of selective absorption of ultra-violet, visible, infra-red or micr....
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....ssion norms, it is important to limit the amount of NOx content in exhaust gases. NOx sensor generates an electrical signal in proportion to NOx present in the gas, that is fed to sensor control module. The NOx measurement value then fed to engine control module (ECM), in this case the Electronic Control Module (ECM) to control other apparatus such as heat, injectors, pump etc., in the after treatment. NOx sensor is therefore a critical component of the engine after treatment system for regulating content of NOx in engine emission. 15. NOx sensors work on 12V DC or 24V DC power supply usually powered from vehicle battery supply. It consists of an Electronic box and measurement probe. When powered on, sensors electronic box triggers the heater element in probe and maintains the temperature at a desired limit. At this temperature the gas passes through the probe chambers with electrodes, across which voltage (Nernst Voltage) is generated proportional to NOx present in exhaust which in-turn is converted to PPM and communicated to ECM by electronic box. Additionally, this sensor can determine internal failures related to sensing probe damage, harness connection, via breakage which ar....
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....ty of: (a) Detecting malfunctions, affecting the emission performance of the engine system; (b) Indicating their occurrence by means of an alert system. (c) Identifying the likely area of the malfunction by means of information stored in computer memory and communicating that information off board. "Exhaust After-Treatment Systems The function and combination of the following devices are regarded as membership criteria for an engine family: a) Oxidation catalyst; b) Three-way catalyst; c) de NOx system with selective reduction of NOx (addition of reducing agent); d) Other de NOx systems; e) Particulate trap with passive regeneration; f) Particulate trap with active regeneration; g) Other particulate traps; h) Other devices... Even though the NOx sensors may be treated as part of deNOx system or device which in turn could be a sub-system of Exhaust After Treatment System, such grouping has been done only for the purpose of Central Motor Vehicle Rules and monitoring emission norms, and these would not have any impact on the function of classification of impugned goods for the purpose of Customs Act, 1962 and Customs Tariff Act, 1975 in determination ....
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....dence have been placed on record to state that vital information relating to the product have been suppressed mis-declared for invocation of the extended period of limitation. On the contrary, the facts on record show that various B/Es have been filed by the appellants over a period of about 5 years in hundreds of occasions and the jurisdictional customs authorities have never questioned the self-assessment made by the appellants. It is only on account of the different interpretation on classification of the goods adopted by the audit wing of the Department, the entire process of show cause proceedings had been initiated. 10.2 In this regard we find that on identical set of facts, the Tribunal in the case of Signet Chemical Pvt. Ltd. (supra) have held that inasmuch as the appellant have been continuously declaring the classification of the product under a particular classification after providing full description of the goods in the various bills of entry, the allegation of suppression of facts cannot be sustained for classifying the goods in a different chapter. The relevant paragraph of the said order is extracted and given below: "18. We do not see substance in the argument o....
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....ring the scope of goods under Chapter Heading 9027, have proved the appropriate classification of the impugned goods. Therefore, the case law relied upon by the appellants does not have relevant to the present case. 11.2 As regards the classification of 'oxygen sensors' under CTH 9031 in the Order of the Tribunal in the case of Denso Haryana Private Limited Vs. Commissioner of Customs (I&G), New Delhi - 2015 (325) E.L.T. 179 (Tri. Del.) relied upon by the appellants, we find that the Tribunal was provided with the write-up material available in Wikipedia on oxygen sensors. Thus, on the basis of such material indicating the following, the Tribunal held that the classification of oxygen sensors would land up under CTH 9031. "As per the same Wikipedia page, "oxygen sensor is an electronic devise that measure the proportion of oxygen in the gas or liquid." Thus it is obvious that oxygen sensors are not instruments or apparatus for physical or chemical analysis as they do not do any analysis and are not capable of doing so either. Indeed, these are quite unlike polarimeters, refractomters, spectrometers, gas or smoke analysis apparatus which are mentioned as examples in the said Chap....
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....ibrating the pumping current in the first cell. The reducing catalyst in the second cell cause the NOx in the remaining gas to decompose into N2 and O2. Similar to the first pump cell, a bias voltage of 400mV is applied to the electrode, and the pumping current of this cell would represent the NOx concentration in the exhaust (gas). To avoid cross-interference all HC and CO should be oxidised before the NOx cell and all NO2 should be converted into NO before the sensing cell." "Equation 1 describes the reduction of oxygen molecules to oxygen ions which occurs in the higher pressure chamber: O2 + 4e- = 2O2- (Equation 1) Based on Equation 1, the sensor voltage can be calculated using the Nernst equation as shown in Equation 2 U8 = (RT/4F)∫n (pref/pexh) Where U8 represents the sensor signal (V), T is the temperature (K), p is the partial pressure of oxygen, R is the gas constant = 8.314 J/mol-K and F is the Faraday's constant = 96485 A-s/mol. NOx sensors should include at least two oxygen pump cells. The purpose of the first pump is to remove excess oxygen from the exhaust gas and the second pump measures the oxygen concentration from the NOx decomposition." Though, the....