TaxTMI 
TaxTMI 
2025 (9) TMI 139
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....s required for manufacture of such engines. The 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....
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....f the above said NOx sensor were submitted by him as 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....
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....uses to electrochemical cells in adjacent chambers as shown in the pictorial diagram in the 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 g....
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....covered under CTH 9027, the classification of these goods would continue to be governed under 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 limit....
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.... shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled. (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 ....
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....cle or group of articles under a heading is preceded by "-", the said article or group of articles shall be taken to be a sub-classification of the article or group of articles covered by the said heading. Where, however, the description of an article or group of articles is preceded 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) sh....
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.... and if the headings and legal notes do not otherwise require, the remaining Rules 2 to 6 may then be applied in sequential order. Further, while classifying goods, the foremost consideration is the 'statutory definition', if any, provided in the Customs Tariff Act. In the absence of any statutory definition, or any guideline provided 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....
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.... 9013 and in heading 9031 are to be classified in heading 9031. Chapter Heading Description of goods (1) (2) 9001 Optical fibres and optical fibre bundles; optical fibre cables other than those of heading 8544; sheets and plates of polarising material; lenses (including contact lenses), prisms, mirrors and other optical elements, of any material, unmounted, other than such elements of glass not optically worked 9002 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, ....
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....cal, dental or veterinary uses, including radiography or radiotherapy apparatus, X-ray tubes and other X-ray generators, high tension generators, control panels and desks, screens, examination or treatment tables, chairs and the like 9023 Instruments, apparatus and models, designed for demonstrational purposes (for example, in education or exhibitions), unsuitable for other uses 9024 Machines and appliances for testing the hardness, strength, compressibility, elasticity or other mechanical properties of materials (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)....
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....s, hygrometers and psychrometers etc.; physical or chemical analysis instruments; measuring or checking viscosity, porosity, expansion, surface tension, heat, sound, light, electrical quantities, alpha, beta, gamma, cosmic and other ionising radiations etc.; Gas, liquid or electricity supply or production meters, tacho meters and speed indicators, models, instruments, apparatus, designed for educational, demonstrational purposes; instruments, apparatus for testing mechanical properties such as hardness, strength, compressibility, elasticity etc., of various materials and automatic regulating or controlling 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. Fro....
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.... individual entries for various tariff items (TIs) to determine the appropriate classification. The contending classification in the present dispute is falling under CTH 9026 or CTH 9027 or 9032, and the respective tariff entries are given below: "Tariff Item Description of goods (1) (2) 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 90.14, 90.15, 90.28 or 90.32 9026 10 - For measuring or checking the flow of level 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 f....
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.... 8.2. Similarly, by applying same GIR 1, it could also be seen that Chapter Heading 9027 covers within its scope and ambit, mainly of four broad categories of goods: (i) first one i.e., "Gas or smoke analysis apparatus," covered under CTI 9027 1000; (ii) the second one i.e., "chromographs and electrophoresis instruments," covered under CTI 9027 2000 are high precision gas or liquid analysis apparatus working on photometric device or by analysing the liquid in passing through layers of absorbent material and measuring by means of detector; (iii) the third one i.e., "Other instruments," (a) using optical radiations covered under CTH 9027 30; 9027 50 (b) other types of instruments and apparatus under CTI 9027 80 and microtomes under CTI 9027 90. It is seen that a number of precision instruments 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 de....
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....2020, at the very beginning of issue of SCN, they have explained the working principle of the NOx sensors as follows: "13. NOx sensor is a critical component of the Engine after treatment system which ensures automatic regulation of the harmful gases within such specified norms. NOx sensor generates a voltage in proportion to the presence of NOx in the emission gases and accordingly sends a CAN message signal to the ECM on the basis of which the amount of Diesel Exhaust Fluid (DEF/AUS 32) to be injected in the engine is decided. DEF is used in the selective catalytic reduction (SCR) process to lawyers nitrogen oxide content in the exhaust emissions from the diesel engine. 14. NOx sensor is an integral/critical part of the Engine after treatment system, which is a catalytic converter to reduce the content of harmful gases and other particles in the exhaust gases. To maintain proper emission 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 th....
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....or vehicles for compliance with Bharat Stage VI (BS-VI) Emission Norms as per Central Motor Vehicle Rules, 1989, use of different terms have been defined thereunder as follows: "deNOx system" means an exhaust after-treatment system designed to reduce emissions of oxides of nitrogen (NOx) (e.g. passive and active lean NOx catalysts, NOx absorbers and selective catalytic reduction (SCR) systems). "Exhaust after-treatment system" means a catalyst (oxidation, 3- way or another), particulate filter, deNOx system, combined deNOx particulate filter, or any other emission reducing device, that is installed downstream of the engine; "Gaseous pollutants" means the exhaust gas emissions of carbon monoxide, NOx, expressed in NO2 equivalent, hydrocarbons (i.e. total hydrocarbons, non-methane hydrocarbons and methane). "On-board diagnostic system" (OBD system) means a system onboard of a vehicle or engine which has the capability 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 mea....
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....rnative CTI 9032 9000, even after taking into account the fact that such NOx analyser would work in conjunction with Engine After Treatment System, we come to a considered opinion that the impugned goods would remain as the 'gas or smoke analysis apparatus', since in terms of functionality and conformity to the Indian standards, the essential function of the said goods remain as measuring the nitrogen oxide, oxygen etc. in the exhaust gas flow of the automobile/vehicles. Therefore, in terms of the above discussion on facts and on the basis of explanatory notes to HS and the Chapter Note 2 to Chapter 90, we are of the considered view that the imported NOx analysers and other similar analysers are appropriately classifiable under CTI 9027 1000, and not under the CTH 9026 or CTH 9032. 10.1 We also find that the adjudicating authority, without any basis had concluded that the appellants had resorted to mis-classification of the impugned goods, as they are not naive to misread the headings and corresponding explanatory notes. No evidence have been placed on record to state that vital information relating to the product have been suppressed mis-declared for invocation of the extended ....
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.... view that the adjudged demands confirmed by the adjudicating authority by invoking extended period of limitation would not stand the scrutiny of law. 11.1 In the case of Bosch India Ltd. Vs. Commissioner of Customs, Bangalore - 2021 (375) E.L.T. 227 (Tri. - Bang.) relied upon by the appellants for classification of impugned goods under CTH 9026, the product under dispute was imported 'Water Signal Sensors' for use in automobile; and the classification under CTH 9026 was held by the Tribunal on the ground that Revenue could not establish the controlling feature of the instruments for classifying it under CTH 9032. However, in the case before us, the Revenue had clearly by quoting the function of the NOx sensor as submitted by the appellants in their letter dated 07.09.2020 and in showing the specific coverage of the instruments and apparatus working on the principle of electrochemical reaction in cells with solid (especially zirconium oxide for oxygen analysis) having been covered under the Explanatory Notes to HSN under sub-clause (8) covering the scope of goods under Chapter Heading 9027, have proved the appropriate classification of the impugned goods. Therefore, the case law....
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....gen levels in the exhaust gases." We find that in arriving at the above conclusion in the above referred case, the Tribunal was not provided with details of the functioning of the product in dispute, as has been done in the present case before us. We have gone into the details of the functioning of the impugned product 'NOx sensors' as explained by the appellants, with illustrative diagram showing the 'NOx Sensor' and 'After Treatment System'. Further, learned AR has also explained the functioning of NOx sensors in terms of the electrochemical reaction using the amperometric detection technique as elaborated in Electrochemistry text books, along with 'Nernst equation' as follows: "The NOx sensor will have at least two chambers or cells. The first cell pumps out the oxygen present in the exhaust so that it does not interfere with NOx measurement in the second cell and also detects the exhaust oxygen level. On applying a bias voltage of -200mV to -400mV, O2 ions are pumped through Yttria Stabilized Zirconia (YSZ). Oxygen concentration can be found out on calibrating the pumping current in the first cell. The reducing catalyst in the second cell cause the NOx in the remain....
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....he case of Denso Haryana Private Limited (supra), is distinguishable for the aforesaid reasons. 11.3 Further, the order dated 05.12.2022 passed by Principal Commissioner of Customs, Bangalore in the case of Bosch Limited quoted by the appellants, for classification of oxygen sensors by relying on the decision of Denso Haryana Private Limited (supra), also does not have relevance to the facts of the present case, for the aforesaid reasons discussed at paragraph 11.2 above. 11.4 We also find that the decision of the Tribunal in the case of Femco Filters (P) Ltd. Vs. Commissioner of Customs, Bangalore - 2006 (203) E.L.T. 494 (Tri.- Bang.) was in respect of the product 'particle counter' for which the classification was decided under CTH 9026, on the basis that the impugned goods therein were different from the counters covered by the classification under CTH 9029. As the facts of the case relating to the impugned goods in the present case are entirely different from the 'particle counter' dealt in the referred case, we are of the view that the aforesaid decision of the Tribunal does not have any relevance to the present case. 12. In view of the foregoing discussions and analy....
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....atalyst DEF DEF Tank NOx sensors are used to monitor NOx conversion rate of the SCR catalytic convertor. Engine out NOx sensor (EONOx) monitors amount of NOx generated by Engine and System out (SONOx) monitors amount of NOx coming out of Aftertreatment system after ATS processing. To satisfy various OBD (on-board diagnostics) requirements, SCR systems typically use a NOx sensor downstream of the SCR catalyst. If excessive NOx or ammonia concentrations exist at the SCR outlet, an OBD malfunction will be triggered, as NOx sensors are sensitive to both gases. Document 2 NOx Sensor Oxygen pumped In/out (rich/lean) &IF OUtout Oxygen further pumped out Main pump Auxiliary pump 1st cavity 2nd cavity Exhaust gas . somnie ppi IIG, CO, 1 l2 oxidation on It electrode_ _- I EXHIBIT -B Diffusion Boundaries Oxygen pumped out proportional to NOx NOx Output Measuring Principle (NOX) 1. Chemical equilibrium, NO . , N2 + O2 Is shifted to right hand side by removing O2 from the cavities. 2. The oxygen current at the measuring pump represents the original NOx concentration. . NOx sensor calculate amount of NOx coming out of En....