TaxTMI 
TaxTMI 
2025 (12) TMI 1565
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....Flow Z3 under CTI 90261010 of the First Schedule of the Customs Tariff Act, 1975 or otherwise. 2. Submission made by the applicant 2.1 GE Oil & Gas India Private Limited (hereinafter referred to as "the Applicant"), is a private limited company and is registered in India under the Companies Act, 2013. 2.2 The Applicant is a part of Baker Hughes Group and is controlled by Baker Hughes Company, a US corporation listed on NASDAQ. In this regard, it is pertinent to note that the Applicant has undergone substantive changes in its business organizational structure since 2017. 2.3 The Applicant develops and deploys the most advanced technologies to assist energy and industrial firms seeking for more efficient, reliable, and cleaner solutions. It is, inter-alia, engaged in the business of import and sale of inter-alia flowmeters along with their parts and components in India. 2.4 The subject goods proposed to be imported by the Applicant are products of "Panametrics" business line. The subject goods are utilized for measuring the rate at which liquid flows through both open and close pipes. The subject goods are suitable to be used in industries such as oil and gas. It is....
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....nuities in the flowing fluid. See DOPPLER EFFECT. In the noise-type meter, the noise generated by the flowing fluid is measured in a selected frequency band, with a useful but relatively inaccurate readout. A different application of ultrasonic to flow measurement can be found in flumes and weirs where the level of the flowing fluid, measured by ultrasonic reflection is to calculate the flow rate" 2.6 On analysis of the aforementioned definition, it is noted that flowmeters which employ the principle of ultrasonic flow measurement are called as ultrasonic flowmeters and are of various types including contra propagating type, axial-transmission contra propagating type and deflection (drift) type flowmeters. 2.7 In the instant case, the subject goods employ the principle of ultrasonic flow measurement and is particularly "contra propagating type of ultrasonic flowmeter" because it operates on a measurement method which is based on the "transit time difference". The principles of "transit time flow measurement" are identical to the principles employed in contra propagating type of ultrasonic flowmeter. The nomenclature of both the principles can be interchangeably used.....
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....and monitor host systems. The slave device i.e., subject goods transmit the relevant information representing some measurement of process variable such as temperature, flow, or pressure to master device i.e., secondary equipment which are typically installed at the customer's /installation site, if needed. It is the master device i.e., secondary equipment which performs the controlling function and subject goods on which the advance ruling is sought, only measures flow rate. On the other hand, secondary equipment can send commands to the slave device i.e., subject goods for enabling remote diagnostics, monitoring, and efficient troubleshooting of field devices etc. 2.13 Hence, the measurement of rate of flow by the subject goods is pre-cursor to the controlling function. The purpose of installing the protocols in the subject goods is only to make available the measured value in the required signal format as inputs to an ADPM based third party system which thereafter can send signals to secondary equipment for specified actions. The subject goods merely relay measurement data for data recording and analysis of values. The functioning of the subject goods is entirely independe....
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....ting device. Upon deployment of the product also, there is no provision for inclusion of taps, valves or control devices. Measurement parameters Velocity, volumetric, and totalized flow outputs. The rate of flow is expressed in SI Unit/Metric Unit/Imperial Unit. B. PanaFlow LC (yet to be imported) i. For the ease of reference, the image of PanaFlow LC in the 'as imported condition' is illustrated below: ii. The technical specifications in the light of the function performed by Panaflow LC are elaborated in the table below: Particulars Description Applications Panaflow LC is suitable for hazardous area environment and is designed to measure the rate of flow of refinery or chemical liquids such as hydrocarbon liquids, crude oil, lubricating oils, refined hydrocarbon oils, solvents, chemicals, water and sea water etc. Features * Panaflow LC is a clamped-on flowmeter and is directly mounted on the pipe i.e., outside the pipe. It uses patented correlation transit-time model. * It is offered in two path/channel, and three-path/ channel. * It is capable of interfacing/communicating digitally via HART, RS485/MODBUS and Foundation F....
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....nd Foundation Fieldbus. Operating principle/ Theory of Operation Panaflow LZ operates on the principle of transit time technique. The image of "transit-time technique" as employed by the said product is illustrated below: Parts/components of Panaflow LZ * At the time of importation, it consists of parts such as inter-alia: (i) Bundle Waveguide Technology System ("BWT"): The BWT system consists of buffer assemblies and transducers. The buffer assemblies use waveguide bundles to efficiently concentrate a greater amount of the transducer ultrasonic signal into the process, providing better signal integrity At the same time, the bundles act as buffers to protect the transducers maximize the transducer life cycle and to allow transducer replacement under operating conditions. (ii) PanaFlow XMT1000 (i.e., transmitter): The transmitter which is to be used with the said product has to be imported along with the product, (iii) Meter body: A PanaFlow meter body is composed of a length of carbon steel or stainless steel pipe with flanged ends and transducer ports rated to the application's pressure requirements, and either one or two pairs o....
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....a greater amount of the transducer ultrasonic signal into the process and protects the transducers from extreme temperatures. Measurement parameters Velocity, volumetric flow rate, mass flow, volume, mass, density, temperature, dimension, time, frequency and current The rate of flow is expressed in SI Unit/Metric Unit/Imperial Unit. Installation When Panaflow HT is locally mounted, it is fast and easy to install its components are already installed on the meter body. E. TransPort PT900: i. For the ease of reference, the image of TransPort PT900 in the 'as imported condition' is illustrated below: ii. The technical specifications in the light of the function performed by TransPort PT900 are elaborated in the table below: Particulars Description Applications TransPort PT900 is used for measurement of the rate of flow of acoustically conductive liquids which are clean or have small amounts of entrained soild or gas bubbles. It is suitable for liquids such as potable water, wastewater, cooling and heating water, ultrapure water and other liquids such as water/glycol solutions, crude oil, refined hydrocarbons, chemicals and beverages.....
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....ch is flowing through the pipelines. * It is offered in two path/channel and three -path channel version. * Panaflow Z3 is capable of communicating digitally using MODBUS via RS485 port, HART and Foundation Fieldbus. Operating principle/ Theory of Operation Panaflow Z3 operates on the principle of transit time technique. The image of "transit- time technique" as employed by the said product is illustrated below: Parts/components of Panaflow Z3 In the as imported condition, Panaflow Z3 consists of Panametrics PanaFlow XMT1000 electronics, three pairs of LX transducers, and sensor body. However, in some cases as per the requirements of the customers, the transmitter can be remotely installed at the customer's site. It is not imported with taps, valves, control device or any starting/stopping/operating device. Upon deployment of the product also, there is no provision for inclusion of taps, valves or control devices. Installation When Panaflow Z3 is locally mounted, it is fast and easy to install its components are already installed on the meter body. Display screen It has an LCD screen, configurable for single or dual measurement parameters. Appli....
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....tion. 4. Where a machine (including a combination of machines) consists of individual components (whether separate or interconnected by piping, by transmission devices, by electric cables or by other devices) intended to contribute together to a clearly defined function covered by one of the headings in Chapter 84 or Chapter 85, then the whole falls to be classified in the heading appropriate to that function." [Emphasis supplied] 3.4 Further, the relevant portion of HSN Explanatory Notes to CTH 9026 have been extracted for the ease of reference below: "Apart from instruments or apparatus more specifically covered by other headings of the Nomenclature, such as: (a) Pressure-reducing valves and thermostatically controlled valves (heading 84.81); (b) Anemometers (wind gauges) and hydrological level gauges (heading 90.15); (c) Thermometers, pyrometers, barometers, hygrometers and psychrometers (heading 90.25); (d) Instruments and apparatus for physical or chemical analysis, etc. (heading 90.27), ... this heading covers instruments and apparatus for measuring or checking the flow, level, pressure, kinetic energy or other proce....
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....this regard, the relevant aspects in relation to Flowmeters have been discussed below. a. It indicates the rate of flow (in volume or weight per unit of time) and is used for measurement of flow both through inter-alia closed conduits (piping, etc.) b. It operates on one of the following operating principles: (i) Differential pressure; (ii) Variable area: (iii) Using magnetic fields, ultrasound and heat c. CTH 9026 excludes inter-alia the following instruments and apparatus: (i) Apparatus which merely indicate the total amount of liquid delivered over a period and are classified as supply meters in heading 90.28. (ii) which are combined with taps and valves etc., are to be classified as indicated in Explanatory Notes to heading 8481. 3.6 On a combined reading of Note 3 to Chapter 90 and HSN Explanatory Notes to CTH 9026, the test for determining whether the classification of impugned as flowmeters under CTH 9026 has been tabulated below: S. No. Parameters of the test 1. Whether the subject goods perform the principal function of measuring and thereby indicating the rate of flow of liquid, in term....
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....vered under HSN Explanatory Notes to CTH 9026. (d) Given the technical specifications of the said products, it is submitted that these can only measure the rate of flow and cannot perform any other function, as stipulated in exclusions in terms of CTH 9026 and HSN Explanatory Notes to CTH 9026. Thus, these are not covered by any of the exclusions as stipulated in HSN Explanatory Notes to CTH 9026. Thus, in view of the above, parameters of test laid down in point (1) of the aforementioned table stands satisfied. 3.7.2 Further, the said products are capable of operating independently as standalone devices, and their principal function is the measurement of the rate of flow of liquids. In the case of the product PanaFlow HT, while it also has the capability to measure additional parameters such as density, temperature, dimension, time, frequency, and current, these supplementary functions do not alter the essential character or the primary function of the product, which remains that of a flowmeter. The core functionality continues to be the measurement of the rate of flow of liquids. In this context, reliance is placed on the judgment of the Hon'ble Supreme Court in....
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.... (b) The said product does not contain any control device and starting/stopping/operating device. Hence, parameters of test laid down in point (4) of the aforementioned tab 3.7.5 The said products transmit the measurements through desired communication protocol. It has no components that permit control on the measured liquids. Hence, the said product is an independent product different from automatic control equipment's. Upon perusal of the technical documents of the said product, it is submitted that the said product is marketed only as a measuring device only and not as a controlling device. Reliance is placed on the decision of Hon'ble CESTAT (Bangalore Bench) in the case of Bosch India Ltd. v Commissioner of Customs, Bangalore, 2021 (375) E.L.T. 227 wherein similar issue pertaining to the classification of sensors was raised. The Hon'ble CESTAT held that the sensors are to be classified under CTH 9026 and not CTH 9032 because it was nowhere stated in the literature provided by the revenue that the impugned instruments were capable of controlling the main machines or triggering the stop or start of the engines, in terms of Note 7(a) to Chapter 90. ....
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.... Act, 1962, being a matter related to classification of goods under the provisions of this Act. 6.3 Before deciding the issue, let me deliberate on the legal framework prescribed in Customs Tariff Act, 1975, Chapter/ Section notes along with HSN explanatory notes. As per Rule 1 of GRI, the titles of Sections, Chapters and sub-Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes. 6.4 The applicant has submitted that the subject goods, namely (i) AquaTrans AT600, (ii) PanaFlow LC, (iii) PanaFlow LZ, (iv) PanaFlow HT, (v) TransPort PT900, and (vi) PanaFlow Z3, are used for measuring the flow rate of liquids through both open and closed pipes. These goods are typically employed in industries such as oil and gas, where precise flow measurement is essential for process control, operational efficiency, regulatory compliance, and profitability. The subject goods operate on the principle of ultrasonic flow measurement, specifically the "transit time" method. Ultrasonic signals are transmitted to....
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....ible digital format to an ADPM-based third-party system. This third-party system, in turn, may transmit control signals to downstream equipment that performs the actual regulating or controlling functions. Although the subject goods do not themselves perform any control or regulation, they play a critical role in the overall process by supplying the essential input data required for automatic regulation or control. In industrial applications, particularly in sectors such as oil and gas, this functionality is vital for optimizing efficiency, maximizing productivity, and ensuring regulatory compliance. Accordingly, the subject goods form an integral "part" of an automatic regulating or controlling apparatus, as they provide the primary measurement inputs upon which subsequent control actions are based. 6.6 The heading 9032 covers "Automatic Regulating or Controlling Instruments and Apparatus". The relevant entries and Explanatory Notes to CTH 9032 is extracted as below: Heading/Sub-heading/Tariff Item Dash Description 9032 Automatic Regulating or Controlling Instrument Apparatus 9032 10 - Thermostats : 9032 20 - Manostats : &n....
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....nctional unit. Some instruments and apparatus do not incorporate devices which compare the measured value with the desired value. They are directly activated by means of a switch, e.g., when the predetermined value is reached. Instruments and apparatus for automatically controlling the flow, level, pressure and other variables of liquids or gases or for automatically controlling temperature are connected to an appliance which carries out the orders (pump, compressor, valve, furnace burner, etc.) which restores the variable (e.g., liquid measured in a tank or temperature measured in a room) to the prescribed value, or which, in the case of a safety system, for instance, stops the operation of the machine or apparatus controlled. This appliance, generally remote controlled by a mechanical, hydraulic, pneumatic or electric control, is to be classified in its own appropriate heading (pump or compressor: heading 84.13 or 84.14; valve: heading 84.81, etc.). If the automatic control apparatus is combined with the appliance which carries out the orders, the classification of the whole is to be determined under either Interpretative Rule 1 or Interpretative Rule 3 (b) (see....
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....032. Nevertheless, given their function in supplying primary process variables to such systems, they are considered as integral parts or components used in conjunction with automatic regulating or controlling apparatus, as they provide the essential measurement input required for the operation of such systems. 6.9 The relevant HSN Explanatory Notes to Customs Tariff Heading (CTH) 9032, concerning the classification of "parts and accessories" of such automatic regulating or controlling apparatus, are reproduced below for reference: "PARTS AND ACCESSORIES Subject to the provisions of Notes 1 and 2 to this Chapter (see the General Explanatory Note), parts and accessories of apparatus or appliances of this heading remain classified here". 6.10 It is pertinent to mentioned that Note 1 to Chapter 90 specifies certain goods that are excluded from coverage under this chapter. However, the goods under consideration-namely, (i) AquaTrans AT600, (ii) PanaFlow LC, (iii) PanaFlow LZ, (iv) PanaFlow HT, (v) TransPort PT900, and (vi) PanaFlow Z3-do not fall within the scope of the exclusion list defined in Note 1 Accordingl....
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....: (a) Pressure-reducing valves and thermostatically controlled valves (heading 84.81); (b) Anemometers (wind gauges) and hydrological level gauges (heading 90.15); (c) Thermometers, pyrometers, barometers, hygrometers and psychrometers (beading 90.25); (d) Instruments and apparatus for physical or chemical analysis, etc. (heading 90.27), this heading covers instruments and apparatus for measuring or checking the flow, level, pressure, kinetic energy or other process variables of liquids or gases. The instruments and apparatus of this heading may be fitted with recording, signalling or optical scale-reading devices or transmitters with an electrical, pneumatic or hydraulic output. Measuring or checking instruments or apparatus of this heading combined with taps, valves, etc., are to be classified as indicated in the Explanatory Note to heading 84.81 (I) APPARATUS FOR MEASURING OR CHECKING THE FLOW OR RATE OF FLOW OF LIQUIDS OR GASES (A) Flowmeters. These indicate the rate of flow (in volume or weight per unit of time) and a used for measurement of flow both through open channels (rivers, waterways, etc.....
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..... In the present case, the subject goods-namely, (i) AquaTrans AT600, (ii) PanaFlow LC, (iii) PanaFlow LZ, (iv) PanaFlow HT, (v) TransPort PT900, and (vi) PanaFlow Z3-are ultrasonic flowmeters designed to measure the flow rate of liquids within a pipe using ultrasonic sound waves. Accordingly, these goods fall squarely within the scope of heading 9026. Further, under the first single-dash subheading 9026.10, which covers instruments and apparatus "for measuring or checking the flow or level of liquids", the Customs Tariff Item (CTI) 90261010 specifically provides for "Flow meters." Upon the sequential application of the classification rules outlined in Note 2 to Chapter 90 for parts of goods falling under heading 9032, it is evident that CTI 90261010 is the most specific description applicable to the subject goods. Therefore, applying General Interpretative Rule 1, and considering Note 2(a) to Chapter 90 along with the relevant Explanatory Notes to heading 9026, the products in question namely, (i) AquaTrans AT600, (ii) PanaFlow LC, (iii) PanaFlow LZ, (iv) PanaFlow HT, (v) Tr....