TaxTMI 
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2026 (2) TMI 959
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....arts of Relays for manufacture of Relays by availing exemption under Notification No.36/96-Cus dated 23.07.1996 and Notification No.25/1999-Cus dated 28.02.1999 (Sl.No.112) as amended by following the procedure laid down under Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 (the Rules, for short). The parts imported by the appellant are (i) PCBA for REJ603 Mother Board; (ii) PCBA for REJ603 Connector Board; (iii) PCBA for REF_REJ601 Comm; (iv) PCBA for REJ_601 CP&BI_T; (v) REF_601 R2:LCD Module Assembly; (vi) REJ601: Input Board - 1A; (vii) REJ601: Output Board; (viii) REJ601: Digital Boad; (ix) REF601R2: Power Supply Board; (x) Power Supply 240 R2; (xi) Power Supply 204 R1 and (xii) Capacitor Bank Protection Module etc. These parts have been used in the manufacture of finished goods declaring the same as "Relays" and classifying the same under CETH 85364900 / 85364100 in their invoices / import documents and also ER1 returns filed with the Department from time to time. Investigation was initiated by the Department abou....
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....ise duty. He has submitted that no proceeding has been initiated on these clearances disputing the classification and therefore the assessments have reached finality. The procedure under the said Rules required the appellant to produce accounts indicating the use of their imported materials and its consumption in every quarter based on which the bonds executed were cancelled. Appellant were following this procedure from 1996 to 2012. The learned advocate has submitted that their request letter dated 24.09.2012 in Annexure-III was rejected which is subject matter of appeal No. E/26173/2013 holding that goods manufactured by the appellant are not 'Relays'. Simultaneous enquiries were conducted by the Department on the eligibility of the benefit of the said exemption notification alleging that the imported goods / components are not parts of Relay and these were parts and sub-assembly of electronic devices. 3.2. The learned advocate has submitted that the goods in question are classifiable under Chapter heading 8536 as Relays since protection is the principal function of the product. He has submitted that Relay is an electrical device and opens and closes the electrical circuit upo....
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....es which states that the multi-function or composite machines are to be classified on the basis of their principal function. They have referred to Circular No.51/2004-Cus dated 01.10.20004 wherein it was clarified that mere classification of 'Lever combination switches' under CTH 8537 will not take the item out of the category of switches. They have referred to the following Circulars:- i. No.17/2007-Cus dated 19.04.2007 ii. No.27/2013 dated 01.08.2013 iii. No.51/2004-Cus dated 01.10.2004 iv. No.36/2013 dated 01.08.2013 v. No.20/2013-Cus dated 14.05.2013 Also, in support, they have referred to the following judgments:- * Xerox India Ltd. v. CC, Mumbai reported in 2010 (260) E.L.T. 161(SC) * Logic India Trading Co. Ltd. v. CC, Cochin reported in 2016 (337) E.L.T. 65 (Tri. Bang.) affirmed by Supreme Court in 2016 (342) E.L.T. A34 (S.C.) * Associated Millers Pvt. Ltd. v. Collector of Customs reported in 1990 (50) E.L.T 633 (Tribunal) affirmed by Supreme Court in 1991 (53) E.L.T. A32) * CCE v. Siemens Ltd. reported in 2000 (118) E.L.T. 689 (Tribunal) * CCE v. Wockhardt Life Sciences Ltd. 201....
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....atus for automatically controlling the level flow, pressure etc. It is submitted that a relay does not control the flow of electricity but only acts as an intervener to isolate an abnormal area of the power system to protect the electrical system. This protection function of a relay cannot be equated to 'control' mentioned for Relays and thus classification under CTH 9032 is not appropriate. 3.5. Further, the learned advocate has submitted that invoking Rule 8 of the said Rules which has limited scope of examining whether the inputs indeed had been used and if not used for which, there could be verification and duty payable be demanded on the inputs so imported but not used. The said Rule 8 does not enable the re-examination of the eligibility of the inputs or the final products to the notification since a comprehensive examination has already been carried out as per the procedure laid down under Rule 3 to 7 of the said Rules. He has submitted that the appellant has duly followed all the procedures contemplated under the said Rules and the bonds executed by the appellant were periodically cancelled after filing of the reports. The cancellation of the bonds indicated that the Dep....
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..... Del.) * CCE v. Molex India Ltd. reported in 2015-TIOL-190-HCKAR-CUS * Dharampal Lalchand Chug v. CCE reported in 2015 (323) E.L.T. 753 (Bom.) * Sterlite Optical Technologies Ltd. v. CCE reported in 2011 (270) E.L.T. 266 (Tri. - Mumbai) * M/s. Ambrane India Pvt. Ltd. V. Commissioner of Customs, New Delhi 2024-VIL-1350-CESTAT-DEL-CU 3.8. The Notification No.40/2012-Cus empowers Central Excise officers to demand Customs duty cannot itself do away with invoking provisions of Section 28 of the Customs Act, 1962. If the present proceedings are considered to be under Section 28 of the Customs Act, 1962, the demand for the period beyond 5 years is not sustainable. Also, since the appellant has disclosed the procurement of parts of Relays and manufacture of Relays in the statutory returns filed periodically, allegation of suppression with intent to evade payment of duty is not sustainable. In support, they have referred to the judgment of the Tribunal in the case of S. Balasubramaniam DIR (Operations), Surana Telcom & Power Ltd. Vs. CCE, Hyderabad ]2019(370) ELT 1412 (Tri. Hyd.)] 4.1. Per contra, the learned AR for the Revenue has submitted that t....
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....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, stabilised against disturbances, by constantly or periodically measuring its actual value. The said apparatus consists of: ○ A device for measuring ○ A control device ○ A starting, stopping or operating device ⮚ Write-ups and submissions made by the appellant clearly indicated that the finished goods were Intelligent Electronic Devices performing multiple functions and not just simple electrical relays performing singular electrical function as specified in the notification. Some of the functions are - a) Analog to digital conversion of different parameters; b) Digital processing of Input signal with software controls; c) Diagnose errors; d) logic control; Ethernet/ optical port facility. A number of relays along with various other devices like Integrated circuits/Microprocessors/ Transistors etc. form part of the equipment. They have filed for grant of patent for Intelligent Electronic Device w....
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.... CCE, Bengaluru-I Vs. Jas Telecom Pvt Ltd., [2018 (9) ΤΜΙ 1291 - KARNATAKA HIGH COURT) (x) CCE, Ahmedabad vs. Gujarat Ambuja Exports Ltd. reported in 2016 (8) TMI 397-SUPREME COURT (xi) CT scan research Centre vs. Commissioner of Customs [2003 155 (ELT) 3 SC] 4.3. On the issue of suppression, the learned AR for the Revenue has submitted that the appellant had never declared the finished goods to be multi-functional devices when permissions under Annexure-IIIs were sought by them from time to time. In support, he referred the judgment of Hon'ble Supreme Court in the case of CCE, Ahmedabad Vs. Gujarat Ambuja Exports Ltd. [2016(8) TMI 397 -SC]. In the present case, the amount demanded is the duty foregone during the period in view of the wrong availment of exemption notification and not customs duty short levied or not levied. The total duty foregone as per Annexure-III has been submitted by the appellant to the Department which are ultimately demanded and confirmed. 4.4. On the issue of invocation of Section 28 of the Customs Act, 1962, the learned AR for the Revenue has reiterated the findings of the learned Commissioner (Appeals). Also referring ....
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....364900. Also, as per the prescribed procedure under the said Rules, the appellant from time to time, on use of the imported parts in the manufacture of final products, furnished application for cancellation of bond executed at the time of import of the goods which had been duly cancelled by the Department. 7.3. In the year 2012, as a result of investigation, the Department alleged that the final products manufactured by the appellant are not mere Relays but Intelligent Electronic Devices (IEDs), which function as equipment used for protection, control, measurement and supervision of power systems having several functions viz. (a). Analog to Digital conversion for input parameters/signals, (b). Digital/Numerical Processing of inputs signals with software controls, (c). Diagnosis errors, (d). Logic Control, (e). Digital to Analog conversion (for output), (f). Ethernet/optical communication ports/facility, (g). Serial ports for communication with other equipments/devices, (h). Power supply, etc. Further, the modules/sub-assemblies sought for exemption, imported as component of relay, are mounted with array o....
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....ontrary to the Chapter notes appended to the said Chapter 90. The use of the terminology 'control' in the catalogues and in the function of the IEDs is to measure and protect the system, isolate the faulty parts but not to control the quantum of flow/transmission of electricity; hence, its classification under Chapter sub-heading 9032 cannot hold good. 9. We find that the crux of the dispute is admissibility of Sl.No.112 of the Notification No.25/1999-Cus dated 28.02.1999 as amended and not a classification dispute as argued by the Appellant. Thus, it is essential to understand the function of the manufactured IEDs, which the appellant called as advance version of digital/numerical relays with additional functions, whereas Revenue's contention is that in addition to the function of relays, since the IEDs also equipped with measuring, control and protective mechanism, it cannot be called as a simple relay falling under Chapter sub heading 85364900, but an automatic regulating or controlling instruments/devices which attract classification under Chapter sub-heading 90328990. 10. Before analysing the rival contention, it is necessary to reproduce the said Notification, which rea....
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....e of the finished goods specified in the corresponding entry in column (4) of the said Table, from so much of that portion of the duty of customs leviable thereon which is specified in the said First Schedule, as is in excess of the 2[amount calculated at the rate ot- (a) Nil in the case of the imported goods specified in List A; and (b) 5% ad valorem in the case of the imported goods specified in List B:] Provided that the importer follows the procedure set out in the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996. TABLE S.NO. Chapter or Heading or Subheading or tariff item Description of imported goods Description of finished goods (1) (2) (3) (4) LIST A 112 39, 72, 74, 76, 85 Parts of Relays, Switches, Connectors Relays; Switches; Connectors 11. There is no definition of 'Relay' prescribed under the said Notification No.25/1999-Cus nor under the Customs Tariff. However, in the HSN for Chapter 8536, Relays are explained as under: (C) Relays are electrical devices by means of which the circuit is automatically controlled by a change in the same or....
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....ility in designing the required protective features in the relay. Protective relays need the fundamental power system quantities, i.e. current and/or voltage as an input to provide the protection function. These input(s) are given to the relay(s) either directly or through instrument transformers, where necessary. Electrical relays are of many types and it is difficult to give a precise definition of a protective relay which covers all types. The following definition is, however, generally accepted: "An electrical relay is a device designed to produce sudden, pre-determined changes in one or more electrical output circuits, when certain conditions are fulfilled in the electrical input circuits controlling the device." The technical development of 'Relay' over a period of time has been narrated in the book Digital / Numerical Relays [Chapter 1 in Digital / Numerical Relays authored by TSM Rao and published by Tata McGraw-Hill] as follows:- It is now more than fifty years since electromechanical disc type over current relays were first introduced for the protection of distribution systems. Although these relays have operated reliably in the past, the new....
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....ith standardised hardware provide functionality in software based technology and provide cost-effective solutions with inherent benefits from standardisation, which are passed on to the customer. Traditional problems which are intrinsic to electromechanical relays, such as inertia and overrun, are substantially reduced. Settings are stored in memory in the digital format. The advantages of numerical relays over electro mechanical and static relays from a protection perspective have been established. Numerical relays, however, offer further significant advantages over their predecessors in terms of the use of integral measurement functions, fault recording and disturbance recording facilities. Due to their cost implications, event, recording and disturbance recording have generally been reserved for use on transmission networks. The use of such records has proven' in valuable for post-fault analysis and the stem performance analyst of these systems. Their use in distribution networks has seldom been justified, owing to their prohibitive costs. These have self-monitoring facilities in respect of hardware, power supply, output relays and CT/VT circuits. 12. The appella....
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.... are as given below: (a) No separate connections for CF and PT are required. (b) Metering of all parameters like A, V, Hz, kW, kWh, P.F., KVA, KVAR, etc., is possible. (c) Accuracy class may be as high as 0.5% class. (d) Since separate meters are not required, there is space saving. (e) Networking of IEDs for metering of all feeders is possible at a single node. (f) Measurement of THD (Toal Harmonic Distortion) and individual harmonic levels for voltage and current waveforms is possible. 13. Benefits of Control Functions: The following functions of control are incorporated in numerical relays: (a) ON/OFF control for circuit breaker and isolator (b) Flexibility of auxiliary supply voltage for control circuits; generally all models of relays have flexible auxiliary voltage acceptability of 80380 V ac/dc. (c) Trip circuit supervision (d) Local / remote selection (e) Alarm / trip signal generation at a remote place. (f) Blocking of particular operation/protection (g) Indication through LED, mimic generation (h) Condition monitoring of circuit breaker li....
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....ue as follows:- "REL670 - maximum flexibility and performance The REL670 provide versatile protection, monitoring and control functionality with maximum flexibility and performance optimized for transmission and sub-transmission overhead lines and cables. The powerful IED provides distance protection for double circuit, parallel operating and series compensated lines. The fast distance protection with trip times as low as 13 ms allows for additional transfer capacity in the power lines. This, together with flexible and expandable hardware, allows the IED to meet your specific requirements. As a result, you can benefit from applications with multiple algorithms and comprehensive bay control functionality, including synchronizing, synchro-check, dead line detection and auto-reclosing. Furthermore, REL670 is able to protect and control several objects, for instance a combination of a line and a shunt reactor with a single IED. As a result, this IED increases both the reliability and profitability of your entire power system. The REL670 provide both customized and pre-configured protection solutions. The pre-configured IEDs are equipped with complete....
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.... operation. The control is based on the select-before-operate principle to ensure secure operation and to avoid human mistakes. The integrated HMI of REL670 and REL650 provide you with a quick overview of the status of the line and service values as well as instant access to important data, such as settings. Using a library of symbols, you can easily configure the graphical display to correspond to your needs and to your substation. The built-in disturbance and event recorders provide you with valuable data for post-fault analysis and corrective actions to increase the security of your power system. Furthermore, the HMI of REL670 allows secure and quick local control for stand-alone applications and provides back-up control for substation automation systems, when control functionality is integrated in the IED. The two-position versatile switch and the 32-position selector switch functions in REL670/650 enable you to easily manage switching operations via an icon on the IED HMI. The versatile switch function allows you to directly change, for instance, the auto-recloser function from on to off, or vice versa, without changing the configuration. The functio....
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....rts and accessories . . . . . . . . . . . . . . . . . . . . Kg. 7.5% The relevant HSN Explanatory Notes 7 to Chapter 90 reads as follows:- 7.- Heading 90.32 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, stabilised 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, stabilised against disturbances, by constantly or periodically measuring its actual value. 16. A plain reading of the said Explanatory Note relevant to Chapter 9032, it is clear....
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....ation switch). The LCS is actually an assembly consisting of various mounted PCBs, switches, cables and electronic components. It is used in automobiles for mounting on steering column. It has two levers. One lever is used for switching on or off indicators for turning left/right. The other lever is used for wipers head/light etc. 2. As per HSN notes in the Heading 85.12, the exclusions include an assembly of switches for mounting on the steering column (CTH 85.37) which is nothing but 'lever combination switch. Since 'lever combination switches are specifically classifiable under CTH 85.37, whereas in general, switches are classifiable under CTH 85 36, it appears that lever combination switches' are not switches in the normal meaning of the term and hence these may not be treated as switches for the purpose of Customs Notification No. 25/99, dated 28-2-1999, S. No 112. 3. This matter was discussed in the Tariff Conference of Chief Commissioners of Customs held at Kolkata on 22nd and 23rd January, 2004 [Agenda Point T-6]. 4. The Conference discussed that the notification does not define as to what is a switch. Switches are covered under CTH 85....
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.... of Siemens Ltd. Vs. CCE [2014 303 ELT 105 (Tri. Mum.]. Referring to Board's Circular in the context of classification Programmable Logic Controller (PLC) and Programmable Process Controller (PPC) and emphasizing the necessary ingredients attracting Chapter heading 9032, the Tribunal observed as: 6.10 The Central Board of Excise & Customs had issued a 37B Order vide Order No. 49/3/97-Cx, dated 9-5-1997 clearly pointing out differences between a programmable logic controller and programmable process controller. The said 37B Order is reproduced below : "2. Representations have been received from trade pointing out that programmable logic controller and programmable process controllers such as process control equipment/distributed control systems are two different types of controls classifiable under different headings of central excise tariff i.e. Heading 85.37 and Heading 90.32 respectively. The following specific differences have been pointed out between two types of controllers. Programmable Logic Controller Programmable Process controller These are for controlling various types of machines These are for controlling various types of processes Opera....
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....Board hereby orders that programmable logic controller as described in para 2 and other similar forms will be classifiable under Heading No. 85.37 of the Central Excise Tariff and programmable process controllers as described in para 2 and other similar forms will be classifiable under Heading No. 90.32 of the Central Excise Tariff." 6.11 From the above clarifications it is seen that to qualify as 'programmable process controller', continuous monitoring of the various parameters such as pressure, flow and temperature level, etc., has to be done and comparison should be made of the parameters of the desired value with the actual value and the machine should be capable of bringing the variables to the desired value. None of the machines in the present case undertake these functions nor do they have a measuring device to measure any of these parameters. As per the HSN Explanatory Notes, to fall under Heading 9032, the equipment should consist of a measuring device (sensing device, resistance probe, thermocouple, etc.) which determines the actual value of the variable to be controlled and converts it into a proportional electrical signal, an electrical control device which com....
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....in their invoices as various types of relays viz. "ABB make transfer protection relay type REL670", be accepted as 'relay' only. Also from the records, we find that the Central Excise authorities had not disputed the classification of the manufactured finished goods as 'relays' having its classification under Chapter sub-heading 85364900 at any point of time. Consequently, the appellant are entitled to the benefit of Notification No.25/1999-Cus as amended on the 'parts of relays' and used in the manufacture relays during the relevant period. Since we hold on merit that the appellant are entitled to the benefit of Notification No.25/1999-Cus dated 28.02.1999 as amended for the imported parts, analysis of ancillary issues like recovery of duty foregone, limitation etc. becomes academic; hence, not delved into. 20. The case laws referred by the learned AR for the Revenue have been delivered in a different set of circumstances; hence, not applicable to the issues in hand. In Bosch Ltd. case (supra), the question raised was classification of navigation system under Chapter sub-heading 8526 9190 or under CTH 8527 2900 being a multi-functional device used in motor vehicles. After analy....