TaxTMI 
TaxTMI 
2026 (8) TMI 532
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....s for manufacturing of such motor vehicles. One of such products is Glow Plug Controller / Glow Control Unit [GCU] that is used in Diesel Engine Motor Vehicles (Cars), which the Appellant classified the same under CTI 9032 8990 as Automatic regulating or controlling instruments and apparatus paying Basic Customs Duty [BCD] @7.5% in terms of Sr. No. 494 of Notification 50/2017-Cus. dated 30.6.2017 ('NN 50/2017), Integrated Goods and Services Tax (IGST') @ 18% and Social Welfare surcharge @10%.On audit, the CRA team noted that the impugned goods were appropriately classifiable under CTI 8511 9000 as a part of glow plug classifiable under CTH 8511. This audit enquiry culminated into issuance of the Show Cause Notice alleging that the impugned goods are parts of glow plugs which are classifiable under CTH 8511 and therefore, the impugned goods merit classification under CTI 8511 9000as parts thereof. The Appellant responded to the Show Cause Notice vide reply dated 12.10.2022, thereafter, the impugned order was passed confirming the proposals made in the Show Cause Notice. Hence, the appellant has filed the present appeal. 3. Learned counsel submitted that the burden to prov....
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....without which the main product (i.e. glow plug in the present case) cannot function. For instance, plug body, heating coil, etc. were parts of glow plug. On the other hand, the products including the impugned goods merely assist in the functioning of glow plugs and are used alongside and hence, cannot be considered as parts. He relied on the following judgments to establish that a "part" is an essential component of the whole without which the whole cannot function: (i) Commissioner of C. Ex., Delhi vs.Insulation Electrical (P) Ltd [2008 (224) E.L.T. 512 (S.C.)]. (ii) Pragati Silicons Pvt. Ltd. vs. Commissioner of Central Excise, Delhi [2007 (211) ELT 534 (SC)] 3.3 Learned counsel stated that the function of glow plug was to provide heating, and undoubtedly worked in conjunction with glow plugs. However, it does not participate in the functioning of the glow plug, i.e. heating. The function of GCU is to control the glow plugs, basis the signals received from ECM and on the basis of diagnosis of glow plugs. Both the components i.e. glow plug and GCU performed their respective functions of heating and controlling, respectively. Hence, GCU is not a part of Glow Pl....
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....refore, having fulfilled all the requirements of CTH 8537, the impugned goods are appropriately classifiable under CTH 8537. 3.6 Learned counsel further submitted that in addition to satisfying all the three requirements under CTH 8537, GCU also satisfied the scope of programmable controllers specifically covered under HSN explanatory note to CTH 8537. He drew attention to the Apex Court judgment in the case of Commissioner of Customs, New Delhi Vs C-Net Communication (I) Pvt. Ltd. [2007 (12) SCC 72] wherein it was held that the word 'apparatus' would certainly mean the compound instrument or chain of series of instrument designed to carry out specific function or for a particular use. The term "apparatus" had been defined by the Court of International Trade (U.S.) and its predecessor court as a combination of articles and materials which are intended, adapted, and necessary for the accomplishment of some purpose .GCU is a combination of shunt (resistor), relay and a micro controller designed to carry out the specific function of switching on the glow plug based on logic i.e. whether to follow the ECM signals or not, which is based on the decision whether there is any ma....
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....omatic regulators 90328990 --- Other 90329000 - Parts and accessories 3.10 Learned counsel stated that in order to fall under CTH 9032, Chapter Note 7 to Chapter 90 was required to be fulfilled. Chapter note 7 provided the scope of CTH 9032, and as per Note 7(b), automatic regulators will be covered under CTH 9032 if: (a) it automatically controls electrical or non-electrical quantities, (b) its operation is dependent on an electrical phenomenon varying according to the factor to be controlled, (c) it is designed to bring the factor and maintain it at desired value and stabilize against disturbances as well; and (d) constantly or periodically measure actual value. 3.11 Learned counsel stated that in the present case, the impugned goods are automatic regulators (regulating the flow of passing of current) that contains a logic to control the switching on/off the relay so as to pass current to the glow plug. Further, the factor to be controlled in the present case is current' and the impugned goods are designed to bring this current to, and maintain it at a desired value i.e. when there is a malfunction and ECM sends sign....
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....oller. 4.2 Functional Unit: Learned authorized representative relying on Section Notes 3 and 4 of Section XVI, submitted that when individual components (GU and Glow Plugs) contribute together to a single defined function (starting the engine), the whole must be classified under the heading appropriate to that function (CTH 8511). 4.3 Learned authorized representative also submitted that MSIL have argued that Note 2(a) of Section XVI mandates that parts which are themselves "goods" included in a heading of Chapter 85 (such as controllers in 8537) must be classified there regardless of their enduse, whereas in the Westinghouse judgment, it was argued that the more "specific" generic heading (8536 for relays) should prevail under Rule 3(a). The Hon'ble Supreme Court rejected this argument holding that the "user test" in the Section Notes takes precedence. He submitted as follows: i) Rule 1 Overrides Rule 3: Classification is first determined by the terms of the headings and relative Section/Chapter notes (Rule 1). ii) System Integrity: Since the GU has no independent function outside of the starting system, the functional unit concept (Section Note 4) is t....
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....Continental Automotive Brake Systems India Pvt. Ltd. vs. Commissioner of Customs [2024(389) E.L.T. 93 (Tri.-Del)] CESTAT order in Continental Automotive Brake Systems India Pvt. Ltd. provides a contemporary legal precedent that strongly supports the Department's classification MSIL Glow Plug Control Units (GU) under CTH 8511. 5. We have heard the Ld Counsel for the appellant and the learned authorised representative for the department. In order to arrive at any conclusive finding, we would need to understand the product viz., Glow Plug Control Unit, its functioning etc. As per the information available on the internet, a GCU is an electronic module i.e., a PCB with microprocessor/relay/switching circuitry that regulates current, voltage and duration of heating supplied to glow plugs in a compression ignition diesel engine. The GCU uses Pulse Width Modulation to precisely control voltage and current to each glow plug, stabilizing temperature and improving cold-start performance and emissions. Functionally, the GCU is essential to the correct and safe operation of modern fast-heating glow plugs, especially in meeting emissions and cold-start requirements. So, while the GCU is ....
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....try. He submitted that the said item automatically controls electrical or non-electrical quantities; its operation is dependent on electrical phenomenon varying according to the factor to be controlled, it is designed to bring the factor and maintain its desired value and stabilize against disturbances and constantly or periodically measure actual value. However, in order to classify the goods in the said Chapter 90, we find that the notes to Section XVI/Chapter 90 carve out exception for apparatus for switching or controlling electrical circuits that are more specifically covered in Chapter 85 headings like 8511/8537. We find that the products covered by this heading is for independent instruments such as thermostats, Manostats and other instruments or apparatus. It is also important to note that there is no specific heading under this CTH and the appellant has opted to classify the same in the residual CTH 90328990. It may be pertinent to note this point that the said chapter covers a large residual category for parts/accessories not covered elsewhere covered. In the instant case, we note that the said Chapter carves out an exception for goods more specifically covered in Chapter....
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.... 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." 6.2.1 We note that said Section Notes suggest that when individual components viz., GCU and Glow Plugs contribute together to a single defined function, which is electrical ignition or starting equipment for engines (both diesel or IC), the whole is liable to be classified under the heading appropriate to that function. We observe that the first four digits under HSN 8511 explicitly cover electrical ignition or starting equipment used for spark-ignition or compression-ignition internal combustion engines, including sparking plugs and glow plugs. The HSN Explanatory Notes to 85.11 extend this heading to electronic control units that regulate ignition/glow-plug operation based on sensor inputs, which is precisely the GPCU's function. 6.3 We further draw support from the General Rules of Interpretation, which clearly states that if the goods are squarely described by the heading text plus Explanatory Notes, classification is resolved witho....
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....nclature emerging from the HSN and in case of doubt, the HSN should be chosen advisory for ascertaining the true meaning of any expression used in the Tariff Act. In Wood Craft (supra), in the opinion written by Justice J.S. Verma, the following was pertinently opined in this context : "12. ... .. Accordingly, for resolving any dispute relating to tariff classification, a safe guide is the internationally accepted nomenclature emerging from the HSN. This being the expressly acknowledged basis of the structure of Central Excise Tariff in the Act and the tariff classification made therein, in case of any doubt the HSN is a safe guide for ascertaining the true meaning of any expression used in the Act. The ISI Glossary of Terms has a different purpose and, therefore, the specific purpose of tariff classification for which the internationally accepted nomenclature in HSN has been adopted, for enacting the Central Excise Tariff Act, 1985, must be preferred, in case of any difference between the meaning of the expression given in the HSN and the meaning of that term given in the Glossary of Terms of the ISI. xx xx xx 18. We are of the view that the Tribunal as ....
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....pread adoption of the Harmonised System by over 200 countries, it would be extremely difficult to deal with an international trade issue involving commodities, without adverting to the Harmonised System. The Code is the bedrock of custom controls and procedures. The HSN consists of over 5000 commodities groups, which are structured into 21 Sections and 97 Chapters, which are further divided into four and six digit sub-headings. Many custom administrations, like India, use an eight or more digit commodity coding system, with the first six digits being the HSN code. 10. Classification under the Harmonised System is done by placing the goods under the most apt and fitting sub-heading. This is done by choosing the appropriate Chapter, Heading, and sub-heading respectively. To facilitate interpretation and classification, each of the 97 Chapters in the HSN contain corresponding Chapter Notes, General Notes, and Explanatory Notes applicable to the Headings and sub-headings within that Chapter. In addition, there are six General Rules of Interpretation applicable to the Harmonised System as a whole. xx xx xx 12. We would, at this stage, take on record the well-s....
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....assification of the Glow Plug Control Unit (GCU) under CTH 8511. Relying on the Bosch Technical Note, we note the following: (i). "Functional Unit":Section note 4 of section XVI states that a combination of machines states that 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) are 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. (ii) In the instant case, the GCU is part of a combination of machines intended to contribute to a clearly defined function (starting the engine). The Bosch note explicitly confirms this by stating that at a fundamental level, the Glow system comprises of a heater and a controller. This supports the application of Section Note 4 to Section XVI, requiring the whole system to be classified under the heading appropriate to its function (8511). (iii) Standalone Controller: Ld Counsel has submitted that the GCU is a generic controller ....
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.... judgment, since GCU is used solely for the operation of glow plugs (which are specifically named in 8511), the broader "Electrical Ignition/Starting Equipment" heading (8511) would be the correct legal home, rather than a generic controller entry. 8. Both the learned Counsel and learned Authorised Representative have relied on several decisions of the Hon'ble Supreme Court and the Tribunal. We take up some of these judgments and examine them. On the issue of the responsibility of the Department to discharge the onus for reclassification, a perusal of the impugned order clearly reflects that each of the submissions of the appellant has been dealt and the classification has been ordered under CTH 8511 based on GIR 1 read with the relevant Section and Chapter notes. Hence, the Department has discharged the onus. Hence, the judgments relied upon by the appellant on this issue does not come to play. 8.1 Several decisions have been relied upon to establish that extended period of limitation cannot be invoked unless the intent to evade/positive act by the appellant is established. In this context, Ld Counsel has submitted that the prior to the initiation of investigations after CRA....