2004(04)LCX0024
IN THE CESTAT, SOUTH ZONAL BENCH, BANGALORE
Dr. S.L. Peeran, Member (J) and Shri K.C. Mamgain, Member (T)
COMMISSIONER OF CUS., BANGALORE
Versus
INSTRUMENT RESEARCH ASSOCIATES
Final Order No. 834/2004, dated 29-4-2004 in Appeal No. E/656/2000
Advocated By : Shri P.M. Saleem, SDR, for the Appellant.
Shri K.K. Varier, Consultant, for the Respondent.
[Order per : S.L. Peeran, Member (J)]. - This is a Revenue appeal against Order-in-Appeal No. 33/2000-Cus by which the Commissioner (Appeals) has held that “LED displays imported by the appellant is classifiable under Chapter Heading 85.42 of the Customs Tariff Act as micro assemblies and not under Chapter sub-heading 8530.90 as parts of “electric sound or visual signalling apparatus (for example: Bells, Sirens, Indicator Panels, Burglar or Fire alarms) other than those of heading 8512 or 8530. Ld. Commissioner has given his findings on this issue as follows :-
“I have carefully gone through the submissions made by the appellants both in their grounds of appeal as well as at the time of personal hearing. It is observed that Heading 85.42 deals with the following items: (as given in HSN Page 1517)
- cards incorporating an electronic integrated circuit (‘smart’ card)
- Metal Oxide Semiconductors (MOS Technology)
- Circuits obtained by bipolar technology
- Other, including circuits obtained by a combination of bipolar and MOS technologies (BIMOS technology)
- Other monolithic integrated circuits
- Hybrid integrated circuits
Electronic assemblies.
Parts : all falling under Electronic Integrated Circuits and microassemblies.
The product imported by the appellants squarely fits into the above explanation. Besides, the appellants produced a certificate from the Department of Electrical Communication Engineering. Indian Institute of Science, Bangalore, in which it has been clarified as under :
Clarification on whether 7 segment, 16 segment and Dot Matrix LEDs are in fact Electronic Microassemblies.
After going through the Harmonized Commodity Description and Coding System, Vol. 4, Chapter 85-97, Section XVI-XXI of World Customs Organisation and the introductory note at the beginning of Chapter 85 and description of heading 85.31 and 85.42 in R.K.Jain’s Customs Tariff Manual 1997-98 as well as catalogues and manuals of various manufacturers on 7 segment, 16 segment and Dot Matrix LEDs and based on our Department’s Microelectronics Laboratory’s findings, we are of the opinion that, 7 segment, 16 segment and Dot Matrix LEDs are electronic microassemblies as given in the Harmonised Commodity Description and Coding System. To describe the contents of the LEDs and the process involved in making the LEDs we state the following :
1. The LEDs are 7 segment LEDs with a decimal point, 16 segment LEDs with decimal point and 7x5 Dotmatrix LEDs and contain 8, 17 and 35 discrete miniature LEDs respectively, positioned on a substrate made up of glass epoxy board. LEDs are interconnected by the deposited or etched conductors and the complete unit is moulded in a plastic cabinet.
2. The LEDs are discrete active devices. They are classified under Heading 85.42. The interconnecting conductors connecting elements on the substrates are discrete passive elements with passive electrical function. The entire assembly of the LEDs connecting elements and substrate are enclosed in a moulded plastic casing.
3. For convenience of connection to external circuits and operation, the leads are taken out from the moulded base. The entire moulded assembly, encased in the moulded base constitutes one component when it is mounted on for use in an equipment. When components are moulded as in this case in the plastic housing, they are inseparable and the components cannot be taken out and used individually.
4. The entire plastic moulded assembly comprising of the base and components/substrate constitutes a moulded module.
As described above, the moulded module comprises both active and passive devices. In view of the above it may kindly be observed that the LED display imported by the appellant as described above falls squarely under the description of ELECTRONIC MICROASSEMBLY described at heading 85.42 of the HSN notes.
Thus, from the above, it could be seen that the Assistant Commissioner while referring to HSN Explanatory Notes in the Adjudication order has not taken into account the exact clarification given in the HSN Notes. On page 1517 of the Explanatory Notes it is given as under :
Electronic Microassemblies :
Microassemblies are made from discrete, active or both active and passive components which are combined and interconnected.
Discrete components are indivisible and are the basic electronic construction components in a system. They may have a single active electrical function (semiconductor devices defined by Note 5(A) to Chapter 85) or a single passive electrical function (resistors, capacitors, interconnections, etc.).
However, components consisting of several electric circuit elements and having multiple electrical functions, such as integrated circuits, are not considered as discrete components. Microassemblies are normally in the form of modules such as:
(1) Moulded modules in which the components are encased in a block (cube, parallelepiped, hemisphere, etc.) generally of plastics.
(2) Micromodules made by superimposing and interconnecting several rectangular (including square) substrates, each serving as a carrier for one or more components.
From the above, it would be clearly seen that the product manufactured by the appellants would rightly fall under Chapter 8542. Based on this classification if any refund is due, the same is required to be paid to the appellants. Thus, the appeal is disposed off accordingly.”
2. The Revenue contend in this appeal that the LED displays imported are used in electronic equipment for indicating numbers; that these form parts of display panels for such equipment; that such panels are specifically covered under Heading 8531.20. Ld. SDR argued on the basis of the grounds made in the appeal memo and submitted that the items are parts of electric sound or visual signalling apparatus and therefore they are required to be classified therein.
3. On the other hand, ld. Consultant relied on the technical opinion, dated 13-7-2000, which had been furnished by the Department of Electrical Communication Engineering who have clarified that the item is electronic micro assemblies and they met the complete definition of electronic micro assemblies as given in the Harmonized Commodity Description and Coding System.
4. Ld. SDR pointed out that this evidence was not before the Original authority and it cannot be looked into, furthermore, the Professors of the Department of Electrical Communication engineering who have signed this certificate cannot state in their opinion the heading under which the item falls.
5. On a careful consideration, it is seen from the Commissioner’s order that the item is electronic micro assemblies. Electronic Micro Assemblies are clearly classifiable under Heading 8542. Note 5 of Chapter 85 also clearly lays down as to what are electronic integrated circuits and electronic micro assemblies and it states that ‘for the classification of the articles defined in this Note, Headings 8541 and 8542 shall take precedence over any other heading in this Schedule, which might cover them by reference to, in particular, their function’. The Commissioner has gone into great detail on all the technical aspects of the matter and has overruled the classification adopted by the lower authorities under sub-heading 8531.90 as parts of electric sound or visual signalling apparatus. The Heading itself gives the examples like bells, sirens, indicator panels, burglar or fire alarms. It is very clear that the item in question is not the part of bells, sirens, indicator panels or fire alarms. The experts have clarified that LEDs are discrete active devices. The interconnecting conductors connecting elements on substrates are discrete passive elements with passive electrical function. The entire assembly of LEDs connecting elements and substrate are enclosed in a moulded plastic casing. It also states that they are inseparable and the components cannot be taken out and used individually. They have clearly given an opinion that the items are electronic microassemblies. When it is specifically covered by a heading with a description ‘Electronic integrated circuits and microassemblies’ then it cannot be considered as part of electric sound or visual signalling apparatus. Note 5 of Chapter 85 also supports the assessee’s case, as it has been clearly laid down therein that for classification of the articles defined in this Note, Heading 8541 and 8542 shall take precedence over any other Heading in this Schedule which might cover them by reference to, in particular, their function. We have noticed from the experts’ opinion that the function of this item is of microassemblies and not electrical sound or visual signalling apparatus. Therefore, it cannot be classified as its parts. Hence, the Order passed by the Commissioner is legal and proper and there is no merit in this appeal and the same is rejected.
Equivalent 2004 (170) ELT 0321 (Tri. - Bang.)
Equivalent 2004 (095) ECC 0667 (Tri.-Bang)
Equivalent 2004 (064) RLT 0399 (CESTAT-Ban.)