2006(12)LCX0136

In the Customs, Excise & Service Tax Appellate Tribunal, Bangalore

Dr. S.L. Peeran, Member (Judicial) and Shri T.K. Jayaraman, Member (Technical)

Commissioner of Customs, Bangalore

Versus

SPM India Ltd.

Final Order No. 19/2007 dt. 29.12.2006 in Appeal No. C/501/2004

Cases Quoted -

Moorco (I) Ltd. vs. CC, Madras 1994 (004) RLT 0519 (SC) - Referred [Para 5]

VDO India Ltd. vs. CC, Chennai 2005(03)LCX0219 Eq 2005 (186) ELT 0408 (Tri-Ban.) - Referred [Para 5]

Moorco (India) Ltd. vs. CC, Madras 1997 (019) RLT 0113 (CEGAT-SB)- Referred [Para 5]

Goodyear India Ltd. vs. CC, ND 1998(09)LCX0181 Eq 1999 (109) ELT 0488 (Tribunal) - Referred [Para 5]

Asia Engineering Co. vs. CC, Bombay 1997 (018) RLT 0704 (CEGAT-B) - Referred [Para 5]

Fag Precision Bearing Ltd. vs. CC, Bombay 1987(07)LCX0128 Eq 1987 (031) ELT 0779 (Tri.) - Referred [Para 5]

Advocated By -

Shri K. Sambi Reddi JDR for Appellant
Shri M.S. Nagaraja, Adv. for Respondents

Per T.K. Jayaraman :

This appeal has been filed against the Order-in-Appeal No. 102/2004-Cus. dated 24.9.2004, passed by the Commissioner of Customs (Appeals), Bangalore.


2. The Respondent filed Bills of Entry for clearance of items describing as "checking for measuring the pressure air leak tester MLS-1862 (ALVE)" in the first Bill of Entry and "Model LS-1862 (ALVE) checking or measuring the pressure (Air Leak Tester)". They sought the classification of the items under CTH 90262000. The above classification is for instrument or apparatus for measuring or checking pressure. The Revenue felt that the classification claimed by the appellants is not correct According to the Revenue, the said item would be classifiable under 90318000. The above tariff item is for measuring or checking instruments, appliances and machines, not specified or included elsewhere in this chapter. The lower authority decided the classification in the above manner. The Respondent paid the duty under protest and appealed to the Commissioner (Appeals). After going through the product literature and HSN Explanatory Notes, the Commissioner (Appeals) decided the classification as claimed by the Respondent.


3. The Revenue is aggrieved over the impugned order of the Commissioner (Appeals). The grounds of the appeal are as follows:-

(i) The goods under import is described both in the invoice and the catalogue as 'Air Leak Tester' and further there is no mention in the catalogue to the effect that the instrument is meant for checking/measuring the pressure of liquid or gas to be classified under CTH 9026. On contrary it indicates the rate of leak in terms of ml/min or ml/sec. The principal function of the Air Leak Tester is to test whether there is any leakage or not. It is not primarily designed to measure the pressure of either liquid or gas. If it were to be a mere measuring devise, it need not test the leakage. Thus the equipment viz. Air leak tester certainly merits classification under CTH 9031.

(ii) The principal function of the equipment under import is testing (as revealed by the product catalogue). In the process of leak testing, the equipment may be checking certain parameters. The said criteria alone cannot conclude that it is only a checking instrument. The essential character of the equipment is testing. Therefore, under Rule 3 (b) of Interpretative Rules, the classification has to decide based on it's essential character. Accordingly, it merits classification as a tester under Heading 90.31 only. Even otherwise, in terms of Rule 3 (c) of Interpretative Rules also, the classification is warranted under Heading CTH 90.31 as it occurs numerically later than Heading CTH 90.26. Thus on all counts classification under CTH 90.31 is not appropriate.

(iii) The instrument is used to test air leakage since measuring the pressure or volume differential is not the end here, but only a mechanism to ascertain the presence or absence of leakage where exact pressure or volume differential measurement is not at all required.

(iv) From the features of the equipment as revealed by the catalogue for the product it is abundantly clear that the air leak test is based on measuring volume or pressure of the gas using differential air pressure testing principle.

(v) The measurement of these parameters are not an end in itself but only a means to test and confirm the presence or absence of 567 air leakage.

(vi) Though there are many other features performing a particular function within the instrument, it is very clear that all these functions are performed towards a single and specific goal of testing the air leakage.

(vii) The conclusion of the Commissioner (Appeals) to classify the impugned goods under CTH 9026 (for measuring or checking pressure) is erroneous since measuring pressure and testing the leakage are not one and the same.


4. Shri K. Sambi Reddy, learned JDR reiterated the grounds of the appeal.


5. Shri M.S. Nagaraja, learned Advocate appeared on behalf of the Respondents. He took us through the entries in the Customs Tariff and pointed out that the Heading 9031 refers to measuring and checking of instruments is not specified elsewhere. However, in the present case, the impugned goods answer to the descriptions of entry under 9026. The Commissioner (Appeals) has gone through the product literature and also HSN Explanatory Notes and came to the conclusion that the impugned goods function by measuring the air differential pressure and rightly classifiable as instruments for measuring or checking pressure. He relied on the Apex Court judgment rendered in the case of Moorco (India) Ltd. Vs. Collector of Customs, Madras, 1994 (004) RLT 0519 (SC)=1994(09)LCX0102 Eq 1994 (074) ELT 0005 (SC) wherein it has been held that when an item is classifiable under a specific heading that should be preferred to a general heading. Further he relied on this Bench's decision in the case of VDO India Ltd. Vs. Commissioner of Customs, Chennai, 2005(03)LCX0219 Eq 2005 (186) ELT 0408 (Tri.-Bang.) wherein the instrument 'Climate Test Cabinet System' used to test function of products manufactured by the appellant during temperature variations is held to be an apparatus for physical analysis. When the Revenue wanted the impugned item to be classified under 9031.80, the Tribunal did not accept the same and held that the items would be correctly classifiable under 9027. It was held that the insistence that apparatus should measure some parameters is not a proper ground to reject the classification under 9027.80. He also relied on the following decisions:-

(i) Goodyear India Ltd. Vs. Collector of Customs, New Delhi, 1998(09)LCX0181 Eq 1999 (109) ELT 0488 (Tribunal)
(ii) Moorco (India) Ltd. Vs. Collector of Customs, Madras, 1997 (019) RLT 0113 (CEGAT-SB)=1996(11)LCX0075 Eq 1997 (091) ELT 0126 (Tribunal)
(iii) Asia Engineering Co. Vs. Collector of Customs, Bombay, 1997 (018) RLT 0704 (CEGAT-B)=1996(11)LCX0062 Eq 1997 (092) ELT 0066 (Tribunal)
(iv) Fag Precision Bearings Ltd. Vs. Collector of Customs, Bombay, 1987(07)LCX0128 Eq 1987 (031) ELT 0779 (Tribunal)


6. We have gone through the records of the case carefully. From the product literature, we noticed that the Air Leak Tester is a high precision measuring and checking instruments incorporating different pressure sensor which measures and checks the volume or pressure of air/gas and determines the existence of leakage of air/gas and the rate of leak. The leakage is determined only based on measurement of pressure. In view of the actual position, the impugned item can definitely be classified an instrument for measuring or checking pressure. When there is a specific entry, there is no need to come to residual entry preferred by the Revenue. Moreover, the Commissioner (Appeals) has given a very detailed finding after going through the literature and HSN Explanatory Notes. The case laws relied on by the Respondents are also relevant. In these circumstances, we do not find any merit in the Revenue's appeal and the same is rejected.

Pronounced in the open Court on 29.12.2006.

Equivalent 2007 (079) RLT 0483 (CESTAT-Ban.)

Equivalent 2007 (211) ELT 0573 (Tri.- Bang.)