2007(07)LCX0065

IN THE CESTAT, SOUTH ZONAL BENCH, CHENNAI

S/Shri P.G. Chacko, Member (J) and P. Karthikeyan, Member (T)

Commissioner of Customs, Chennai

Versus

Excellent Computers

Final Order No. 854/2007, dated 11 -7-2007 in Appeal No. C/696/2000

Advocated By -

Shri M.K.A.K. Mohideen, DR, for the Appellant.
Smt. Nisha Bineesh, Advocate, for the Respondent.

[Order per : P.G. Chacko, Member (J)]. -

The short question arising for consideration in this appeal of the Revenue is whether the equipment described "GPS 12 CX" and imported by the respondents is classifiable as a Radio Navigational Aid Apparatus under Heading 85.26 (SH 8526.91) as claimed by the Revenue or as a Direction Finding Compass under Heading 90.14 (SH 9014.10) as claimed by the assessee. The original authority classified the item under Heading 85.26, but the first appellate authority classified it under Heading 90.14. The lower appellate authority found that the item appeared to be a hand-held equipment capable of locating its own position by taking in signals sent by satellites. On the basis of the write-up produced by the party, the appellate authority observed that the item was an improved hand-held navigational equipment capable of giving continuous position updates through 12 parallel channel receiver. The appellate authority also consulted HSN Explanatory Notes, which indicated that Heading 90.14 covered direction- finding compasses and other navigational instruments and appliances. On this basis, classification of the item was finalized under SH 9014.10. Classification under Heading 85.26 was ruled out by the appellate authority by holding that the item under consideration was not a radio navigational aid apparatus. It was observed that the said heading generally covered radio beacons and radio buoys, with fixed or rotating aerials, receivers etc. It was further observed that no two-way communication was possible with the said goods, implying that such communication was characteristic of equipments falling under Heading 85.26.


2. In the present appeal, it has been submitted that the apparatus in question is a radio navigational apparatus and hence it can be classified only under Heading 85.26. It is submitted that the apparatus receives radio signals from a fleet of satellites circling the earth, analyses these signals and locates its own position to a remarkable accuracy. It is claimed that the apparatus would not get classified under Heading 90.14 on account of one-way signal transmission. Oneway radio signalling communication is nevertheless a radio communication. In support of these grounds of the appeals, learned JDR produces a computer printout on GPS (GLOBAL POSITIONING SYSTEM). This document indicates that GPS consists of 3 segments viz. the space segment, the control segment and the user segment. The space and control segments are operated by the US Air Force. The user segment consists of the GPS receiver equipment, which receives the signals from the GPS satellites and uses the transmitted information to calculate the user's three-dimensional position and time. It is the said equipment which is under consideration for classification. Learned counsel for the respondents, on her part, also produces a write-up titled "What is a GPS?", which also gives a brief account of how the receiver works. This information is no different from the one available from the documents furnished by DR. Both sides have relied on HSN Explanatory Notes. The Notes under Heading 85.26 indicates that this Heading includes radio navigational aid equipment (e.g. radio beacons and radio buoys, with fixed or rotating aerials; receivers, including radio compasses equipped with multiple aerials or with a directional frame aerial). According to learned DR, radio compasses are expressly covered as radio navigational aid equipments under Heading 85.26. Notes under the said Heading also indicate that this Heading excludes radar apparatus, radio navigational aid apparatus and radio remote control apparatus. This Note mentions Heading 85.26 in parentheses. Learned counsel submits that, as per HSN Notes under Heading 90.14, all direction finding compasses must fall under this Heading. The Note relied on by counsel reads thus:-

"This group covers all types of direction finding compasses, from the simple types used by hikers, cyclists etc. to those specialized for use in mining, navigation etc. (including magnetic compasses, gyroscopic compasses, gyro magnetic compasses, binnacle compasses, position finding compasses etc.)."

It is submitted by counsel that the equipment imported by the respondents is a position - finding compass and hence appropriately classifiable under Heading 90.14. Learned counsel has also placed on record what she calls literature on GPS 12 CX. She has taken us through this document and has claimed that this contains only material to support classification of the equipment under Heading 90.14.


3. After giving careful consideration to the submissions, we note that CTA Heading 85.26 covers radar apparatus, radio navigational aid apparatus, radio remote control apparatus. Radar apparatus has been classified under SH 8526.10 and other apparatus have been sub-divided. SH 8526.91 covers radio navigational aid apparatus. It is conspicuous that all the apparatus classified under Heading 85.26 are, as their names indicate, based on the use of radio waves. On the other hand, Heading 90.14 covers direction finding compasses and other navigational instruments and appliances, without reference to radio waves. Direction-finding compasses have been classified under SH 9014.10. We have not found anything in the HSN Notes under Heading 90.14 to indicate that the equipments/apparatus/appliances classified under that Heading work on a technology involving radio signal transmitted between any satellite and the equipment. On the other hand, the data made available to us by both sides on GPS indicate that the equipment receives radio signals from satellites orbiting the earth and use such signals to calculate the exact latitude and longitude and thereby to position it over the globe. This technique is not clear from the literature furnished by learned counsel. However, it indicates that GPS is used for navigational purposes. It is not in dispute that compasses are equipments for positioning and navigation. HSN Notes under Heading 85.26 say that radio navigational aid apparatus include receivers including radio compasses equipped with aerials. HSN Notes under Heading 90.14 indicate that all types of direction-finding compasses are covered by this Heading. The examples given in brackets are magnetic compasses, gyroscopic compasses, gyro magnetic compasses, binnacle compasses, position-finding compasses. It appears from the examples that these compasses work on magnetic and allied techniques. There is no reference to use of radio signal transmission from satellite orbiting the earth. On the other hand, Note l(h) of Chapter 90 of the Tariff excludes radar apparatus, radio navigational aid apparatus and radio remote control apparatus (Heading 85.26). A similar exclusion is indicated by the HSN Notes under Heading 90.14 also.


4. It appears from the impugned order that, though learned Commissioner (Appeals) suo motu consulted the 'New Dictionary of Scientific and Technical Terms' and found therein the essential features of a GPS, he did not consider these materials in the context of finalizing classification of the equipment in question. The above dictionary clearly states that the equipment on earth can receive a host of radio signals from a fleet of satellites circling the earth and locate its own position to a remarkable accuracy. That the equipment works on a technology involving radio signals transmitted by satellites was not duly taken into account by learned Commissioner (Appeals).


5. For the reasons already noted by us, the equipment in question is held classifiable under SH 8526.91 of the CTA Schedule. In the result, the impugned order gets set aside and this appeal is allowed.

(Dictated and pronounced in open Court)

Equivalent 2007 (216) ELT 0635 (Tri. - Chennai)

Equivalent 2007 (082) RLT 0776 (CESTAT- Che.)

Equivalent 2007 (121) ECC 0311

Equivalent 2007 (147) ECR 0311 (Tri.-Chennai)