Commissioner of Customs (ICD), New Delhi vs Keihin Penalfa Ltd.>2003(03)LCX0106

2003(03)LCX0106

IN THE CEGAT, NORTHERN BENCH, NEW DELHI

S/Shri S.S. Kang, Member (J) and V.K. Agrawal, Member (T)

COMMISSIONER OF CUSTOMS (ICD), NEW DELHI

Versus

KEIHIN PENALFA LTD.

Final Order No. 181/2003-NB(B), dated 13-3-2003 in Appeal No. C/517/2001-B

CASES CITED

Eacom’s Controls (India) Ltd. v. Collector — 1998(11)LCX0127 Eq 1999 (109) ELT 0805 (Tribunal) — Referred [Para 3]

Escorts Ltd. v. Collector — 2000(01)LCX0229 Eq 2000 (118) ELT 0755 (Tribunal) — Referred............................. [Para 2]

DEPARTMENTAL CLARIFICATION CITED

C.B.E. & C. Circular No. 49/3/97-CX., dated 9-5-1997....................................................... [Para 3]

REPRESENTED BY : Shri M.P. Singh, JDR, for the Appellant.

Shri Piyush Kumar, Consultant, for the Respondent.

[Order per : V.K. Agrawal, Member (T)]. - In this Appeal filed by the Revenue, the issue involved is whether the Electronic Automatic Regulator imported by M/s. Keihin Penalfa classifiable under sub-heading 9032.89, as confirmed by the Commissioner (Appeals) under the impugned Order or is classifiable under sub-heading 8543.89 of the First Schedule to the Customs Tariff Act, as claimed by the Revenue. Shri M.P. Singh, learned Departmental Representative submitted that sub-heading 9032.89 covers other instruments and apparatus of Heading 9032 which applies to Automatic regulator or controlling instruments and apparatus; that as per Note 6 to Chapter 90, Heading 9032 applies only to –

(a) Instruments and apparatus for automatic 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; and

(b) Automatic regulator of electrical quantities, and instruments and apparatus for automatically controlling non-electrical quantities the operation of which depends on an electrical phenomenon varying according to the factor to be controlled.

2. He further, submitted that the impugned goods is an instrument to replace carburettor of automobile engine; that it does not have operative device; that it receives signals from remotely mounted sensor and gives signal to remotely mounted actuators and valves; that the impugned goods not only controls flow, but also regulates timing and fuel injection for optional engine efficiency and as such is not covered within the purview of Heading 90.32; that further, the impugned goods also performs functions not performed of the goods of the said Heading such as ignition, timing control and fuel Injection Control. Learned Departmental Representative also mentioned that the Commissioner (Appeals) has classified the impugned product on the basis of use of the final products, in which the impugned goods are used that is electronic control unit; that according to Rule (1) of the Interpretative Rules, the classification of the product shall be determined according to the terms of the Heading and therefore, before the impugned product can be classified under Heading 9032, it has to confirm to the heading 9032 which applies to automatic regulating or controlling instruments; that expert opinion need not be taken into consideration at all as the issue involved is the classification of the product under the Customs Tariff; that further the expert opinion is regarding the scope of the product in question and has been obtained by the respondents that too on his own. Finally, he relied upon the decision in the case of Escorts Ltd. v. Collector of Customs, New Delhi - 2000 (118) ELT 755 wherein it was held that Microsoft presetting unit for boring and milling tools type CGS 2040-01 is also doing function other than measuring and checking and hence is classifiable under Heading 8479.89 and not under sub-heading 9031.80 of the Customs Tariff.

3. On the other hand, Shri Piyush Kumar, learned Consultant, submitted that the impugned product is a control device which regulates the flow of fuel/air supplied to the multipoint fuel injection system of the present day Euro II engines; that it optimizes the engine output and minimizes the emission level by constant monitoring and maintaining the flow of fuel/air at pre-determined level; that the fuel injection system has replaced the carburettor which was used in internal combustion engine; that earlier the engines were fitted with carburettor for supply of fuel to the ignition chamber; that now Multi Point Fuel Injection System is being used in place of Carburettor and performs the function of monitor and controller. In this regard, he also referred to a Journal Overdrive August, 2000 issue which refers to Electronic fuel injection. Learned Consultant further submitted that as per Note 6 to Chapter 90, the product in question is covered by Heading 90.32 as it regulates the flow of air and fuel; that Explanatory Notes of HSN pertaining to Heading 90.32 provides that the automatic regulator of the Heading are intended for use in complete automatic control system which is designed to bring a quantity, electrical or non electrical, to, and maintain it at a desired value, stabilized against any disturbances by constantly measuring its actual value; that they consists essentially of measuring device, an electrical control device and starting, stopping or operating device. He also mentioned that as per ITC (HS) Classifications of Import and Export Items electronic automatic regulators have been classified under Heading 903289.01 He also placed reliance on Board’s Circular No. 49/3/97-CX, dated 9-5-97 wherein it has been opined that automatic regulating or controlling instruments and apparatus falling under Heading 9032 are primarily used for controlling/maintaining the flow, level, pressure or other variables of liquid or gases; that this Circular has been issued by the Board after consulting the Department of Electronics. He also mentioned that the product has been classified under Heading 90.32 in the Madras Customs House. Finally he relied upon the decision in the case of Eacom’s Controls (India) Ltd. v. Collector of Customs, New Delhi, 1999 (109) ELT 805 wherein the parameters for classifying the product under Heading 85.43 has been laid down by the Tribunal. According to the said judgment, the following are to be regarded as individual functions :

(A) Mechanical devices with or without motors or other driving force whose function can be performed distinctly from and independently of any other machine or appliances.

(B) Mechanical devices which cannot perform their function unless they are mounted on another machine or appliance or are incorporated in a more complex entity provided that this function -

(i) is distinct from that which is performed by the machine or appliances whereon they are to be mounted or by the entity wherein they are to be incorporated; and

(ii) does not play an integral and inseparable part in the operation of such machine, appliance or entity.

He mentioned that the impugned goods does not fit into these parameters as it does not perform any individual functions other than measuring and controlling the fuel injected nor it functions independently of the engine; that its function actually starts the moment ignition is turned on and the engine data determined by the sensors is communicated to the control unit.

4. We have considered the submissions of both the sides. According to the Explanatory Notes of HSN, automatic control apparatus for liquids or gases and apparatus for automatically controlling temperature form part of complete automatic control systems and consist essentially of a device for measuring, a controlling device and a starting, stopping or operating device. According to the Explanatory Notes, the operations within the meaning of Note 6 (a) consist of these three devices forming a single entity or in accordance with the Note 3, a functional unit. According to the Respondents, the electric automatic remote imported by them controls the injected fuel quantity for achieving the optimum performance of the engine. It controls the ignition timing as well as composition of the air fuel measure depending on the engine and external conditions and ensures optimum level of engine performance while keeping the emission level in the exhaust within the specified under all operating conditions. It has been, further, explained by the Appellants that the impugned goods is usually placed inside the passenger/driver cabin and is not mounted on the engine and is connected to the engine through various sensors to receive the input data and connectors to pass out signals to the mechanical devices, namely, the throttle valve, fuel pumps and injections which control and regulate fuel quantity and air intake. Learned Departmental Representative has emphasized that the impugned product does not have the measuring device which is only in the main machine. We also observe that the Adjudicating Authority under the Adjudication Order 33/01, dated 26-3-2001 has also given his specific finding that the impugned goods do not have operating device as it receives signals from remotely mounted sensors and gives signals to remotely mounted actuators and valves and it does not satisfy the Explanatory Notes of HSN. This has not been rebutted by the Respondents. In fact in their reply dated 30-11-2000, the Respondents have mentioned, while summarizing the working of EAR, that it “gives output signals; to various remotely mounted actuators and valves which in turn control the amount of fuel supplied to die injectors and flow of air to the desired level”. We are, therefore, of the view that the product in question does not qualify to be classified under Heading 9032.89 of the Customs Tariff. Accordingly, the Appeal is allowed.

Equivalent 2003 (154) ELT 0680 (Tri. - Del.)