Full Judgment Text
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 4
CASE NO.:
Appeal (civil) 4436 of 2001
PETITIONER:
M/s. H.V. Industrial Electronics Pvt. Ltd.
RESPONDENT:
Commissioner of Central Excise & Customs
DATE OF JUDGMENT: 20/07/2006
BENCH:
ASHOK BHAN & MARKANDEY KATJU
JUDGMENT:
J U D G M E N T
With
CA No. 4439 of 2001, CA No. 4437 of 2001
and CA No. 4438 of 2001
BHAN, J.
The common question for consideration in these
four appeals by the Commissioner of Central Excise
& Customs, Aurangabad (for short "the respondent")
is to the classification of "power controllers"
manufactured by each of the four appellants to
these appeals.
The appellants inter alia are manufacturers of
electrical goods namely, power controllers also
known as Light Dimmers and Heat Controllers. Until
June, 1991, the appellants had classified the
"power controllers" under Chapter 85, Sub-heading
8543.00 under the Central Excise Tariff Act (for
short "the Tariff Act"). With effect from
25.07.1991, the appellants started classifying
"power controllers" under Sub-heading 8536.90.
The Department did not accept the
classification list and issued show cause notices
dated 1.6.1992, 5.11.1992, 3.5.1993 and 4.10.1993,
respectively to the fourth respondent herein inter
alia alleging that the correct classification of
the "power controllers" is under Sub-heading
8543.00 and not under Sub-heading 8536.90.
Identical show cause notices proposing to deny the
proposed classification by the appellant and
confirm the classification earlier claimed and
approved were issued, the notices also proposed
recovery of duty short paid, caused by the
difference between the duty payable under each of
the two headings. The said show cause notices made
allegation relating to valuation of goods as well,
but the subject matter of these appeals is
restricted to the issue of the determination of
classification of "power controllers". The
respondent submitted their reply to the show cause
notice vide letters dated 22.4.1992, 22.6.1992,
19.11.1992 and 31.5.1993. It was submitted by them
that the power controllers/light dimmers are for
controlling the flow of power and for the purpose
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 4
of protecting the circuit of 230 AC Voltage from
150 Watts to 3000 Watts and therefore the said
items fell under Sub-heading 8536.90 and not under
Sub-heading 8543.00 which was a residuary item
relating to electrical machine having individual
functions not specified or included elsewhere in
Chapter 85.
The Assistant Collector by his order-in-
original bearing No. 84/93 dated 31.12.1993
confirmed the classification of "power controllers"
under Sub-heading 8543.00 and the difference in
duty demanded. The appellants filed statutory
appeals before the Collector of Central Excise &
Customs (Appeals) challenging the order of the
respondent on the grounds set out in the appeal.
The Collector (Appeals) by his order-in-appeal No.
A-371/94 dated 31.12.1994, after recording a
finding that the product manufactured by the
appellants is used for making connection to or in
electrical circuits held that the goods are
classifiable under Sub-heading 8536.90 as it was
for Voltage not exceeding 1000 Volts.
Being aggrieved against the order-in-appeal,
the Department filed an appeal before the Customs
Excise and Gold (Control) Appellate Tribunal, West
Zonal Bench at Mumbai (for short "the Tribunal").
Tribunal by the impugned order accepted the appeal
filed by the Department, set aside the order of the
Collector (Appeals) and restored the order of the
Assistant Controller. It has been held in the
impugned order that the function of "power
controllers" is to provide a source of current
variable at the option of the user to the load to
which it is connected. That it performs individual
functions and hence would fall under Heading 85.43.
Being aggrieved by the order passed by the
Tribunal, the appellants have filed the present
appeals.
Counsels for the parties have been heard at
length. Headings 85.36 and 85.43 relied upon by
the parties read as follows:
"85.36 - Electrical apparatus for
switching or protecting electrical
circuits, or for making connections to
or in electrical circuits (for
example, switches relays, fuses, surge
suppressors, plugs, sockets, lamp-
holders, junction boxes) for a voltage
not exceeding 1000 volts.
85.36.10 - Overload protection or
thermal relay, starting relay
controls, for refrigerating or air
conditioning appliances and machinery.
8536.90 - Other"
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 4
"85.43 - Electrical machines and
apparatus, having individual functions
not specified or included elsewhere in
this chapter."
Heading 85.36 covers electrical apparatus for
switching or protecting electrical circuits, or for
making connections to or in electrical circuits,
such as, switches, relays, fuses, surge
suppressors, plugs, sockets, lamp-holders, junction
boxes for a voltage not exceeding 1000 volts.
The assessee-appellant has not shown any
technical write-up to substantiate their claim to
the effect that the items produced by them perform
the function of either switching, protecting or for
making connections to or in electrical circuit.
Heading 85.43 covers electrical machines or
apparatus having individual functions not specified
or included elsewhere in the Chapter. The "power
controllers" do not either switch or protect or for
make connections to or in electrical circuits. Its
only function is to control the degree of
illumination and outflow of heat, i.e., it
functions as a light dimmer and speed controller.
Its function is to control the degree of
illumination and flow of electric current. The
apparatus whose function is to control the degree
of illumination and flow of current has not been
mentioned in either of the entries of Chapter 85.
It performs individual function. The fact that the
use of product manufactured by the respondent is to
regulate the flow of electricity to the object in
question, the same cannot be treated as an
apparatus for making or protecting switching or
making connections to or in electrical circuits.
The machine/ apparatus manufactured by the
appellant is for controlling or regulating the
electric current/power so as to feed the required
quantum of current to the other equipments
connected to the circuits. Apparatus "power
controller" is capable of controlling the
current/power in the circuit and therefore,
definitely performs the individual function. Such
machine or apparatus would fall under residuary
entry 85.43 and not under 85.36.
Rejecting the contention of the assessee that
the power controllers would not fall under Heading
85.36, the Tribunal has recorded the following
findings:
"Both headings are a reproduction of
respective headings in the Harmonized
System of Nomenclature (HSN) and
reference to the Explanatory Notes of
that nomenclature in determining the
scope of the coverage of these
headings is justified. Heading 85.36
speaks of Electrical apparatus for
switching or protecting electrical
circuits, or for making connections to
or in electrical circuits." Therefore,
such apparatus which is intended
solely or predominantly for any of
these purposes, that would be
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 4
classified under that heading.
Electrical apparatus which are
intended to perform other functions,
and incorporating a switch, relay,
fuse, or plug, cannot, solely by the
fact of such incorporation, be
considered to be apparatus for
switching or protecting electrical
circuits. If that were to be the case,
every apparatus that incorporates a
switch or fuse or other item mentioned
in the heading would be classifiable
under that heading. Thus,
transformers, electric lamps or
television receivers incorporating a
fuse or the fuse to protect against
overload, or a switch to turn on the
circuit would be classifiable not
under headings 85.04, 85.39 or 85.28
respectively but would be classifiable
under heading 85.36. The absurdity of
this conclusion shows the
unacceptability of the reasoning
advanced in its support. It is clear
that heading 85.36 is for goods solely
or essentially used for the purpose
specified in that heading switching or
protecting electric circuit, or making
connection or any switch circuits.
This article therefore cannot be
classifiable under heading 85.36."
The Tribunal further examined the
appropriateness of the classification claimed by
the assessee under Heading 85.43. It came to the
conclusion that the electrical appliances or
apparatus under consideration has individual
functions as it does the function of
controlling/regulating the electric current/power
so as to feed the required quantum of current to
the other equipments connected to the circuits.
Its function is to provide a source of current
variable at the option of the user to the load to
which it is connected. We agree with both the
findings referred to above by the Tribunal.
For the reasons stated above, we do not find
any merit in this appeal and dismiss the same,
leaving the parties to bear their own costs.