H.V. Industrial Electronics Pvt. Ltd. Vs. Commissioner of Central Excise &
Customs  Insc 433 (20
Bhan & Markandey Katju
CA No. 4439 of 2001, CA No. 4437 of 2001 and CA No. 4438 of 2001 BHAN, J.
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.
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.
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
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 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
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
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
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").
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.
aggrieved by the order passed by the Tribunal, the appellants have filed the
for the parties have been heard at length. Headings 85.36 and 85.43 relied upon
by the parties read as follows:
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.
protection or thermal relay, starting relay controls, for refrigerating or air
conditioning appliances and machinery.
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.
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.
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
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.
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.
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
the contention of the assessee that the power controllers would not fall under
Heading 85.36, the Tribunal has recorded the following findings:
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 classified under that
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.
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
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.
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.