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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

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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"

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"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

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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.