Case Law Details

Case Name : ABB Limited Vs Commissioner of Customs (CESTAT Bangalore)
Appeal Number : Customs Appeal No. 2110 of 2012
Date of Judgement/Order : 04/12/2023
Related Assessment Year :

ABB Limited Vs Commissioner of Customs (CESTAT Bangalore)

Introduction:

In a recent decision by the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Bangalore, the tribunal ruled in favor of the Revenue Department, upholding the classification of ABB Limited’s static converters under Customs Tariff Heading (CTH) 8504. The appellant, ABB Limited, had initially declared the goods as “inverter unit – frequency converter” under CTH 9032 9000, claiming a concessional rate of duty. However, the department reclassified the product as ‘inverter’ under CTH 8504 4010.

Key Facts:

  • ABB Limited filed Bill of Entry No.860886 dated 19.9.2008, declaring the goods as an “inverter unit – frequency converter” and claiming a concessional rate of duty under CTH 9032 9000.
  • The Revenue Department reclassified the product under CTH 8504 4010 as ‘inverter,’ leading to a dispute over the correct classification.
  • The Commissioner of Customs (Appeals), Bangalore, upheld the reclassification, prompting ABB Limited to file the present appeal before CESTAT.

CESTAT’s Decision:

  • The learned Authorized Representative for the Revenue pointed out that this issue had already been decided by the tribunal for a subsequent period, where similar appeals by the appellant were dismissed. Therefore, the present appeal should be decided accordingly.
  • The learned advocate for the appellant did not dispute this fact.
  • CESTAT considered the previous decision of the tribunal in Final Order No. 21151 – 21152/2023 dated 20.10.2023, where it was held that the appellant’s product, classified as ‘static converters,’ was rightly classifiable under CTH 8504. The tribunal emphasized the primary function of the product and its technical characteristics.
  • The tribunal noted that the appellant’s reliance on certain notes and explanatory notes was misplaced, and the correct classification was determined based on the technical characteristics and functions of the product.
  • CESTAT referred to precedents, including a decision involving Larsen & Toubro Ltd., where static converters with similar functions were classified under CTH 8504. The tribunal found that the primary function of the static converters was to convert electrical energy for further use.
  • The tribunal also cited a decision in the case of Pioma Chemicals, where the classification was determined based on the published literature and expert opinions.
  • CESTAT highlighted a Supreme Court decision in the case of Thermax Ltd., emphasizing the importance of the definition of a product given in the Harmonised System Nomenclature (HSN) for the purpose of levying excise duty.
  • Based on these observations and precedents, CESTAT concluded that the goods were rightly classifiable under CTH 8504 instead of CTH 9032 as claimed by the appellant.
  • The appeal filed by ABB Limited was dismissed, and the classification of the static converters under CTH 8504 was upheld.

Conclusion:

The decision by CESTAT Bangalore affirms the classification of ABB Limited’s static converters under Customs Tariff Heading 8504. The tribunal emphasized the importance of considering the technical characteristics and primary function of the product for proper classification. This ruling provides clarity on the classification of similar goods and sets a precedent for future cases involving the classification of static converters. 

FULL TEXT OF THE CESTAT BANGALORE ORDER

This appeal is filed against Order-in-Appeal No.90/2012 dated 30.05.2012 passed by the Commissioner of Customs (Appeals), Bangalore.

2. Briefly stated the facts of the case are that the appellant had filed Bill of Entry No.860886 dated 19.9.2008 declaring goods as inverter unit – frequency converter classifying the same under CTH 9032 9000 and claiming concessional rate of duty. The Department has reclassified the product under CTH 8504 4010 as ‘inverter’. Aggrieved by the said assessment, they filed appeal before the learned Commissioner (A), who in turn upheld the order of the adjudicating authority and rejected their appeals. Hence, the present appeals.

3. At the outset, the learned Authorised Representative for the Revenue submits that on similar issues for subsequent period, this Tribunal had already decided the appeals filed by the appellant classifying the product under CTH 8504 4010 as against claimed classification of CTH 9032 9000. Therefore, the present appeal be decided accordingly.

4. Learned advocate for the appellant does not dispute the said facts.

5. Heard both sides and perused the records. We find that the issue has already been considered by this Tribunal taking note of the various aspects on the issue and precedent. After analysing the submissions from both sides, this Bench vide Final Order No. 21151 – 21152/2023 dated 20.10.2023 has held as follows:

“21. The reliance placed on by the learned counsel on note 1(m) of Section XVI which states this Section does not cover articles of Chapter 90 is totally misplaced as seen from the chapter notes and the explanatory notes supra. The learned counsel has also relied on the explanatory notes where it states “automatic voltage regulators are classified in heading 90.32, conveniently ignoring the HSN explanatory notes under Chapter 8504”. As discussed above, the items imported are not automotive regulators but frequency inverters and going by the Technical Literature provided by the appellant, they are rightly classifiable under Chapter 85.04. The reliance placed on Kone elevators by the appellant does not support the case of the appellant in as much as the product there was being classified under 8504 based on the expert opinions which was not rebutted by the revenue.

22. The learned Authorised Representative has rightly relied on the decision of the Tribunal in the case of Larsen & Toubro Ltd. V. Commissioner of Central Excise Mumbai 2005 (189) ELT 439 (Tri-Mumbai) wherein the similar products under dispute, the Tribunal upheld the classification under 8504 as against the classification under 8537 as claimed by the Revenue. The facts of the case are that the static converters manufactured by the appellant where the primary function of the subject goods was to convert electrical energy in order to adopt it for further use namely direct current – alternating current – direct current or alternating current – alternating current. The subject goods technically known as ‘frequency inventors, convertors for speed control of D.C. Motors, Chopper Controllers, A.C. Regulators’. The dispute involved in the present case relates to the classification of the said “static convertors” manufactured by the appellants. The appellants claimed the classification of the said products under Chapter subheading 85.04 of the Tariff Act and cleared the products at appropriate rate of duty accordingly. By the order impugned in this appeal, the Commissioner (A) classified the said products as “‘Panels” under Chapter Heading 85.37 of the Tariff Act. But based on the primary function of the product, the Tribunal found classification under 8504 to be appropriate.

23. In the case of Pioma Chemicals v. Commissioner of Customs, Nhava Sheva-I: 2019 (370) ELT 301 (Tri-Mumbai) held that:

“In our view all the published literature support the findings recorded by the Commissioner in the impugned order to the effect that the goods imported are nothing but re-esterified fat/oil. On going through the published literature referred above, and also the fact that as per the rulings relied from US Customs and Kenya Customs we do not find any error in the classification of the goods determined under Chapter 1516 20 91. It is true that the Rulings of the US Customs and Kenya Customs may not be binding but definitely have great persuasive value as the Classification Code followed by all these countries, are based on, which the classification system adopted by Indian Customs is also aligned. It is only beyond six-digit level that local jurisdictions have their own expansions.”

24. The Hon’ble Supreme Court of India in the case of Thermax Ltd. Versus Commissioner of Central Excise, Pune-I: 2022 (382) E.L.T. 442 (S.C.) dated on 13-10-2022 the Supreme Court held that:

“6. The definition of a product given in the HSN should be given due weightage in the classification of a product for the purpose of levying excise duty. This is because in the Statement of Objects and Reasons of the Bill leading to enactment of Central Excise Tariff Act, 1985, it was clearly stated that the pattern of tariff classification is broadly based on the system of classification derived from the International Convention on the Harmonised Commodity Description and Coding System (Harmonised System) with such contraction or modification thereto as are necessary, to fall within the scope of the levy of Central Excise duty. The tariff so suggested for the levy under the Indian Tariff Act is based on an internationally accepted nomenclature, in the formulation of which, all considerations, technical and legal, have been taken into account. This was done to reduce avoidable disputes on tariff classification. Besides, the tariff would be on the lines of the harmonized system. It was also borne in mind that the tariff on the lines of the harmonized system would bring about considerable alignment, between the Customs and Central Excise Tariffs, which in turn, would facilitate charging of additional customs duty on imports, equivalent of excise duty. It was therefore expressly stated in the Statement of Objects and Reasons that the Central Excise Tariff are based on the HSN and the internationally accepted nomenclature was as such taken into account, to reduce tariff classification disputes………” .

In view of the above, the decision of the WCO cannot be ignored and also the fact that the suppliers invoice classified the product under Chapter Heading 8504.

25. Therefore, based on our above observations and the various decisions as discussed above, we find that the goods are rightly classifiable under Chapter Heading 8504 as against the classification under Chapter Heading 9032 as claimed by the appellant.

6. We do not find any reason in not following the said order of the Tribunal. Consequently, the product in question merits classification under CTH 8504 instead of CTH 9032 as claimed by the appellant. Consequently, the appeal is dismissed.

(Order dictated and pronounced in Open Court.)

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