Deltabar Presssure Transmitters- M PMD 55 merit classification under heading 90262000

In re Endress + Hauser (India) Pvt. Ltd (CAAR Mumbai)

The principal function of the measuring instrument is to measure the process parameter of liquid or gases. It is possible the output from these devices may then be used for giving input to an independent process control system or process controller which compares the signal received with desired measurements and sends a control command or signal. The devices may have facilities for providing a digital output to just ensure that the end-user can integrate the measuring instruments with other controlling apparatus to suit their needs. However, it is necessary to make a distinction between the measuring instrument and the control system, which acts on the measured variable. Automatic regulating or controlling instruments are designed to bring a factor, such as flow to, and maintain it at the desired value, by constantly or periodically measuring its actual value. The products covered in the present applications are measuring instruments only. They are not part of control systems and are distinct from the control systems. They are operable as standalone devices classifiable under heading 90.26 as simple measuring devices. They cannot be treated as parts of control devices and can operate without any control system at the customers’ end.

The jurisdictional commissionerate has submitted that as per Chapter note 3 read with note 2(b) to Chapter 90, the measuring devices, being parts and accessories of controlling apparatus have to be classified under heading 90329000.

Note 2(b) to Chapter 90 states that parts and accessories, if suitable for use solely or principally with a particular kind of machine, instrument or apparatus, or with a number of machines, instruments or apparatus of the same heading (including a machine, instrument or apparatus of heading 9010, 9013 or 9031) are to be classified with the machines, instruments or apparatus of that kind.

HSN explanatory rules to Chapter 90 were referred to. It states that subject to Chapter note 1, parts or accessories identifiable as suitable for use solely or principally with the machines, appliances, instruments or apparatus of this Chapter are classified with those machines, appliances, etc. However, this general rule does not apply to parts or accessories which in themselves constitute articles falling in any particular heading of this Chapter or of Chapter 84, 85 or 91 (other than the residual heading 84.85, 85.48 or 90.33. As discussed above, these devices themselves constitute articles falling under heading 90.26. Therefore, note 2(b) is not applicable owing to the explanation given in note 2(a) to Chapter 90. In respect of Chapter note 3 to Chapter 90, it is to be noted that at the time of clearance the impugned goods are not a composite machine or a machine involving individual components to be classified under heading 90.32. As discussed earlier, these devices lack other essential parts to be classified under heading 90.32 at the time of import. The principal function as well as the clearly defined function of the goods to be imported is to measure the process variables of liquid or gases. Therefore, the impugned device is correctly classifiable under heading 90.26.

Before coming to this conclusion, I have carefully considered the findings of the Id. Commissioner (Appeals) who dealt with the import of similar measuring instruments. It appears that ld. Commissioner (Appeals) has come to the conclusion that the final product manufactured by the appellant is not merely a measuring instrument and it is in fact a part of the automatic regulating or controlling apparatus under heading 90.32. The appellate order also considers the catalogue submitted by the appellant of products and came to the conclusion that these devices contain sensors, microprocessors, transmitters, amplifiers, relays etc. along with software and that such devices also have inbuilt software known as HART PROFIBUS PA/DP, Foundation Fieldbus and others which makes the resultant product suitable for two-way communication and process control. A conclusion has also been drawn that these devices have time-saving local operation systems without additional software and hardware and also have integrated web servers, and therefore, can convert analogue signals into digital or electrical signals which are amplified further to desired strength and then are transmitted to process controller. Therefore, it has been held that the final equipment is suggested to have a facility of the configuration of parameters to be controlled and the parts and accessories imported by the appellant are to be used for sophisticated functional units which directly participate in process control. On the basis of the above understanding, the Id. Commissioner (Appeals) has upheld the classification of Liquiphant and other flowmeters and has also denied the benefit of exemption. However, I am unable to agree with the conclusions of the Id. Commissioner (Appeals) in holding that the imported goods were parts and accessories for the manufacture of automated process control systems. As I have already observed earlier, classification has to be decided on the basis of the state of goods at the time of import and any subsequent activity shouldn’t influence the classification decision. This also is the view of the Hon’ble Supreme Court in the case of M/s. Sony India reported at 2008 (231) E.L.T. 385 (S.C.) apart from the ruling in the case of M/s Dunlop India vs UOI — 1983 (13) ELT 1566 (SC) cited by the applicant. Therefore, I am unable to agree with the conclusions of the Id. Commissioner (Appeals) and hold that even though it is possible that the device proposed to be imported by the applicant can be used in a system to control and regulate process parameters, the device, by itself, is not an automatic controlling and regulating apparatuses.

In view of my aforesaid discussions, I rule that Deltabar Presssure Transmitters- M PMD 55 merit classification under heading 90.26 and more specifically under subheading 90262000 of the first schedule to the Customs Tariff Act.

FULL TEXT OF ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, MUMBAI

M/s. Endress+Hauser (India) Pvt. Ltd. filed an application on 21.09.2021 seeking an advance ruling on the classification of Deltabar Pressure Transmitters- M PMD 55.

2. E+H is a manufacturer/supplier of instruments for measuring flow, level, pressure, and temperature, as well as recording and digital communications across a wide range of industries. Further, they provide services for commissioning & erection, repairing, calibration & configuration, inspection and commercial training and engineering to various customers across the country.

2.1 The applicant stated that the Deltabar M PMD 55 is used for flow measurement and level, volume or mass measurement in liquids, vapours and gases and differential pressure monitoring. Deltabar PMD 55 consists of both a transmitter and a sensor. The instrument is capable of only detecting/measuring a value and the measured parameter (s) are displayed visually or otherwise made known, as a digital output. The applicant has categorised the measuring instruments into groups, based on their characteristics, for seeking an advance ruling. An instrument with a unique combination of transmitter and sensor is considered a distinctive instrument. There may be further variations in Deltabar M PMD 55 based on the size (dimension) and generation of the instrument. The principal function of Deltabar is to measure the process parameter of differential pressure, flow, level etc. The measuring instrument has a sensing element that generates an electrical phenomenon directly proportional to the parameter under measurement. The electrical phenomenon is taken to a transmitter which stabilizes the phenomenon to give a stable output, which is representative of the measured process variable. The output may then be used for giving input to an independent process control system or process controller which usually compares the signal received with desired measurements and sends a control command or signal. The instrument may have facilities for providing a digital output to just ensure that the end-user can integrate the impugned device with other apparatus also, to suit their needs. The instrument precisely fit the description given under heading 9026 of Customs Tariff Act, 1985, as an instrument and apparatus for measuring or checking the flow, level, pressure or other variables of liquids or gases.

2.2  The applicant has informed that they had, in past, imported certain measuring instruments and had filed Bills of Entry Nos. 7041231, dated 02.07.2018 and 7880188, dated 01.09.2018 claiming the classification under heading 90.26 and the benefit of Notification No. 24/2005-Customs, dated 01.03.2005 (Si. No. 31). The items covered in the said bills of entry were: –

Promass P1008P1B15, DN15 1/2″ 8P1B15-1RT4/0 Coriolis flowmeter
Promass P 100 8P1B08, DNO8 3/8″ 8P1B08-1MM1/0 Coriolis flowmeter
Promass F 300 8F3B80, DN80 3″ 8F3B80-8QV7/0 Coriolis flowmeter
Promass 84F08, DN8 3/8″ 84F08-2196/0 Coriolis flowmeter
Cerabar PMC 11 (pressure transducer)
Cerabar
Micropilot FMR20 (liquid level measuring instruments)
Liquiphant M FTL51H (liquid level measuring instruments)
Ceraphant PTP33B (pressure switch).

During the course of assessment, the original authority had rejected the classification claimed and classified the items under tariff entry 90328990 and consequently denied the exemption. The applicant filed an appeal with the jurisdictional Commissioner of Customs (Appeals) against the said assessment. In the Order-in-Appeal dated 28.06.2019, the Commissioner (Appeals) had observed that the imported parts and accessories might have been used in manufacturing either the measuring device or the controlling device, but since the final product is a regulating or controlling device, its parts shall also be classifiable under heading 9032 and consequently the benefit of Notification No. 24/2005-Customs, dated 01.03.2005 would not be admissible to the appellant. The applicant has filed an appeal against the said OIA which, at present, is pending before the CESTAT. The applicant has reiterated that the items for which advance ruling has been sought in the present application is not covered in the pending appeal. It is argued that the well-established position of law is that classification of each good has to be decided on its merit, considering its function, characteristics and the wording of the tariff headings and the related chapter and section notes. In its findings, the Order-in-Appeal refers to ‘the goods under reference’. Thus, the OIA applies specifically and only to the goods discussed in the OIA.

3. Since, the applicant has expressed their desire to import the subject goods through the Sri city SEZ, the application was forwarded to the Commissioner of Customs (Preventive), Vijayawada. The comments of the jurisdictional commissionerate dated 29.10.2021 and 20.01.2022 are summarised as under: –

i. The product in question pertains to industrial instrumentation. Its constituents include sensors/transducers, amplifiers, microprocessors, transmitters, relays, A to D converters, D to A converters, etc. These goods are either equipped with digital communication protocols (communication interfaces) like HART, Profibus, Foundation Fieldbus, Modbus etc. to provide a digital output of measured value of process parameter or provide an analogue output of measured value of process parameters. The characteristics and features of the product suggest that the imported parts and accessories might have been used in the manufacturing of either the measuring device or control device but since the product is a regulating or controlling instrument, its parts shall also be classified under the heading 9032. All the measuring devices manufactured by the assessee are designed to provide an analogue or digital interface of the output of measured value which is the input of the control device in the automatic control apparatus or system available with their customers. These two devices work together along with operating or actuating devices to perform control functions in the process. In such conditions, the automatic control apparatus is considered a functional unit and control of process parameters like flow is the defined function of this functional unit as a whole. Further, on the website of the importer, it is mentioned that the product is not merely a measuring instrument but is a field instrument required to measure and control different automation processes. As per note 3 to read with note 2(b) to Chapter 90, the measuring devices, being parts and accessories of controlling apparatus have to be classified under tariff entry 90329000.

ii. Similar observations have been made by the Commissioner (Appeals), Mumbai in the OIA No.MUM-CUSTM-AMP-APP-255&256/19-20 dated 28.06.2019 in case of M/s Endress & Hauser India Pvt. Ltd, Mumbai, involving classification of “Micro pilot NMR 81 (Model No. NMR81). It is opined that the ratio of the issue as decided by the said OIA applies to the applications under consideration. It is also suggested to seek comments from the concerned commissionerate.

iii. Presently the applicant has gone into appeal before Hon’ble CESTAT, Mumbai against order OIA No.MUM-CUSTM-AMP-APP-255&256/19-20. As the appeal is pending before Hon’ble CESTAT, the application is not fit for advance ruling in terms of Section 281 (1) & (2) of the Customs Act, 1962.

iv. Reference has also been made to the order passed by the Commissioner (Appeals), Mumbai OIA NO. MUM-CUSTM-AMP-APP-879 /17-18, dated 14.12.2017 in respect M/s Emerson Process Management (India) Pvt. Ltd., Mumbai, involving classification of similar flowmeters. Further, the show cause notice and order in original passed by Assistant Commissioner of Goods and Service Tax (GST), Aurangabad Rural Division is also submitted in support.

v. In respect of the report issued by FCRI dated 01.10.2014, it has been pointed out that it is not known whether the report pertains to the same goods with the same specifications and technology that are intended to be imported. It is also stated that the report is old and is not issued by a central authorised control laboratory like the CRCL.

vi. The case of CC Bangalore Vs. N.I. Systems (India) Pvt. Ltd. 2010(256) ELT 173 (S.C.) is cited, in which the Hon’ble Supreme Court observed that a control system generally refers to the control by a device of the process system by monitoring one or more of its parameters over a period of time. Controllers are generally connected to other computing apparatuses. The principal function of controllers is to execute control. Therefore, the goods cannot be considered as mere flowmeters but in fact are control and regulating system/apparatus, classifiable under heading 9032.

vii. The applicant had initially imported the goods from Mumbai customs, by rightly classifying them under heading 9032 and upon payment of applicable duties. But the applicant intends to import the said goods, subsequently, from a logistically far off place, i.e., SEZ, Sri city, Andhra Pradesh, under a different heading, i.e., 9026, which evidences the malafide intentions of the applicant to evade payment of applicable duties.

viii. In view of the above, it is stated that the impugned goods are rightly classifiable under heading 9032, and not under 9026, and hence, no exemption benefits would be available to the importer as such.

4. The comments from the Vijayawada Commissionerate have been shared with the applicant and the applicant has filed their rejoinder on 02.11.2021. The reply in response to comments from the jurisdictional commissionerate has been summarised below:-

i. The impugned device is a differential pressure transmitter used for flow and level measurement. All sensors today are equipped with electronics including a microprocessor for processing of physical signals. However, this does not imply that the instruments have inherent automatic control or regulating functions. The devices also have a local LCD for showing the process variable being measured. Profibus, Hart & Fieldbus are industry network protocols for the purpose of configuring devices (e.g., selection of language, unit of measurement etc.) for the given application and reading the measurements. The impugned devices are capable of functioning independently for measurement. The manner of usage of the measurement information is the choice of the user. In response to the extract cited by the commissionerate alleging controlling function, the applicant stated that it is general information about the global portfolio of the company. The specific information for each instrument is in the product catalogues which they have shared with the application. The instrument does not contain a controlling device, nor a starting, stopping or operating device, which is required for goods falling under heading 90.32, as per HSN Explanatory Notes. They are also not manufactured or imported as parts of automatic controlling or regulating instruments. As per note 2 (a) to Chapter 90, if a good is included specifically in any heading of Chapter 90, it will stand classified under that respective heading in all cases. In the subject case, the measuring instrument is specifically classified under heading 9026. Note 2 (b) to Chapter 90 is not relevant. It is a settled legal position that the goods have to be assessed to duty in the condition in which they are imported, and as per the intended function. Post-importation considerations should not influence the classification of imported goods.

ii. In respect of the order in appeal dated 28.06.2019, the applicant states that it does not cover the products included in this application. Therefore, this order is not relevant to the current application. As the applicant has indicated Sri city port as the port of import in the CAAR-1 application, the authority is not required to seek comments from Mumbai customs.

iii. In reply to the comment that the expert opinions are not from CRCL and are old, the applicant states that the expert opinions were obtained for the purpose of assessing functionalities of instruments and the date of the reports does not influence their validity. It is pointed out that the department has not referred the matter to CRCL.

iv. In respect of the issue of classification, the goods covered in these applications are not pending before the appellate tribunal or any court. Nor is the specific matter already decided by the appellate tribunal or any court. The appeals pending in Mumbai jurisdiction in respect of some other goods (not covered in these applications) cannot impact the present applications.

v. The applicant states that M/s Endress + Hauser Flowtec (I) Pvt. Ltd. is a distinct corporate entity, with its PAN, IEC, GST and other registrations. Hence, it is not relevant to the present application.

vi. In respect of an allegation of malafide intentions, the applicant states that the decision to import at Sri city SEZ was taken considering efficient logistics & commercial operations for the current and future business transactions and available infrastructure. They presented all facts to the department on their own and sought rulings to bring predictability to their operations and that the unsubstantiated allegation is not called for.

5. The application was heard on 13.01.2022. S/Shri Santosh Kumar, Satish Reddy, Prasad Dange and Ms Sonali Trivedi appeared on behalf of the applicant. Ms Sowmya Nuthalapati, Joint Commissioner, Commissioner of Customs (Preventive) and Vijaykumar Kavilikatta, Deputy Commissioner appeared on behalf of the jurisdictional commissionerate.

5.1 The applicant explained the product specifications and characteristics in detail. It was stated that apart from flow and level which are measured directly, other variables like volume and mass can also be measured through calculations. They further pointed out that the ability of the device to transmit the measured variable shouldn’t be construed as a controlling or regulating element.

5.2 The representative of the jurisdictional commissionerate stated that it is their considered opinion that the device in question merits classification under heading 9032. When asked as to whether their opinion takes into account the mandate of the HSN Explanatory Notes that an automatic controlling or regulating apparatus would include a measuring device, a controlling device and a device for starting, stopping or operating, they requested for some time to re-examine the issue and report. This communication dated 20.01.2022 is already summarised in paragraph 3 hereinbefore.

6. Before proceeding on the merits, in view of the comments from the jurisdictional commissionerate, it is necessary to establish the admissibility of the application first. According to Section 28-1(2) of the Customs Act, 1962, the authority shall not allow the application where the question raised in the application is either already pending in the applicant’s case before any officer of customs, the appellate tribunal or any court; or has already been decided by the appellate tribunal or any court. It is true that there is an appeal of the applicant pending before the CESTAT. The pending appeal is in respect of products that are not involved in the present proceedings. The term “advance ruling” is defined in the Act as a written decision on any of the questions referred to in Section 28H raised by the applicant in his application in respect of any goods before their importation or exportation. The Technical Guidelines on Advance Rulings for Classification, Origin and Valuation, published by the World Customs Organisation, in its Clause 7, says that ‘An application for advance ruling on classification, origin or valuation shall be made in writing to a competent authority and relate to only one good (emphasis supplied). From a reading of the law as it stands and the WCO’s mandate, it would appear that if advance ruling applications are to be rejected only on the ground that a similar product is involved in a dispute, the entire purpose of seeking advance rulings would be defeated. It has to be kept in mind that the process of advance rulings is not a dispute settlement mechanism, but is purely a facilitative nature and seek to enhance ease of cross border trade by indicating entry tax liabilities before import or export. In such circumstances, if the present application is rejected only because an appeal is pending in respect of similar products, in my considered opinion, that would be a travesty. Therefore, I have decided to proceed with the present proceedings and render a ruling on merits.

7. I have considered all the materials placed before me and have also verified the weblink provided by the applicant in respect of the device proposed to be imported. The item for which advance ruling has been sought, its characteristics, specifications etc., are already mentioned in paragraph 2.1 of this ruling. To summarise, the item under consideration is stated to be a differential pressure transmitter instrument. It measures differential pressure from which flow (volume or mass current) and level (level, volume or mass) are derived. Measured products are gases, vapours and liquids. The illustration provided by the applicant to explain the measuring principle of the device, shows that metal separating diaphragms are deflected on both sides by the two acting pressures, p1 and p2. The process pressures are transmitted via the separating diaphragms and filling oils to a resistance circuit bridge (semiconductor technology). The difference between the acting pressures changes the bridge voltage. This change is measured, further processed and converted into a corresponding output signal.

Measuring cell of the Deltabar M

1 Sensing element
2 Overload diaphragm/Middle diaphragm
3 Filling oil
4 Process isolating diaphragm

Illustration : Measuring Principle of Deltabar M PMD55
(Source: Technical Information Deltabar M PMD55)

Therefore, a differential pressure transmitter is a pressure-measuring gauge or an electrical device that uses two sensors to measure the differences in pressure in a sealed container. In this case, I am confronted with two different possible headings for classification of the impugned device/instrument, i.e.,

90.26: ‘INSTRUMENTS AND APPARATUS FOR MEASURING OR CHECKING THE FLOW, LEVEL, PRESSURE OR OTHER VARIABLES OF LIQUIDS OR GASES (FOR EXAMPLE, FLOWMETERS, LEVEL GAUGES, MANOMETERS, HEAT METERS), EXCLUDING INSTRUMENTS AND APPARATUS OF heading 9014, 9015, 9028 OR 9032’ or

90.32: ‘AUTOMATIC REGULATING OR CONTROLLING INSTRUMENTS AND APPARATUS’.

8. From the product catalogues, it appears that the impugned device measures the differential pressure of liquids, vapours and gases, with the help of which other parameters such as flow rate, level, etc. are calculated. The device appears to be capable of only measuring the value and the measured parameter(s) are displayed visually or provided as a digital output. Hence, the impugned instrument appears to match the description for goods covered under heading 90.26, as instruments and apparatus for measuring or checking the flow, level, pressure or other variables of liquids or gases. I find that heading 90.26 specifically mentions instruments measuring or checking the pressure. The HSN Explanatory Notes for heading 90.26 states, “This heading covers instruments and apparatus for measuring or checking the flow, level, pressure, kinetic energy or other process variables of liquids or gases. The instruments and apparatus of this heading may be fitted with recording, signalling or optical scale-reading devices or transmitters with an electrical, pneumatic or hydraulic output. Measuring or checking apparatus generally incorporates an element sensitive to variations in the quantity to be measured (e.g., Bourdon tube, diaphragm, bellows, semiconductors) moving a needle or a pointer. In some devices, the variations are converted into electrical signals.

8.1. In respect of instruments and apparatus for measuring or checking the pressure of liquids or gases the HSN explanatory notes Chapter 90.26 further states that it includes pressure gauges (e.g., manometers) that is an apparatus for measuring the pressure of a liquid or gas. The main types of pressure gauges are liquid type pressure gauges, metallic pressure gauges, piston-type pressure gauges and electrical pressure gauges. The electrical pressure gauge is based on variations of an electrical phenomenon (e.g., resistance, capacitance) or using ultrasound. It is further stated that the heading also covers the maximum and minimum type pressure gauges. Differential pressure gauges used to measure differences in pressure and include the following types: two-liquid, float, oscillating ring balance, diaphragm, capsule, ball (without liquid), etc. From the product description, it is evident that the differential pressure gauge under consideration indicates the differences in pressure. They are fitted with a sensor that is sensitive to the variations in the quantity to be measured. These variations are converted into electrical signals. They incorporate transmitters for the communication purpose of the output variables.

Considering the above it appears that the impugned goods are classifiable under heading 90.26 of the Customs Tariff Act, 1975 and more specifically under subheading 90262000 as an instrument for measuring or checking the pressure.

9. As per Chapter note 7 to Chapter 90, heading 9032 applies only to:

(a) instruments and apparatus for automatically 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, which are designed to bring this factor to, and maintain it at, the desired value, stabilized against disturbances, by constantly or periodically measuring its actual value; and

(b) automatic regulators of electrical quantities, and instruments or apparatus for automatically controlling non-electrical quantities the operation of which depends on an electrical phenomenon varying according to the factor to be controlled, which are designed to bring this factor to, and maintain it at, the desired value, stabilized against disturbances, by constantly or periodically measuring its actual value.

9.1. Elaborating on the instruments and apparatus for automatically controlling the flow, level, pressure or other variables of liquids or gases, the HSN Explanatory Notes state that the apparatus shall essentially consist of:

(A) A device for measuring the variable to be controlled (pressure or level in a tank, the temperature in a room, etc.); in some cases, a simple device which is sensitive to changes in the variable (metal or bi-metal rod, chamber or bellows containing an expanding liquid, float, etc.) may be used instead of a measuring device.

(B) A control device that compares the measured value with the desired value and actuates the device described in (C) below accordingly.

(C) A starting, stopping or operating device.

Further, it states that apparatus for automatically controlling liquids or gases or temperature, within the meaning of note 7 (a) to this Chapter, should consist of these three devices forming a single entity or in accordance with note 3 to this Chapter, a functional unit. Some instruments and apparatus do not incorporate devices that compare the measured value with the desired value. They are directly activated by means of a switch, e.g., when the predetermined value is reached. Instruments and apparatus for automatically controlling the flow, level, pressure and other variables of liquids or gases or for automatically controlling temperature are connected to an appliance that carries out the orders (pump, compressor, valve, furnace burner, etc.) which restores the variable (e.g., liquid measured in a tank or temperature measured in a room) to the prescribed value, or which, in the case of a safety system, for instance, stops the operation of the machine or apparatus controlled. If the automatic control apparatus is combined with the appliance which carries out the orders, the classification of the whole is to be determined under either Interpretative Rule 1 or Interpretative Rule 3 (b) (see Part (III) of the General Explanatory Note to Section XVI and the Explanatory Note to heading 84.81).

9.2. The differential pressure transmitter under consideration appears to only measure the difference in pressure and make available the measured value in the required signal format for further processing/information, based on the requirement of the end customer. There is nothing on record, or available in the product catalogues to indicate that these devices/instruments have the capacity to perform additional functions of automatically controlling or regulating the process parameters. In the context of explanatory notes, these devices lack 2 essential components, viz, a control device and a stating/stopping/operating device. Therefore, it appears that the goods under consideration do not fulfil the criteria laid down in explanatory notes and are consequently not classifiable under heading 9032.

10. Rule 1 of the GI Rules lays down that the titles of sections, chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes. Considering the nature of the devices/instruments involved in this proceeding, heading 90.26 is a more appropriate classification. Rule 3 of the GIR states that “the heading which provides the most specific description shall be preferred to headings providing a more general description”. The classification of the differential pressure gauge under heading 90.26 complies with the mandate of both the above-mentioned General Rules.

10.1 The jurisdictional commissionerate in their comments has submitted that these goods incorporate sensors, transmitters, microprocessors etc., along with software such as HART PROFIBUS PA/DP, Foundation Fieldbus and others which makes the resultant product suitable for two-way communication and process control. The goods proposed to be imported by the importer are devices suitable for use principally with industrial automatic process control equipment and pertain to industrial instrumentation and forms part of the automatic process control apparatus system. However, as discussed in para 9.2 there is nothing on record that indicates these instruments incorporate devices for controlling or operating the machines. Therefore, these softwares give the ability to the impugned goods to communicate with control devices for process control. However, lack of control or operating devices in the products under consideration renders them as measuring devices only, and not automatic process control apparatus.

10.2 I also find merit in the applicant’s contention that classification has to be based on the form of goods at the time of their clearance and it is a settled legal position that the goods have to be assessed to duty in the condition in which they are imported. The decision of the Hon’ble Supreme Court in the case of Dunlop India Vs. UOI – 1983 (13) ELT 1566 (SC), cited by the applicant, states that ‘the condition of the article at the time of importing is a material factor, for the purpose of classification as to under what head duty will be leviable. In the present case, what are proposed to be imported and cleared are measuring instruments used in measuring or checking the pressure. Therefore, the goods are required to be classified as only differential pressure gauges, which per se, are not capable of performing any controlling function. The applicant’s global company, according to information available in the public domain, is a market leader in the field of manufacturing measuring instruments. The product positioning of these goods is as measuring instruments only. There is no material before me to reject the applicant’s contention that these devices are individually marketable and, in many cases, operate without any control system at the customers’ end and that they can be used as stand­alone instruments for measurements in some industries (water management and sugar industries) where only measurement is involved for monitoring with no interface with any other system. These instruments do not and cannot control the flow of the liquid/gas. The export invoice from the parent company in Germany also shows that the classification adopted was heading 9026.

10.3 The principal function of the measuring instrument is to measure the process parameter of liquid or gases. It is possible the output from these devices may then be used for giving input to an independent process control system or process controller which compares the signal received with desired measurements and sends a control command or signal. The devices may have facilities for providing a digital output to just ensure that the end-user can integrate the measuring instruments with other controlling apparatus to suit their needs. However, it is necessary to make a distinction between the measuring instrument and the control system, which acts on the measured variable. Automatic regulating or controlling instruments are designed to bring a factor, such as flow to, and maintain it at the desired value, by constantly or periodically measuring its actual value. The products covered in the present applications are measuring instruments only. They are not part of control systems and are distinct from the control systems. They are operable as standalone devices classifiable under heading 90.26 as simple measuring devices. They cannot be treated as parts of control devices and can operate without any control system at the customers’ end.

10.4 The jurisdictional commissionerate has submitted that as per Chapter note 3 read with note 2(b) to Chapter 90, the measuring devices, being parts and accessories of controlling apparatus have to be classified under heading 90329000.

Note 2(b) to Chapter 90 states that parts and accessories, if suitable for use solely or principally with a particular kind of machine, instrument or apparatus, or with a number of machines, instruments or apparatus of the same heading (including a machine, instrument or apparatus of heading 9010, 9013 or 9031) are to be classified with the machines, instruments or apparatus of that kind.

Note 3 to Chapter 90 states that notes 3 and 4 to Section XVI apply also to this Chapter. These notes are reproduced below:

3. Unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines designed for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine, which performs the principal function.

4. Where a machine (including a combination of machines) consists of individual components (whether separate or interconnected by piping, by transmission devices, by electric cables or by other devices) intended to contribute together to a clearly defined function covered by one of the headings in Chapter 84 or Chapter 85, then the whole falls to be classified in the heading appropriate to that function.

HSN explanatory rules to Chapter 90 were referred to. It states that subject to Chapter note 1, parts or accessories identifiable as suitable for use solely or principally with the machines, appliances, instruments or apparatus of this Chapter are classified with those machines, appliances, etc. However, this general rule does not apply to parts or accessories which in themselves constitute articles falling in any particular heading of this Chapter or of Chapter 84, 85 or 91 (other than the residual heading 84.85, 85.48 or 90.33. As discussed above, these devices themselves constitute articles falling under heading 90.26. Therefore, note 2(b) is not applicable owing to the explanation given in note 2(a) to Chapter 90. In respect of Chapter note 3 to Chapter 90, it is to be noted that at the time of clearance the impugned goods are not a composite machine or a machine involving individual components to be classified under heading 90.32. As discussed earlier, these devices lack other essential parts to be classified under heading 90.32 at the time of import. The principal function as well as the clearly defined function of the goods to be imported is to measure the process variables of liquid or gases. Therefore, the impugned device is correctly classifiable under heading 90.26.

10.5 Before coming to this conclusion, I have carefully considered the findings of the Id. Commissioner (Appeals) who dealt with the import of similar measuring instruments. It appears that ld. Commissioner (Appeals) has come to the conclusion that the final product manufactured by the appellant is not merely a measuring instrument and it is in fact a part of the automatic regulating or controlling apparatus under heading 90.32. The appellate order also considers the catalogue submitted by the appellant of products and came to the conclusion that these devices contain sensors, microprocessors, transmitters, amplifiers, relays etc. along with software and that such devices also have inbuilt software known as HART PROFIBUS PA/DP, Foundation Fieldbus and others which makes the resultant product suitable for two-way communication and process control. A conclusion has also been drawn that these devices have time-saving local operation systems without additional software and hardware and also have integrated web servers, and therefore, can convert analogue signals into digital or electrical signals which are amplified further to desired strength and then are transmitted to process controller. Therefore, it has been held that the final equipment is suggested to have a facility of the configuration of parameters to be controlled and the parts and accessories imported by the appellant are to be used for sophisticated functional units which directly participate in process control. On the basis of the above understanding, the Id. Commissioner (Appeals) has upheld the classification of Liquiphant and other flowmeters and has also denied the benefit of exemption. However, I am unable to agree with the conclusions of the Id. Commissioner (Appeals) in holding that the imported goods were parts and accessories for the manufacture of automated process control systems. As I have already observed earlier, classification has to be decided on the basis of the state of goods at the time of import and any subsequent activity shouldn’t influence the classification decision. This also is the view of the Hon’ble Supreme Court in the case of M/s. Sony India reported at 2008 (231) E.L.T. 385 (S.C.) apart from the ruling in the case of M/s Dunlop India vs UOI — 1983 (13) ELT 1566 (SC) cited by the applicant. Therefore, I am unable to agree with the conclusions of the Id. Commissioner (Appeals) and hold that even though it is possible that the device proposed to be imported by the applicant can be used in a system to control and regulate process parameters, the device, by itself, is not an automatic controlling and regulating apparatuses.

11. In view of my aforesaid discussions, I rule that Deltabar Presssure Transmitters- M PMD 55 merit classification under heading 90.26 and more specifically under subheading 90262000 of the first schedule to the Customs Tariff Act.