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Case Law Details

Case Name : In re Marsap Services Pvt. Ltd. (CAAR Mumbai)
Appeal Number : Advance Ruling No. CAAR/Mum/ARC/62/2021
Date of Judgement/Order : 27/10/2021
Related Assessment Year :

In re Marsap Services Pvt. Ltd. (CAAR Mumbai)

CTH 9027 covers instruments and apparatus for physical or chemical analysis. A particle counter is used for monitoring and diagnosing particle contamination within a sample of clean media. Inherent particles constitute one of the physical characteristics of a liquid and are important in determining its usage for a specific purpose. The 3rd one-dash subheading under CTH 9027 i.e., subheading 902750 covers other instruments and apparatus using optical radiations (UV, visible, IR). From the working of the LPCs, it is clear that these instruments employ optical radiations. A laser can be radiated with any of the radiation sources viz. UV, visible and IR whereas white light is a combination of lights of different wavelengths in the visible spectrum. Therefore, it is evident that the LPCs use optical radiations mentioned in this heading for particle analysis.

Explanatory notes to the combined nomenclature of the European communities, in respect to subheading 90275000, states that “This subheading includes electronic devices used in hospital chemical laboratories for the fully-automatic analysis of blood sera. They essentially consist of the analyser proper (with sample preparation device, reagent metering mechanism and photometric measurement system using a halogen lamp as the light source and photodiodes as the detectors), a control and evaluation device (with microprocessors and screen for displaying the measurement results) and a printer for recording the results. All three devices are interconnected by electric cables”. It can be observed that the components of the instrument for the analysis of a sample and the principle employed are similar to LPCs. The instrument having the above description is classified under tariff entry 90275000. Therefore, LPCs appear to be classifiable under heading 902750 and more appropriately under sub-heading 90275090 as “other” instruments and apparatus using optical radiations for physical and chemical analysis of a liquid.

 In view of the foregoing discussions, 1 rule that 12 models of PAMAS liquid particle counters are classifiable under subheading 90275090 of the first schedule to the Customs Tariff Act, 1975.

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

M/s Marsap Services Pvt. Ltd. filed an application for an advance ruling before the erstwhile Authority for Advance Ruling (Central Excise, Customs and Service Tax), New Delhi and the said application was received in the registry/secretariat of the erstwhile AAR on 14.02.2020. However, no ruling was actually issued by the erstwhile AAR and on appointment of the Customs Authorities for Advance Rulings under section 28EA of the Act, the said application has been transferred to the CAAR, Mumbai in terms of the provisions of section 28F (3) of the Act. On scrutiny of the said transferred application by the Secretary to the CAAR, Mumbai, it appeared that the time limit of three months as provided under the statute was already over when the application was actually received in the secretariat of the CAAR, Mumbai. Therefore, a communication was sent to the applicant to re-submit the application as envisaged under sub-clause (1) of clause (6) of the Customs Authority for Advance Rulings Regulations, 2021. The applicant re-submitted their application on 22.07.2021.

2. The applicant is a distributor of the hi-tech lab and analytical instruments. The present application is for the classification of liquid particle counters (hereinafter referred to as LPCs) intended to be imported from M/s Pamas.

2.1. As per the applicant, a LPC is used to measure the size and distribution of particles in a liquid sample. It works with the help of a source light and a photodetector, placed on either side of the measuring cell, through which liquid to be analysed flows. It operates on the principle that the light extinguished or scattered by particles in a liquid within a light beam is a direct function of their area and quantity. The effect of light on the particles is analysed with the help of calibrated optical-electronic hardware. According to the principle of light extinction, if there are particles in the liquid, then the light beam hits the particles and as a result, the shadow of the particle is shown on the photo-detector. The surface of the shadow causes a voltage change on the photodetector and indicates the size of the particle flowing through the sensor cell. The procedure of the light scattering technique is similar to that of light extinction. However, in the case of light scattering, the scattered light rays are analysed instead of the extinct ones. In the impugned products two types of sensors, namely PAMAS HCB-LD and PAMAS SLS-25/25 are used for contamination analysis based on the principle of light extinction and principle of light scattering, respectively. The light source for PAMAS HCB-LD sensor is a laser, whereas it is white light for PAMAS SLS-25/25 sensor. On the basis of sensors employed and ‘sample fluids to be analysed, the LPCs to be imported are classified as follows: –

Sr.
No.
Model Sensor used in the model Liquid to be analysed
1. S40 & S40 GO PAMAS HCB-LD Oil
2. S40 AVTUR & S40 VTUR GO PAMAS HCB-LD Aviation turbine fuel
3. S4031 & S4031 GO PAMAS HCB-LD Water, organic and
corrosive liquids
4. S4031 WG & S40131 WG GO PAMAS HCB-LD and PAMAS SLS-25/25 Hydraulic fluids
5. SBSS PAMAS HCB-LD and PAMAS SLS-25/26 Oil and hydraulic fluids
6. SBSS WG PAMAS HCB-LD and PAMAS SLS-25/28 Hydraulic fluids
7. SVSS PAMAS HCB-LD and PAMAS SLS-25/29 Water, cleaning solvents
8. 4132 PAMAS HCB-LD and PAMAS SLS-25/30 Oil
9. AS3 PAMAS HCB-LD Oil
10. Water viewer PAMAS HCB-LD Water
11. S50 PAMAS HCB-LD Oil
12. SSOP Fuel PAMAS HCB-LD Oil

2.2 The applicant has stated that they had imported these products earlier also. They have proposed 3 possible CTHs for the classification of LPCs viz 9018, 9026, 9027. Further, as per the applicant, either subheading 90268090 or subheading 90278090 would be appropriate for the classification of impugned goods.

3. In the CAAR – I form, the applicant has declared that they would import through the air cargo complexes of Mumbai, New Delhi and Chennai. The application, therefore, was forwarded to the jurisdictional Principal Commissioners/ Commissioners of Customs for comments. Comments have been received from the Principal Commissioners/Commissioners of Customs, New Delhi and Mumbai. The Principal Commissioner, ACC, New Delhi has opined that since the applicant has been importing the said instruments since 17.04.2017, the application does not merit consideration under section 28H of the Customs Act, 1962. Comments from Commissioner, ACC, Mumbai is summarised below: –

1) LPC does not merit classification under CTH 9026 as it does not measure flow, level, pressure or other variables of the given liquid.

2) LPC is not an apparatus for physical or chemical analysis. It does not measure viscosity, porosity, surface tension etc., and it does not measure quantities of heat and light. Therefore, LPC is not classifiable under CTH 9027.

3) As per Chapter Note 5 to Chapter 90 and Rule 3(c) of GRI suitable tariff heading for LPC would be CTH 90318000.

4. Personal hearing in the matter was fixed for 14.09.2021. However, the applicant requested for deferment of the hearing. Subsequently, the hearing was held on 05.10.2021 in virtual mode. S/Shri. V.S. Rajan, Director and Gautam Rajan represented the applicant whereas S/Shri. Ritesh Kumar, Anuj Kumar and Alagesan represented the Chennai Air Cargo Commissionerate. Shri Gautam Rajan was asked to provide detailed write-ups describing the scientific principles behind the equipment and the manner in which they work. Besides, it was also requested to provide categorical statements as to whether any proceeding is pending with respect to the past imports. Shri Rajan promised to expedite their reply by 7th October 2021.

5. I have considered all the materials placed before me for the subject products. I have gone through the submissions made by the applicant during the personal hearing and the replies received from the jurisdictional Principal Commissioner/ Commissioner. The issue at hand is to decide the classification of liquid particle counters. The opinion of Principal Commissioner, ACC, New Delhi is based on an interpretation of section 28E (b), which states that “advance ruling” means 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 prior to its importation or exportation”. Proviso to subsection 2 of section 281 states that “Provided that the Authority shall not allow the application where the question raised in the application is – (a) already pending in the applicant’s case before any officer of customs, the Appellate Tribunal or any Court; (b) the same as in a matter already decided by the Appellate Tribunal or any Court”. On holistic reading of above proviso with section 28E (b), I am of the opinion that applications for already imported items are not barred unless they are in dispute or the tribunal or any other court has decided the matter already. In the present application, the products proposed to be imported are neither involved in any dispute nor the matter has already been decided by any tribunal or court. Therefore, the application is eligible for an advance ruling. However, the ruling will not be applicable to the items already imported. It will be applicable for future imports.

6. A particle counter is a device that detects and counts physical particles. Particle counters are available for three categories of medium to be analysed, namely, aerosol, liquid, and solid. LPC is used to identify particulate contamination of a liquid. In general, LPC works on the principle of either light scattering or light blocking. The instrument consists of 3 components, viz. a light source, a sample flow system and a photodetection sensor. A liquid is irradiated with a light source. When a particle is illuminated by this light beam, it is redirected or absorbed. Light scattered by a single particle in a specific direction in relation to the original direction provides information related to the size of the particle. This allows for the sizing and counting of particles. The applicant has suggested CTH 9018, 9026, 9027 for classification. Further, Principal Commissioner, ACC, Mumbai has suggested subheading 90318000 as an appropriate tariff classification. Relevant CTHs are reproduced below: –

`9018: Instruments and appliances used in medical, surgical, dental or veterinary sciences, including scientigraphic apparatus, other electromedical apparatus and sight-testing instruments ‘

`9026: Instruments and apparatus for measuring or checking the flow, level, pressure or other variables of liquids or gases (for example, flow meters, level gauges, manometers, heat meters), excluding instruments and apparatus of heading 9014, 9015, 9028 or 9032′

`9027: Instruments and apparatus for physical or chemical analysis (for example, polarimeters, refractometers, spectrometers, gas or smoke analysis apparatus); instruments and apparatus for measuring or checking viscosity, porosity, expansion, surface tension or the like; instruments and apparatus for measuring or checking quantities of heat, sound or light (including exposure meters); microtomes ‘

`9031: Measuring or checking instruments, appliances and machines, not specified or included elsewhere in this chapter; profile projectors ‘

7. 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. As per HSN explanatory notes to CTH 9018, the heading covers a very wide range of instruments and appliances which, in the vast majority of cases, are used only in professional practice (e.g., by doctors, surgeons, dentists, veterinary surgeons, midwives), either to make a diagnosis, to prevent or treat an illness or to operate, etc. The LPCs do not fall in these categories of instruments. Therefore, CTH 9018 does not appear to be appropriate for the impugned products.

7.1 As per HSN explanatory notes to CTH 9026, the heading covers instruments and apparatus for measuring or checking the flow, level, pressure, kinetic energy or other process variables of liquids or gases. They are fitted with an element sensitive to quantity to be measure. It further states that instruments and apparatus for physical or chemical analysis, etc. are covered under CTH 9027. LPCs do not measure the flow, level, pressure or other variables of the liquid. They only count the particles present in the given liquid. From the description of the process employed for the measurement of particles provided by the applicant, it is clear that the particle counters proposed to be imported don’t satisfy the criterion to be eligible for classification under heading 9026.

7.2 GI Rule 3 states that “When by application of Rule 2 (b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: (a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.” As per GIR 3(a), a classification that specifically names the product over the one that identifies the class. Similarly, a clearer description is preferable to a general description.

7.3 CTH 9031 covers measuring or checking instruments, appliances and machines, whether or not optical. This group does not include any instruments, apparatus, etc., falling in headings 90.01 to 90.12 or 90.15 to 90.30. CTH 9031 is a residual heading. It covers instruments, appliances and machines not specified or included elsewhere in Chapter 90. The optical type measuring and checking appliances and instruments under this heading include optical or graduated scale comparators, comparator benches, measuring benches, interferometers, interferometers, optical surface testers, apparatus equipped with rapid impulse differential feeler and optical viewer, alignment telescopes, optical rules, micrometric reading apparatus, optical goniometers or angle gauges, and focimeters. On the analysis of principle, functioning and features of the above instruments, it is evident that, as such, there is no similarity with the LPCs under consideration. These instruments are more akin to machines for the optical inspection of surfaces.

7.4 CTH 9027 covers instruments and apparatus for physical or chemical analysis. A particle counter is used for monitoring and diagnosing particle contamination within a sample of clean media. Inherent particles constitute one of the physical characteristics of a liquid and are important in determining its usage for a specific purpose. The 3rd one-dash subheading under CTH 9027 i.e., subheading 902750 covers other instruments and apparatus using optical radiations (UV, visible, IR). From the working of the LPCs, it is clear that these instruments employ optical radiations. A laser can be radiated with any of the radiation sources viz. UV, visible and IR whereas white light is a combination of lights of different wavelengths in the visible spectrum. Therefore, it is evident that the LPCs use optical radiations mentioned in this heading for particle analysis.

7.5 Explanatory notes to the combined nomenclature of the European communities, in respect to subheading 90275000, states that “This subheading includes electronic devices used in hospital chemical laboratories for the fully-automatic analysis of blood sera. They essentially consist of the analyser proper (with sample preparation device, reagent metering mechanism and photometric measurement system using a halogen lamp as the light source and photodiodes as the detectors), a control and evaluation device (with microprocessors and screen for displaying the measurement results) and a printer for recording the results. All three devices are interconnected by electric cables”. It can be observed that the components of the instrument for the analysis of a sample and the principle employed are similar to LPCs. The instrument having the above description is classified under tariff entry 90275000. Therefore, LPCs appear to be classifiable under heading 902750 and more appropriately under sub-heading 90275090 as “other” instruments and apparatus using optical radiations for physical and chemical analysis of a liquid.

8. In view of the foregoing discussions, 1 rule that 12 models of PAMAS liquid particle counters are classifiable under subheading 90275090 of the first schedule to the Customs Tariff Act, 1975.

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