Case: Commissioner Of Customs, Bangalore Vs. M/S. N.I. Systems India P.Ltd

applications. It is a Programmable Microprocessor based device which is used to control assembly lines and machinery on the shop floor as well as to control many other types of mechanical, electrical and electronic equipment in a plant. A PLC is designed for real-time use in rugged industrial environments, connected to sensors and actuators. PLCs are characterized by the number of I.O. Ports which they provide. PLCs are also categorized by their I.O. scan rates. As stated, PACs, which expands the role of PLCs and, at the same time, combines the capabilities of several traditional controls and monitoring systems, offers several benefits in the form of enhanced functionalities. Thus, a PAC does not replace the traditional PLCs but it expands the role of a PLC. A PAC has features found in Programmable Logic Controllers, Distributed Control Systems, Remote Terminal Units and PCs. 40. The summary of what we have stated above is that PACs/Programmable Process Controllers and I.O. Modules by themselves are not measuring, regulating or controlling instrument (system). Physical variables such as temperature and voltage are measured by device, like sensors which constitute measuring and control systems. In other words, controllers and I.O. Modules each have a specific function to perform being parts of a measuring and control system i.e. sensors. 41. We also do not find any merit in the submission of the importer that in view of the Explanatory Notes, the Measuring Device, the Control Device and the Operating Device has to form a "single entity". There is no dispute that if all the above three devices are found in one "single entity" then classification will fall under Chapter 90. However, the test of "single entity" containing three devices is not a pre-condition for classification under CTH 9032. On the contrary, the test is not that of single entity, but of the device being capable of working as a functional unit. In this connection, Note 3 of Chapter 90 is to be read. Note 3 incorporates Note 4 to Section XVI. Note 4 inter alia provides for a machine consisting of individual components which may be separate as long as they are intended to contribute to a clear defined function. The PACs/Programmable Process Controller, though separate from sensors, is an individual component intended to contribute to a clearly defined function. Note 3 of Chapter 90 has to be read with Note 2(b) of Chapter 90 and if so read then it becomes clear that PAC/Programmable Process Controllers, being parts and accessories and a regulating or controlling apparatus like sensors have got to be classified under CTH 9032.89.10. 42. For the above reasons, we hold that PACs (including embedded Controllers/Programmable Process Controllers) have been rightly classified by the Department under CTH 9032. 43. On the question of Input-Output (I.O.) Modules and Chassis, the Tribunal has not given any finding whatsoever thereon. However, on going through the technical material and the demonstration given to us in Court, we are of the view that I.O. Modules and Chassis have also been rightly classified by the Department as parts and accessories of regulating and controlling apparatus classifiable under Chapter 90. In this connection, one needs to examine the nature and function of I.O. Modules and Chassis which we have already discussed hereinabove. To put it briefly, at the cost of repetition, we may say that the primary function of I.O. Modules (Boards) is to function as a part of measuring and control System. It is for this reason that such Modules are required to be classified as parts and accessories of regulating and measuring System. For this purpose, it is necessary to examine each of the imported items apart from Controllers in order to see whether the hardware coupled with the pre-installed software gives it a definite identity and function. From the catalogue and technological write-ups we find that each and every I.O. Module imported by the assessee is configured with a sensor at one end. This aspect is very important. Take the example of Data Acquisition Boards (DAQ). The purpose of DAQ Boards is to acquire data from external sensor, usually in the form of analog voltage of +/- 10 volts. This data is converted by DAQ Boards into digital signals which the personal computer can understand. On the other hand, Instrument Control Boards which are placed inside the computer allow data required from external sensors to be communicated directly to the computer. This is called as handling of information (see Explanatory Notes of HSN at page 1575) which is different from controlling temperature, pressure etc. (see Explanatory Notes of HSN at page 1856). On the other hand, we have what is called as Analog Output Boards which are meant for converting signals from external units such as PXI. Similarly, the Chassis provides connectivity and housing for embedded controller and the data acquisition modules, allowing them to communicate with each other. A network interface module is used to connect to a network for distributed control applications. It interconnects measuring instruments to a PC by sending and receiving messages from the two units. Thus, each I.O. Module is tailored to a specific function and is therefore a part of regulating and controlling apparatus. Handling of information under the HSN Notes is separate and distinct from regulating and measuring temperature, pressure etc. 44. Lastly, we need to analyse Chapter Note 5(E) to Chapter 84. In our view, once a machine incorporating an ADPM performs a specific function other than data processing then that machine is classifiable in the heading corresponding to the function of that machine (see Note 4 of Section XVI and Note 3 to Chapter 90, the scope whereof has already been explained hereinabove). Further, HSN clearly indicates that Heading 8478 is excluded where the case is of a clearly defined function to which separate components contribute. 45. In our view, in order to attract Note 5(E) the real test is whether or not the machine imported is performing a specific function relatable to the functional unit as a whole.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]On the other hand, we have what is called as Analog Output Boards which are meant for converting signals from external units such as PXI. Similarly, the Chassis provides connectivity and housing for embedded controller and the data acquisition modules, allowing them to communicate with each other. A network interface module is used to connect to a network for distributed control applications. It interconnects measuring instruments to a PC by sending and receiving messages from the two units. Thus, each I.O. Module is tailored to a specific function and is therefore a part of regulating and controlling apparatus. Handling of information under the HSN Notes is separate and distinct from regulating and measuring temperature, pressure etc.44. Lastly, we need to analyse Chapter Note 5(E) to Chapter 84. In our view, once a machine incorporating an ADPM performs a specific function other than data processing then that machine is classifiable in the heading corresponding to the function of that machine (see Note 4 of Section XVI and Note 3 to Chapter 90, the scope whereof has already been explained hereinabove). Further, HSN clearly indicates that Heading 8478 is excluded where the case is of a clearly defined function to which separate components contribute.45. In our view, in order to attract Note 5(E) the real test is whether or not the machine imported is performing a specific function relatable to the functional unit as a whole.