Commissioner Of Customs, Bangalore vs M/S. N.I. Systems India P.Ltd

During the relevant assessment year, the assessee imported various products from their Principal. The products were computer based instrumentation products. The importer filed 64 bills of entries. The importer claimed the items to be computers and/ or parts of computers. The importer grouped the items in accordance with similar/ identical functions broadly under CTH 8471, 8473 and other headings falling under Chapter 84. Broadly, the importer categorized the imported items as follows:

6. Against decision dated 31.7.2007, the importer preferred Customs Appeal No. 678/07 before CESTAT. Vide its decision dated 29.6.2009, the Tribunal held that the main item of import was PXI Controller and other Controllers. According to the Tribunal, these imported Controllers were nothing but ADP Machines. According to the Tribunal, the importer had placed before it the sample of imported items with enormous data including a diagram which read as follows:

25. As regards Input-Output ("I.O.") Modules and Chassis, the Department contended that I.O. modules and chassis have been rightly classified by the adjudicating authorities as parts and accessories of regulating and controlling apparatus classifiable under CTH 9031 90 00/9032 90 00. In this connection, the Department submitted on the basis of the catalogue and technical write-ups that each and every imported I.O. Modules is configured primarily to match with a sensor. In this connection, the Department has demonstrated by way of an illustration that one of the items imported by the assessee is Instrument Control Boards (Cards). Instrument Control Board (Card) is a stand-alone instrument. It acquires data from external sensors, but it is unable to send the data directly to a computer. Therefore, a suitable board like instrument control board is required to be placed inside the computer to allow the data to be sent directly to the computer. Similarly, another example given by the Department is concerning Data Acquisition Board. The purpose of a Data Acquisition Board is to acquire data from external sensor and convert it to digital sensors which the PC can understand. Thus I.O. Module is tailored to a specific function and is therefore a part of regulating a controlling apparatus. According to the Department, a signal converting device or I.O. unit has got to be properly aligned with the measuring or checking instrument. According to the Department, industrial process controllers and I.O. modules are parts of a functional unit, the function of which is to be judged as a whole and is therefore classifiable in Chapter

28. For the reasons given hereinafter, we hold on the basis of technical material (including the importer's own catalogue and webcast) that Controllers (including embedded controllers) are not merely PCs/ADPMs, but have a specialized structure and specific functions to perform and are therefore classifiable under Chapter 90.

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"

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.

46. For the aforestated reasons, we are of the view that the imported goods were rightly classified by the Department under Chapter 90. We are also of the view that the Department was right in classifying the I.O. Modules and Chassis as parts and accessories of Automatic Regulating or Controlling Instruments and Apparatus in terms of CTH 9032.90.00.

47. For the aforestated reasons, the impugned order of CESTAT is hereby set aside and the Civil Appeal filed by the Department stands allowed with no order as to costs. ..................CJI (S. H. Kapadia) ...................J. (K.S. Radhakrishnan) ...................J. (Swatanter Kumar) New Delhi;

July 15, 2010