TMI Blog2021 (12) TMI 1389X X X X Extracts X X X X X X X X Extracts X X X X ..... ism, 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 applications are rejected only because an appeal is pending in respect of similar products, that would be a travesty. The items under consideration are stated to be measuring instruments consisting of 20 applications of flowmeters and one application of a level measuring device. Flowmeters are devices that measure/check the mass flow of liquids and gases, along with other parameters such as temperature, specific gravity etc. The level measuring instrument is used for point level/interface detection of different liquids. The product catalogues submitted with these applications are also in agreement with the averments of the applicant. The applicant has explained the basis of groupings of the instruments/devices as common sensor and each group of products are intended for different applications/industries - Measuring or checking instruments or apparatus of this heading combined with taps, valves, etc., are to be classified as indicated in the Explanatory Note to Heading 84.81. APPARATUS FOR MEASU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 flow of liquids. 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. The instruments/devices under consideration merit classification under Heading 90.26 and more specifically, devices listed at Sr. Nos. 1 to 20 of Table 1 under sub-heading 9026 10 10 of the First Schedule to the Customs Tariff Act, 1975 and devices at Sr. No. 21 of the said table under sub-heading 9026 10 20 of the first schedule to the said act - Application disposed off. - Ruling Nos. CAAR/Mum/ARC/71-91/2021 in Application Nos. CAAR/CUS/APPL/47-67/2021-O/o Commr-CAAR-MUMBAI - - - Dated:- 21-12-2021 - Shri M.R. Mohanty, Authority for Advance Rulings, Customs Shri Hemal Desai, Santosh Kumar, Satish Reddy and Ms. Sonali Trivedi, for the Assessee. Ms. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CAAR/CUS/APPL/60/2021 Prosonic B200 Ultrasonic flowmeter 15. CAAR/CUS/APPL/61/2021 Prosonic E100 Ultrasonic flowmeter 16. CAAR/CUS/APPL/62/2021 Prosonic P500 Ultrasonic flowmeter 17. CAAR/CUS/APPL/63/2021 Prowirl F200 Vortex flowmeter 18. CAAR/CUS/APPL/64/2021 Prowirl D200 Vortex flowmeter 19. CAAR/CUS/APPL/65/2021 Prowirl O200 Vortex flowmeter 20. CAAR/CUS/APPL/66/2021 Prowirl R200 Vortex flowmeter 21. CAAR/CUS/APPL/67/2021 Liquicap Capacitance point levels measuring device 2. E+H is a manufacturer/supplier of measurement instruments for measuring the flow, level, pressure, and temperature, as well as recording and digital communications across a wide range of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etermines the type of liquid for which flowrate is to be measured. The transmitter is denoted by a number signifying its nature. Transmitter 10 55 100 200 300 400 500 800 Nature of transmitter integral and remote integral and remote blind integral 2 wire-transmitter integral integral and remote remote integral battery mag Thus, the numerical difference denotes the placement of the transmitter (integral to the instrument or placed at a remote location; or blind meaning that it has no visual display etc.). Models Picomag and Dosimag also operate on electromagnetic principle and are used for water flow measurement and batching and dosing applications respectively. The measured variables of these types of instruments include volume flow and electrical conductivity. 2.2 Thermal mass flowmeter using the thermal measuring principle based on the cooling of a heated resistance thermomete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nic flowmeters using the sound waves to determine the flow velocity :- These instruments are listed at Sr. Nos. 13 to 16 of Table 1. These devices measure flow velocity, medium temperature, volume flow, mass flow, etc. of liquids. Ultrasonic flowmeters use sound waves to determine the velocity of a fluid flowing in a pipe. The measuring system uses a measurement method based on the transit time difference. In this measurement method, acoustic signals (ultrasonic) are transmitted between two sensors. Signal transmission is bidirectional, i.e., the sensor operates as both a sound transmitter and a sound receiver. At no flow conditions, the frequencies of an ultrasonic wave transmitted into a pipe and its reflections from the fluid are the same. Under flowing conditions, the frequency of the reflected wave is different due to the Doppler Effect. When the fluid moves faster, the frequency shift increases linearly. The transmitter processes signal from the transmitted wave and its reflections to determine the flow rate. In the Prosonic models of ultrasonic flowmeters, the sensor integrated into any instrument is denoted by an alphabet, namely, G, B, E and P. Sens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which can be used as both the integral and remote unit. The measured variables of these types of instruments include volume flow and temperature. 2.5 Capacitance point level measurement instrument utilising the principle of change in capacitance of the capacitor due to the change in the level :- This instrument is listed at Sr. No. 21 of Table 1. The principle of measurement is based on the change of capacitance of a capacitor. The probe and the tank wall form a capacitor whose capacitance is dependent on the quantity in the tank. An empty tank has a lower capacitance, whereas a filled tank has a higher capacitance. The liquicap level instruments are used for point level detection, interface detection of different liquids (e.g., oil on water), foam detection of conductive liquids etc. They are capable of reliable operation even in strong build-up formation and viscous media. The measured variable of this device includes continuous measurement of change in capacitance between probe rod and container wall or ground tube, depending on the level of a liquid. 2.6 The devices discussed above are also equipped with software such as HART PROFIBUS PA/DP, Foundation Fieldbus and ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 89 90 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 28-6-2019, 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, 1-3-2005 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 rulings are being sought are 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 specific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 seeking comments from the concerned Mumbai 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 goods 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 Services Tax (GST), Aurangabad Rural Division is also submitted in support. (v) In respect of the report issued by FCRI dated 1-10-2014, 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 instruments do 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 co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heard on 26-10-2021, 27-10-2021 and 30-11-2021. S/Shri Hemal Desai, Santosh Kumar, Satish Reddy and Ms. Sonali Trivedi appeared on behalf of the applicant. Ms. Sowmya Nuthalapati, Joint Commissioner, Commissioner of Customs (Preventive), Vijayawada appeared on behalf of the jurisdictional Commissionerate. 5.1 In all the 21 applications involving flow measuring devices operating under 5 different scientific principles, the applicant has stated that duty has been paid under protest. Therefore, the applicant was asked to clarify the nature of their protest and provide full facts in respect of the status of such assessments. In reply to this, the applicant informed that they have already written to ACC, Mumbai informing that they do not intend to pursue the subject matter of past import. They have submitted the letter dated 11-11-2021 issued to the Assistant Commissioner, ACC, Mumbai for reference. Also available on record is the Letter F. No. S/3-Misc-55/2021-22/Gr-VB/ACC (I), dated 30-11-2021 of the Additional Commissioner of Customs, Import, ACC, Mumbai stating that no order was passed in respect of the B/E No. 2331497, dated 3-7-2017 where duty was paid under protest and that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 applications are 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 rulings on merits. 7. I have considered all the materials placed before me and have also verified the weblinks provided by the applicant to the specific products. The items for which advance rulings have been sought, their characteristics, specifications etc. are already mentioned in Para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aratus 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. Measuring or checking instruments or apparatus of this heading combined with taps, valves, etc., are to be classified as indicated in the Explanatory Note to Heading 84.81. APPARATUS FOR MEASURING OR CHECKING THE FLOW OR RATE OF FLOW OF LIQUIDS OR GASES . 8.1 In respect of apparatus for measuring or checking the flow or rate of flow of liquids or gases the HSN explanatory notes Chapter 90.26 further states that the flowmeters indicate the rate of flow (in volume or weight per unit of time) and are used for the measurement of flow both through open channels (rivers, waterways, etc.) and through closed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce. A transmitter is also fitted for communication purposes. Further, this level instrument does not fall under the exclusion criteria specified in explanatory notes. Considering the above it appears that the impugned goods are classifiable under Heading 90.26 of the Customs Tariff Act, 1975, the flowmeters are classifiable under sub-heading 9026 10 10 and the level measuring instrument is classifiable under sub-heading 9026 10 20. 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 ph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etative 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 flowmeters under consideration appear to only measure the flow rate 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 flow of liquids. 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 dev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 stand-alone 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 int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 essential other parts for them 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, correctly cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to agree with the conclusions of the Ld. Commissioner (Appeals) and hold that even though it is possible that some of the flowmeters proposed to be imported by the applicant can be used in a system to control and regulate process parameters, these flowmeters, by themselves, are not automatic controlling and regulating apparatuses. 11. In view of my aforesaid discussions, I rule that the instruments/devices under consideration merit classification under Heading 90.26 and more specifically, devices listed at Sr. Nos. 1 to 20 of Table 1 under sub-heading 9026 10 10 of the First Schedule to the Customs Tariff Act, 1975 and devices at Sr. No. 21 of the said table under sub-heading 9026 10 20 of the first schedule to the said act. 12. Before concluding, I wish to make an observation regarding the Jurisdictional Commissionerate s comments regarding mala fide intentions on part of the applicant. Advance ruling is the determination of a question of law or fact regarding the duty liability of the applicant on proposed activity to be undertaken by the applicant. World Customs Organisation and World Trade Organisation recognise advance rulings as an essential mechanism to reduce con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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