Holding

Power controllers, whose sole function is to regulate the flow of electric current, are to be classified under heading 85.43 and not under heading 85.36.

Summary

H.V. Industrial Electronics Pvt Ltd manufactures power controllers (light dimmers/heat controllers) and initially classified them under heading 8543.00 of the Central Excise Tariff Act, 1985, later reclassifying them under 8536.90. The Commissioner of Central Excise & Customs issued show‑cause notices asserting that the correct classification is the residuary heading 8543.00. The matter proceeded through the Assistant Collector, the Collector (Appeals), and the Customs, Excise and Gold (Control) Appellate Tribunal, which held that the devices perform an individual function of regulating electric current and therefore fall under heading 85.43, not 85.36. The appellants appealed to the Supreme Court, which affirmed the Tribunal’s view, finding that power controllers are not apparatus for switching or protecting circuits and must be placed in heading 85.43. The appeals were dismissed.

Issues considered

Whether power controllers are classifiable under heading 85.36 (electrical apparatus for switching or protecting electrical circuits) of the Central Excise Tariff Act, 1985.
Whether power controllers fall under heading 85.43 (electrical machines and apparatus having individual functions not specified elsewhere) of the same Act.

Legislation cited

Central Excise Tariff Act, 1985

Subjects

classificationcentral excisecustomstariff headingspower controllerelectrical apparatusheading 85.36heading 85.43excise duty

Judgment

MIS. H.V. INDUSTRIAL ELECTRONICS PVT. LTD. A
v.
COMMISSIONER OF CENTRAL EXCISE & CUSTOMS

JULY 20, 2006

[ASHOK BHAN AND MARKANDEY KA TJU, JJ.] B

Central Excise Tariff Act, 1985-Tariff Heading 85.43 or 85.36--"Power
Controller" manufactured by assessee---Has individual functions as it does
the function of controlling/regulating electric current/power in the circuit- C
It cannot be treated as an apparatus for making or protecting switching or
making connections to or in electrical circuits-Hence, such machine/
apparatus would fall under Heading 85.43 and not under Heading 85. 36.

The question which arose for consideration in the present appeal is
whether the machine/apparatus known as "Power Controller" manufactured D
by assessee is classifiable under Heading 85.43 of the Central Excise Tariff
Act, 1985 or under Heading 85.36.

Dismissing the appeals, the Court

HELD: I. Heading 85.36 covers electrical apparatus for switching or E
protecting electrical circuits, or for making connections to or in electrical
circuits while Heading 85.43 covers electrical machines or apparatus having
individual functions not specified or included elsewhere in the Chapter.
[732-C, DJ
F
2. The fact that tlie use of 'Power Controller' is to regulate the flow of
electricity to the object in question, the same cannot be treated as an apparatus
for making or protecting switching or making connections to or in electrical
circuits. Its only function is to control the degree of illumination and outflow
of heat, i.e., it functions as a light dimmer and speed controller. The electrical
appliances or apparatus under consideration has individual functions as it G
does the function of controlling/regulating the electric current/power so as
to feed the required quantum of current to the other equipments connected to
the circuits. Its function is to provide a source of current variable at the option
of the user to the load to which it is connected. Such machine or apparatus
729 H
730 SUPREME COURT REPORTS (2006] SUPP. 3 S.C.R.

A would fall under residuary entry 85.43 and not under 85.36. (732-D-GJ

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4436 of 200 I.

From the Order No. C-1/78-81/WZB/2001 dated IO. 1.200 I of the Customs, '
Excise & Gold (Control) Appellate Tribunal, (West Zonal Bench) Mumbai in
B Appeal No. E/4705/95 SB (WR) (relevant Order pertaining to this Appeal
being Order No. C-1180/WZB/200 I.

WITH
·~

CA. Nos. 4439, 4337 and 4438 of2001.
c
M.F. Humayunisa and Siddharth Dutta (for R. Nedumaran) for the
Appellant.

Gopal Subramanium, ASG, Harish Chandra, Asheesh Jain, B.K. Prasad
D and Manpreet Singh Doabia (for P. Parmeswaran) for the Respondent.

The Judgment of the Court was delivered by

BHAN, J. The common question for consideration in these four appeals
by the Commissioner of Central Excise & Customs, Aurangabad (for short
E "the respondent") is to the classification of "power controllers" manufactured
by each of the four appellants to these appeals.

The appellants inter alia are manufacturers of electrical goods namely,
power controllers also known as Light Dimmers and Heat Controllers. Until
June, I 99 I, the appellants had classified the "power controllers" under Chapter
F 85, Sub-heading 8543.00 under the Central Excise Tariff Act (for short "the
Tariff Act"). With effect from 25.07.1.991, the appellants started classifying
"power controllers" under Sub-heading 8536.90.

The Department did not accept the classification list and issued show
G cause notices dated 1.6. I992, 5. I 1.1992, 3.5. I993 and 4. IO. I993, respectively to
the fourth respondent herein inter alia alleging that the correct classification
~
of the "power controllers" is under Sub-heading 8543.00 and not under Sub-
heading 8536.90. Identical show cause notices proposing to deny the proposed
classification by the appellant and confirm the classification earlier claimed
and approved were issued, the notices also proposed recovery of duty short
H
H.V. INDUSTRIAL ELECTRONICS PVT.LTD. "· COMMR. OF CENTR<L EXCISE & CUSTOMS [BHAN, J.] 731
paid, caused by the difference between the duty payable under each of the A
two headings. The said show cause notices made allegation relating to
valuation of goods as well, but the subject matter of these appeals is restricted
to the issue of the determination of classification of"power controllers". The
respondent submitted their reply to the show cause notice vide letters dated
22.4.1992, 22.6.1992, 19.! i: 1992 and 31.5.1993. It was submitted by them that
the power controllers/light dimmers are for controlling the flow of power and B
for the purpose of protecting the circuit of230 AC Voltage from 150 Watts
to 3000 Watts and therefore the said items fell under Sub-heading 8536.90 and
not under Sub-heading 8543.00 which was a residuary item relating to electrical
~"
machine having individual functions not specified or included elsewhere in
Chapter 85. c
The Assistant Collector by his order-in-original bearing No. 84/93 dated
31.12.1993 confirmed the classification of "power controllers" under Sub-
heading 8543.00 and the difference in duty demanded. The appellants filed
statutory appeals before the Collector of Central Excise & Customs (Appeals)
challenging the order of the respondent on the grounds set out in the appeal. D
The Collector (Appeals) by his order-in-appeal No. A-371/94 dated 31.12. 1994,
after recording a finding that the product manufactured by the appellants is
used for making connection to or in electrical circuits held that the goods are
classifiable under Sub-heading 8536.90 as it was for Voltage not exceeding
1000 Volts. E
Being aggrieved against the order-in-appeal, the Department filed an
appeal before the Customs Excise and Gold (Control) Appellate Tribunal,
West Zonal Bench at Mumbai (for short "the Tribunal"). Tribunal by the
impugned order accepted the appeal filed by the Department, set aside the
order of the Collector (Appeals) and restored the order of the Assistant F
Controller. It t.as been held in the impugned order that the function of "power
controllers" is to provide a source of current variable at the option of the user
to the load to which it is connected. That it performs individual functions and
hence would fall under Heading 85 .43.

Being aggrieved by the order passed by the Tribunal, the appellants
G
__,,._ have filed the present appeals.

Counsels for the parties have been heard at length. Headings 85.36 and
85.43 relied upon by the parties read as follows:
,_ H
732 SUPREME COURT REPORTS [2006] SUPP. 3 S.C.R.

A "85.36 - Electrical apparatus for switching or protecting electrical
circuits, or for making connections to or in electrical circuits (for
example, switches relays, fuses, surge suppressors, plugs, sockets,
lamp-holders, junction boxes) for a voltage not exceeding 1000 volts.

"85.36.10 - Overload protection or thermal relay, starting relay controls,
B for refrigerating or air conditioning appliances and machinery.

8536.90 - Other"

"85.43 - Electrical machines and apparatus, having individual functions
not specified or included elsewhere in this chapter." ·~
c
Heading 85.36 covers electrical apparatus for switching or protecting
electrical circuits, or for making connections to or in electrical circuits, such
as, switches, relays, fuses, surge suppressors, plugs, sockets, lamp-holders,
junction boxes for a voltage not exceeding 1000 volts
D
The assessee-appellant has not shown any technical write-up to
substantiate their claim to the effect that the items produced by them perform
the function of either switching, protecting or for making connections to or
in electrical circuit. Heading 85.43 covers electrical machines or apparatus
having individual functions not specified or included elsewhere in the Chapter.
E The "power con<rollers" do not either switch or protect or for make connections
to or in electrical circuits. Its only function is to control the degree of
illumination and outflow of heat, i.e., it functions as a light dimmer and speed
controller. Its function is to control the degree of illumination and flow of
electric current. The apparatus whose function is to control the degree of
illumination and flow of current has not been mentioned in either of the
F
entries of Chapter 85. It performs individual function. The fact that the use
of product manufactured by the respondent is to regulate the flow of electricity
to the object in question, the same cannot be treated as an apparatus for
making or protecting switching or making connections to or in electrical
circuits. The machine/ apparatus manufactured by the appellant is for
G controlling or regulating the electric current/power so as to feed the required
quantum of current to the other equipments connected to the circuits.
Apparatus "power controller" is capable of controlling the current/power in
the circuit and therefore, definitely perfom1s the individual function. Such
machine or apparatus would fall under residuary entry 85.43 and not under
85.36.
H ,.
~
H.V INDUSTRIAL ELECTRONICS PVT.LTD.>. COMMR. OF CENTRAL EXCISE & CUSTOMS [BHAN,J.j 733
Rejecting the contention of the assessee that the power controllers A
would not fall under Heading 85.36, the Tribunal has recorded the following
findings:

"Both headings are a rep~oduction of respective headings in the
Harmonized System of Nomenclature (HSN) and reference to the
Explanatory Notes of that nomenclature in determining the scope of B
the coverage of these headings is justified. Heading 85.36 speaks of
Electrical apparatus for switching or protecting electrical circuits, or
for making connections to or in electrical circuits." Therefore, such
apparatus which is intended solely or predominantly for any of these
purposes, that would be classified under that heading. Electrical C
apparatus which are intended to perform other functions, and
incorporating a switch, relay, fuse, or plug, cannot, solely by the fact
of such incorporation, be considered to be apparatus for switching or
protecting electrical circuits. If that were to be the case, every apparatus
that incorporates a switch or fuse or other item mentioned in the
heading would be classifiable under that heading. Thus, transformers, D
electric lamps or television receivers incorporating a fuse or the fuse
to protect against overload, or a switch to tum on the circuit would
be classifiable not under headings 85.04, 85.39 or 85.28 respectively
but would be classifiable under heading 85.36. The absurdity of this
conclusion shows the unacceptability of the reasoning advanced in
its support. It is clear that heading 85.36 is for goods solely or E
essentially used for the purpose specified in that heading switching
or protecting electric circuit, or making connection or any switch
circuits. This article therefore cannot be classifiable under heading
.,.. 85.36."
The Tribunal further examined the appropriateness of the classification F
claimed by the assessee under Heading 85.43. It came to the conclusion that
the electrical appliances or apparatus under consideration has individual
functions as it does the function of controlling/regulating the electric current/
power so as to feed the required quantum of current to the other equipments
connected to the circuits. Its function is to provide a source of current G
variable at the option of the user to the load to which it is connected. We
agree with both the findings referred to above by the Tribunal.
For the reasons stated above, we do not find any merit in this appeal
and dismiss the same, leaving the parties to bear their own costs.

- B.B.B. Appeals dismissed. H