Whether Automatic Taps, Urinals and WC Flushing Systems would be classified under heading 9032 or Heading 8481 of Central Excise tariff?

PJ/Case Law/2018-2019/3464

Case:AOS SYSTEMS VersusCOMMISSIONER OF CENTRAL EXCISE, DELHI
Citation:2018 (13) G.S.T.L. 167 (Tri. - Del.)
Issue:Whether Automatic Taps, Urinals and WC Flushing Systems would be classified under heading 9032 or Heading 8481 of Central Excise tariff?
Brief facts: The appeal is against the Order-in-Appeal No. 24/2016, dated 27-3-2017. The appellant is engaged in the manufacture of Automatic Taps, Urinals and WC Flushing Systems. All three products are hand free plumbing products, which are normally used in public toilets. In the case of Automatic Tap, when the hands of the user break the infrared beams, the device is activated and the flow of water commences. In the case of Automatic Urinal and WC Flushing Systems, the system gets activated when the person moves away and flushing happens. The appellant classified the products under CETH 8543 90, since they commenced manufacture in 1998. In the budget of 2014, a concessional rate of duty of 10 per cent was prescribed for the goods falling under Chapter 84 and 85. This exemption notification remained in force from 17-2-2014 of 31-2-2014. The Department was of the view that the appellant had wrongly classified the product under 8543 90 and cleared the same by paying duty at the rate of 10 per cent. The Original Authority vide his order dated 31-12-2015 ordered classification of all the three products under CETH 9032 89 10 and held them as liable to duty at 12 per cent as against the concessional rate of 10 per cent. However, the Commissioner (Appeals), in the impugned order, ordered classification of the Automatic Taps under CETH 8481 and the other two products under CETH 9032. Aggrieved by the impugned order the present appeal has been filed, in which the appellant has claimed the classification of all the products under CETH 8481.

Appellant’s contention:Applicant submits that the there is no material difference between the three products for the purpose of classification. He cited the ruling of US Customs to justify the classification of all the products under 8481.

Respondent’s Contention:The Ld. DR on the other hand, justified the impugned order. He referred to the leaflet of the products manufactured by the appellant and argued that the classification ordered by the Commissioner (Appeals) is correct.

Reasoning of Judgement: We have heard both sides and perused the records. The three products manufactured by the appellant are:-
(i) The Automatic Water Tap :-
This is a water tap in which a sensor is located which controls flow automatically, once a hand is placed or removed near the tap.
(ii) Automatic Flushing System for urinal;
(iii) Automatic Flushing System for WC.
In respect of the items at (ii), (iii) the appellant manufactures only the electronic device which is operated through batteries and mounted on the water lines and placed on the wall. After someone uses the urinal/WC and moves away, the sensor in the system operates the flow of water and cleans urinal/WC. It is to be noted that the electronic device manufactured by the appellant does not come fitted on any WC or Urinal. The competing CETH, 8481 as well as 9032 are copied below for ready reference.

8481	Taps cocks, valves and similar appliances for pips, boiler shells, tanks, vas or the like, including pressure - reducing valves and thermostatically controlled valves.
8481 10 00	Pressure - reducing valves
8481 20 00	Valves for oleo hydraulic or pneumatic transmission
8481 30 00	Check non-return valves
8481 40 00	Safety or relief valves
8481 80	Other appliances
8481 80 10	Taps, cooks and similar appliances of iron or steel
8481 80 20	Taps, cooks and similar appliances of non-ferrous, metal
8481 80 30	Industrial valves (excluding pressure-reducing valves, and thermostatically controlled valves).
	Inner tube valves
8481 80 41	For bicycles
8481 80 49	Other
8481 80 50	Expansion valves and solenoid valves for refrigerating and air-conditioning appliances and machinery
8481 80 90	Other
8481 90	Parts
8481 90 10	Bicycle valves
8481 90 90	Other

CETH 9032 :- Automatic regulating or controlling instruments and apparatus.

9032	Automatic regulation or controlling instruments and apparatus
9032 10	Thermostats
9032 10 10	For refrigerating and air-conditioning appliances and machinery
9032 10 90	Other
9032 20	Manos tats
9032 20 10	For refrigerating and air-conditioning appliances and machinery
9032 20 90	Other
	Other instruments and apparatus
9032 81 00	Hydraulic or pneumatic
9032 89	Other
9032 89 10	Electronic automatic regulators
9032 89 90	Other
9032 90 00	Parts and accessories
9033 00 00	Parts and accessories (not specified or included elsewhere in this chapter) for machines, appliances, instruments or apparatus of chapter 90.

It is evident from the head note under 8481 that this heading covers various types of Taps, Locks, Valves etc. The Automatic Tap manufactured by the appellant, no doubt incorporates an electronic control device, but functions as a Tap to regulate the flow of liquid. Consequently, the essential character of the products remains the tap and hence, it is rightly classifiable under CETH 8481.
In respect of the Automatic Flushing System for Urinal and WC, it is noted that the appellants manufacture only the electronic device that is fitted to the water supply line so as to flush the device automatically. However, WC/Urinal is not part of the goods manufactured by the appellant. The goods manufactured are in the nature of instruments/apparatus for automatically controlling of the flow of the fluid. Hence, these are most appropriately classifiable under CETH 9032, as ordered in the impugned order.
In the result, the impugned order is upheld and the appeal is dismissed.

Decision: Appeal Dismissed
Comment: The analogy of the caseis that it is concluded that the applicant is engaged in manufacture of Automatic Urinals and WC Flushing Systems would be classified under the heading 9032 of central excise Tariff and Automatic Water Tap would be classified under the Heading 8481 of Central Excise Tariff.
Prepared By: Pushpa Choudhary

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PJ/Case Law/2018-2019/3464

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