PER: P.A. AUGUSTIAN

The issue in the present appeal is regarding classification of the goods imported by the Appellant whether they fall under Customs Tariff Heading (CTH) 9032 as classified by the Department or under Customs Tariff Heading (CTH) 9027 as declared by the Appellant.

2. The brief facts are the ITC Limited ('the Appellant'), having office at ITC Life Sciences and Technology Centre is a DSIR (Department of Scientific and Industrial Research, Ministry of Science and Technology, Government of India) certified Research facility which is engaged in developing various kinds of products through Research and Development activities. The Appellant imported "1520 Monodisperse Aerosol Generator: w/Acc-SN (230-20190417-01 vide Bill of Entry No. 3301122 dated 20.05.2019 and goods were classified under Customs Tariff Item (CTI) 9027 5090 of the First Schedule to the Customs Tariff Act, 1975 at the duty rate of 0% (Basic Customs Duty) + 0% (Social Welfare Surcharge) + 18% (IGST). The Appellant before the adjudicating authority submitted that they had classified the product under Customs Tariff Item 9027 5090 instead of Customs Tariff Item 9027 8090. The Appellant declared the assessable value of the goods as Rs. 25,22,168.76/- and paid IGST at 18% amounting to Rs. 4,53,990.20/-. The Appellant under the same consignment and bill of entry, the following items, viz., (i) 3321 Aerodynamic Particle Sizer: w/ACC-SN (71913011) (ii) 1090 Electrical Neutralizer (Corona based):w/Acc-SN (109020190411-0171913011) and (iii) 3302A Aerosol Diluter:w/ACC-SN (3302191501) were also imported along with the above Product.

3. The Department alleging mis-declaration of classification of goods, proceedings were initiated and a show cause notice was issued on 05.07.2021 and Adjudication authority as per the Order-in-Original dated 29.11.2021 rejected the classification declared by the Appellant and reclassified the goods under Customs Tariff Item (CTI) 9032 8990, confirmed the differential duty with interest and also imposed equal amount of penalty under Section 114A of the Customs Act, 1962. Aggrieved by said order, an appeal was filed before the Commissioner (Appeals) and Commissioner (Appeals) as per the impugned Order-in Appeal dated 16.02.2023 dismissed the appeal. Aggrieved by said order, present appeal is filed.

4. The Learned Chartered Accountant (CA) during the hearing submits that in the System, all the above components /instruments work in tandem to produce the final analytical result for the physical and chemical analysis of the aerosol. The Appellant follows the below described process for this purpose:

Step 1: Aerosol particles are generated using the Mono-disperse aerosol generator (the imported item which is the subject of the present appeal).

Step 2: The generated aerosol is then fed through Electrical Neutralizer in order to neutralize the negative or positive charges of the aerosol.

Step 3: Once neutralized, a sample of such neutralized aerosol will be diluted with the Diluter to attain the required concentrate of aerosol.

Step 4: The particle size and concentration of the diluted aerosol will be measured using the APS Spectrometer.

Step 5: The Spectrometer is also used to observe that consistency in the particle size of the aerosol (to 0.8 to 12 µm in diameter) has been attained as required for the experiment.

Step 6: Using a Mass Flow Controller along with the Flow Meter and Vacuum Pump, the requisite amount and rate of diluted aerosol is administered in the analytical model which will yield the physical analysis experimental data.

4.1 In the course of procuring the various components and instruments required to construct this System, some of these components /instruments were sourced locally, while others were imported from M/s. TSI, a US-based company which supplies precision measurement instruments.

5. In this regard Relevant extract of Chapter 90 of the Customs Tariff Act, 1985 is reproduced below: