CESTAT Delhi Upholds Relay Classification and Exemption for Multifunction Protection Devices

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi, in the case of GE Vernova T & D India Limited Vs Commissioner of Customs, has delivered an important ruling on classification and exemption of advanced electrical protection devices. The dispute revolved around whether various multifunction protection products imported between 05.03.2013 and 04.12.2017 should be treated as relays under CTI 8536 49 00 or as Feeder Management Intelligent Electronic Devices (FMIEDs) under CTI 8536 90 90, and whether they were eligible for exemption under Notification No. 12/2012 dated 17.03.2012 for relays with contact rating up to 7 amperes.

The Tribunal ultimately held that all four categories of imported products — Midos relays, relays for tap changer control and transformer monitoring, K-range relays, and MICOM relays — are classifiable as relays under CTI 8536 49 00. It further held that three of these (other than MICOM) had contact rating below 7 amperes and hence qualified for the exemption under Serial No. 376 (No.8 of List 21) of Notification No. 12/2012. Only MICOM relays, having contact rating above 7 amperes, were found ineligible for the exemption.

Background of the Dispute

Parties and Period Involved

  • Assessee: GE Vernova T & D India Limited
  • Respondent: Commissioner of Customs
  • Period under dispute: 05.03.2013 to 04.12.2017
  • Appeals:
    • Company appeal against duty, interest and penalties (Customs Appeal No. 52421 of 2019)
    • Individual appeals against penalties (Customs Appeal Nos. 52370, 52732, 52733 of 2019)

Goods Covered

The imports related to four types of multifunction devices used in power system protection and control:

  1. Midos (MVAJ, MVAA, MVAX)
  2. Relays for Tap Changer control and transformer monitoring
  3. K-range Relays (KAVR, KAVS)
  4. MICOM (P14, P24, P40)

The core controversy was:

  • Classification:

    • Whether these devices are relays under CTI 8536 49 00 (- Relays – Others)
    • Or FMIEDs under CTI 8536 90 90 (- Other apparatus – Other) due to multifunctionality

  • Exemption:

    • Whether they qualify for the customs duty exemption granted to relays of contact rating up to 7 amperes under Serial No. 376 – List 21, Item (8) of Notification No. 12/2012 dated 17.03.2012.

Relevant Exemption Entry

Notification No. 12/2012 dated 17.03.2012
Serial No. 376 – The goods specified in List 21

Item (8) of List 21:

(8) Relays of contact rating upto 7 amperes

Demand, Interest and Penalties as per Commissioner’s Order

The Commissioner’s order dated 24.06.2019 confirmed substantial demands and penalties:

  • For the company:

    • Differential duty under section 28(4) of the Customs Act 1962: Rs. 2,39,65,764
    • Interest under section 28AA
    • Penalty under section 114A: Rs. 2,36,65,764 plus interest
    • Penalty under section 114AA: Rs. 5,00,00,000

  • For three individual officials:

    • Section 114AA: Rs. 1,00,00,000 each (total Rs. 3,00,00,000)
    • Section 112: Rs. 20,00,000 each (total Rs. 60,00,000)

According to the assessee:

  • Out of total differential duty of Rs. 2,39,65,764:
    • Rs. 1,78,79,947 related to MICOM relays with contact rating above 7 amperes.
      • The assessee acknowledged that these imports were not entitled to exemption.
      • Differential duty plus interest of Rs. 4,49,85,564 (duty + interest) was voluntarily paid even before issuance of the show cause notice.
    • Balance Rs. 60,85,817 concerned Midos, tap changer/transformer monitoring relays, and K-range relays alleged by the department to have contact rating above 7 amperes. The assessee contested both the classification and denial of exemption for these.

Technical Nature of the Imported Products

The assessee described the devices as protection and control equipment used in transformers and other power installations.

General Function of Relays

Relays, in the assessee’s explanation (accepted by the Tribunal), are:

Devices used for control, protection and supervision of an electrical system against overcurrent and overvoltage.

With technological progress, modern relays may incorporate digital functionalities such as:

  • Displaying electrical parameters
  • Recording events and inputs/outputs
  • Triggering alarms
  • Enabling communication and data analysis

However, these features merely enhance and support the functioning of the relay; they do not replace its fundamental role of protecting and controlling electrical circuits.

Product-wise Features

  1. Midos relays (MVAJ, MVAA, MVAX)

    • Primarily used for protection through tripping functions.
    • Do not possess the sophisticated digital features found in newer models.
    • Represent relatively older technology, but still function as relays.

  2. Relays for Tap Changer control and transformer monitoring

    • Compare actual current values to preset values.
    • Trigger transformer tap changes if deviations occur.
    • Perform measurement, control, monitoring and regulation; however, these functions remain ancillary to the overriding purpose of protecting the transformer from overcurrent.