2006 (10) TMI 307 - AT - Central Excise

Classification - Poultry keeping machinery parts - granting the benefit of exemption notification - poultry cages of Iron and Steel - HELD THAT - We are of the considered opinion that the Revenue has failed to establish that the poultry equipment can be treated as articles of iron and steel. The articles have specific use as poultry equipment and the item is understood in the trade as well as in the commercial parlance as poultry equipment which has a specific description under Chapter Sub-Heading No. 8436 of the Central Excise Tariff. We notice that the Madras Bench in the case of CC v. M/s. Chowdary Enterprises 1996 (12) TMI 201 - CEGAT, MADRAS by Final Order has also decided the classification of this very item under Chapter Heading No. 8436.99 and has rejected the Revenue s claim for classification under Chapter Heading 73. In view of the correct order passed by the Commissioner and supported by the judgments cited including the Tribunal ruling of Chennai Bench in the case of CC v. Chowdary Enterprises (supra), we find no merit in the present appeal and dismiss the same.

Issues Involved:
1. Classification of parts of Poultry Keeping Machinery.
2. Applicability of exemption notification.
3. Interpretation of relevant tariff headings and HSN notes.
4. Relevance of previous tribunal and Supreme Court rulings.
5. Validity of CBEC Circular No. 36/CX/4, dated 31-8-90.

Issue-wise Detailed Analysis:

1. Classification of Parts of Poultry Keeping Machinery:
The core issue pertains to the classification of parts of Poultry Keeping Machinery under Chapter Sub-Heading No. 8436 of the Central Excise Tariff (CET). The Revenue argued for classification under Heading 7314 of CET as "Articles of Iron and Steel wire." The Tribunal noted that the Revenue did not provide evidence of market, trade, and commercial understanding to support this classification. Both the Commissioner (A) and the Deputy Commissioner classified the items under Chapter Sub-Heading 8436.00, which includes "Other Agriculture, Horticulture, Forestry, Poultry Keeping Machinery."

2. Applicability of Exemption Notification:
The classification under Chapter Sub-Heading 8436.00 attracts a nil rate of duty, benefiting from an exemption notification. The Tribunal upheld this classification, noting that the items are understood in trade and commercial parlance as poultry equipment, not merely as iron and steel articles.

3. Interpretation of Relevant Tariff Headings and HSN Notes:
The Tribunal emphasized the importance of HSN notes in classification. The HSN notes for Chapter Heading 8436 include "Rearing and laying units or 'batteries'," which are large installations equipped with automatic devices for various poultry-keeping functions. The Tribunal found that the impugned goods are parts of such batteries and thus fall under Chapter Heading 8436.00. The dictionary definition of "battery" relevant to the poultry industry supports this classification.

4. Relevance of Previous Tribunal and Supreme Court Rulings:
The Tribunal distinguished the present case from previous rulings cited by the Revenue, such as Poultek Engineers v. CCE, Coimbatore, and M/s. Anup Engg. The Tribunal noted that the Poultek Engineers case did not consider the specific functions and market understanding of the items in question. The Tribunal also referred to several Supreme Court judgments, including Dunlop India Ltd. & Madras Rubber Factory Ltd. and G.S. Auto International Ltd., which support the principle that classification should consider the specific use and market understanding of the goods.

5. Validity of CBEC Circular No. 36/CX/4, dated 31-8-90:
The Tribunal found that the CBEC Circular, which suggested that equipment without mechanical function should be classified according to constituent material, was against Section Note No. 5 of Section XVI of the Central Excise Tariff Act, 1985. The Tribunal cited the Supreme Court's decision in Bengal Iron Corporation v. Commercial Tax Officer, which held that circulars represent the government's understanding and are not binding on courts or quasi-judicial authorities.

Conclusion:
The Tribunal upheld the classification of the impugned goods under Chapter Sub-Heading 8436.00 of the Central Excise Tariff, rejecting the Revenue's appeal. The Tribunal emphasized the specific use of the goods as poultry equipment, supported by HSN notes, market understanding, and relevant case law. The Tribunal dismissed the appeal, affirming the orders of the Commissioner (A) and the Deputy Commissioner.

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